Anarchy, State and Moore's Law

Effluvia

There are several arguments that defend the need for a coercive State. Most of the interesting ones tend to be utilitarian arguments. Now, I'm not a utilitarian, but I refer to these as the "interesting" arguments as they are debatable – if someone argues in favor of a theocratic state because Allah wills it, or in favor of a monarchical state because "it's always been that way", I just reject those axioms…and there's not much interesting about shouting "is too" and "is not".

…so if we limit ourselves to the utilitarian arguments for the State, they tend to fall into two classes:

  • greater utility for some via redistribution (e.g. "'society' should take care of the poor").
  • greater utility for almost everyone via collective action.

In this essay rant, I'd like to argue that while the State may have improved (or, at least, been CAPABLE of improving) collective utility at some point in time, we are undergoing a stunning novel revolution right now (comparable in scale the change from nomadism to pastoralism, and from farming to industrial society), and the outcome of that revolution in information technology and financial technology will render the utility of the State in collective action null and moot.

(You can see why I crossed out "essay" and replaced it with "rant": what follows are the crack-addled rantings of an anarchocapitalist who hopes to see the entire Westphalian system overthrown, kicked into pieces, set on fire, and then defecated on once it cools sufficiently.)

The concept of "greater utility for almost everyone via collective action" is known by the shorter term public good. The idea is that there are some things in life – immunizations, roads, national defense, education, etc., which (a) improve utility for almost everyone, (b) are very hard to coordinate via non-coercive one-to-one coordination.

Consider the game theory problem of the prisoner's dilemma. If the prisoners cooperate they get minimal punishments…but there is a very strong incentive for one prisoner to defect from the coalition. The TOTAL utility is highest when the prisoners cooperate, and the TOTAL utility drops when one defects…but the INDIVIDUAL incentives push each towards defecting.

(I should footnote this to mention that I'm talking only about the utility totaled across the two prisoners: the guards, the staff of the guard's union, the firm supplying food to the prison under a no-bid contract, and the three sisters, the niece, and the pool boy of various politicians who get hired for do-nothing jobs in the probation department, etc. are all higher when BOTH of the prisoners are convicted).

Anyway: the point is that (a) sometimes the best outcomes occur when people can coordinate and create binding contracts, (b) nuanced, bottom-up coordination is hard.

There is one kind of coordination that is easier than nuanced, bottom-up, negotiated coordination: naked force.

The pen may be mightier than the sword, but no one ever said anything about the pen being particularly quick.

Let's imagine an example of how high transaction costs can be solved by force, to the benefit of everyone…or, at least, almost everyone:

We imagine thirty folks all living in houses on a small dirt road… a road so narrow that delivery trucks can't get down it.

A few bright folks say "hey…we could all deed our front yards over to the village, move our fences back a bit, and then get Amazon deliveries to our front door, instead of having to trudge down to the village green every day where the UPS guy unceremoniously dumps them now".

A few dozen folks chat the idea up, but several others are unsure: "Well, even if we do that, will UPS drive up this new road?" "What if I deed over my front yard but no one else does: I've lost my yard, and yet I still don't get UPS deliveries", etc.

One day the local bully comes by with his crew, smashes down all the front fences, paves the road, and announces "There, it's done. The first UPS truck rolls in tomorrow. …also, you each owe me $200 for blacktop and labor".

There's some grumbling, but a few weeks later, everyone acknowledges that $200 and a lack of a front yard is a small price to pay to have the latest Twilight novel delivered to one's front step on release day. Also, it's nice not to have neighbors snooping over the pile of packages down at the village green and ask suspiciously "Sooooo….what exactly did you order from bukake.jp ?"

Yay, government! Yay collective action!

( Oh, and, yeah, it sucks that we had to knock down all of Old Man Fielder's house because it was too close to the new road, and now he's left the Village of New London and is writing cranky things about "takings" on the Internet, but progress is progress, cost be damned! )

So, anyway, if we posit that the benefits to everyone else exceed the pain to Old Man Fielder, and if we posit that somehow a good chunk of the money collected went to paying off Fielder and getting him to take down his cranky blog, we can see that total utility created is above zero, and progress was accomplished.

…and we also see that with out government it wouldn't have happened.

I assert that we haven't learned that "force is necessary to solve coordination problems" – I assert that what we've ACTUALLY learned is "force is necessary to solve coordination problems…where those 'problems' are defined AS A FUNCTION OF THE COST OF COMPUTATION".

Folks of a certain bent love the story of the Uniform Penny Post – the British post office realized that the costs of computing variable postage prices exceeded the extra revenue gained by the higher prices.

The response was the fairly clever idea of slashing the price to one low fixed point and then charging the same to deliver an envelope two doors down or 200 miles away.

This was a quite-clever bit of systems thinking and we should be impressed at the revolutionary idea (think it's not revolutionary? It was. It was such a revolution that it's reshaped our world to the point where we regard fixed pricing even over variable costs as "obvious").

…but it's also somewhat appalling: brute force labor was so much cheaper than computation that it made sense to replace expensive brains with cheap muscles.

We no longer live in a world where the computation of functions of multiple arguments is expensive. In fact, it's effectively free.

Which is a point with some radical implications.

It says that societal consensuses that were created in an era of cheap labor and expensive processing are perhaps exactly backwards.

What sorts of societal consensus? In this rant I'm arguing that "the State" is one big example.

The costs of coordination – or transaction costs – have several sub parts: search and information costs, bargaining costs, and enforcement costs.

At least two of these three are amenable to efficiencies from technological and financial engineering.

To explain why search costs are falling is to belabor the obvious.

Information costs fall for similar reason.

I'd say "we'll soon be at the point where you can go to a search engine and find a Chinese factory that will build drums to your custom specifications using Nigerian wood"…except we reached that point several years back.

Bargaining costs are likewise amenable to technological tools – we've got auctions, Dutch auctions, reverse Dutch auctions, and I'd have to do a quick Internet search to verify that "bi-curious Belgian auctions" are just a product of my fevered imagination, and not an actual thing.

Dominant assurance contracts may have been invented (or at least popularized) by anarchocapitalists, but they've been embraced by the hipster set (or, in this age of startups, is that "Hipstr"?).

There's no technical reason that we can't already coordinate the provision of shared goods like a new road serving a bunch of private homes via the tools and concepts we've already got on hand: futures markets, assurance contracts, microfinance, quick and easy online incorporation of single issue bodies, etc.

Leftists at this point trot out the talking point "Roads are public goods!"

Something is a public good if it satisfies the criteria of a public good. Merely saying " [ my favorite government program ] is a public good …as it was in the beginning, is now and ever shall be, world without end" is a statement of faith, not an argument.

Public goods are those things that are

nonrival and non-excludable.

Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others;

non-excludability means that no one can be effectively excluded from using the good.

Education is clearly rivalrous. If it was not so, we would not have admissions committees at colleges or residency requirements in high schools.

Good leftists tell us over and over that highways have fixed capacities.

(In fact, good leftists spend a very large percent of their waking hours telling us how finite and limited everything is, including toilet paper and our ability to heat and cool our homes…

but that is neither here nor there. Smarter people make different arguments. )

Anyway, many of the things that we're told aren't rivalrous – education, roads, security, etc. – are actually rivalrous.

The other prong of the public good fork is non-excludability…and again we find that the arguments of the left are wrong and getting wronger as technology progresses.

Car parking is excludable, and meters these days take credit cards.

…and so do the roads.

As microprocessors get smaller, faster and cheaper at such a rate that industrial contracts specify price declines by the week, we are not at the point where there is a microchip in every car and every keyring – we're well beyond that point. There are more CPUs in your house than there are human beings.

…and one can almost envision the day when there will be more CPUs in your house than there are bacteria.

Television was once non-excludable, but now you pick a bundle that matches your programming choice and pay for it. Perhaps you pay more than your neighbors because you're a history fan and want to pay more for serious educational programming, or perhaps you make do with less material and pay less.

Roads were once non-excludable (except for turnpikes, and the computational overhead was fairly expensive, as you had to pay a human to stand in the toll-house and turn the wall of pikes after being paid), but now RFID cards and credit card merchant accounts make them more common. Do a "mashup" (as the kids say) of GPS, cheap transmitters, cheap security cameras repurposed, and you can do a business model inversion that name checks Zipcar.com but makes the roads the item you subscribe to.

Or in the space of education, put the source material up for free and pair with private tutors.

The examples are numerous – technology lets us

  • narrow cast benefits to individuals
  • disambiguate those who use services from those who do not
  • charge just those who use services
  • allow individuals to coordinate for expensive development projects

Almost all of what are described as public goods are no longer so.

The world has changed.

…and thus technology is making anarchocapitalism far more realistic
than ever before.

P.S. Oh, right. Don't want to lose that bet with Ken. Wait. For. It. "crazy monkey sex".

Last 5 posts by Clark

31 Comments

31 Comments

  1. Bruce  •  Sep 26, 2011 @10:13 pm

    That's more tacked on than worked in.

  2. GeekChick  •  Sep 26, 2011 @11:36 pm

    I love you Clark!

  3. IgotBupkis, President, United Anarchist Society  •  Sep 27, 2011 @1:38 am

    More on this piece in a moment, but I think everyone ought to be conscious of the radical change Iteration places on The Prisoner's Dilemma. By itself, the Prisoner's Dilemma is a really nasty statement about the universe — basically, it says you're better off saying "screw you, I'm getting mine now!" as a general life strategy.

    What happens with Iterating it, though — that is, throwing the players back in the same game with each other over and over again — basically taking it from a narrowly defined academic exercise and putting it into a real world context, is enough to at least make you wonder about God.

    Because at this point, the whole thing turns itself onto its own head and, instead of "screw you, I'm getting mine" is no longer the best play. Instead, what you really wind up with is that The Best General Strategy for all circumstances is essentially almost identical to the Judeo-Christian moral ethos. You are free to argue chicken-or-egg, here as far as the natural inspiration for this vis-a-vis God, but it's… interesting. I recommend the Wiki article on it for those of you not familiar with it.

    ===============

    I also note that another thing that comes out of it is that President Downgrade's foreign policy standard, "Be Nice, Always" is actually just about the worst possible strategy — the wolves will tear you apart… as anyone with a brain pretty much already knew.

  4. IgotBupkis, President, United Anarchist Society  •  Sep 27, 2011 @2:15 am

    >>> that $200 and a lack of a front yard is a small price to pay to have the latest Twilight novel delivered to one’s front step on release day.

    Really? I was thinking of having to pay them a buck just to throw it into the nearest recycling bin….

    But then, that's just me, I'm not a thirteen year old girl, and I damned sure don't appreciate Vampire Chic.

    A villainous, evil thing that sucks the life out of those things around it… hey, sounds like real hero potential to me!

    There's something really wrong with society when it does that.

  5. Clark  •  Sep 27, 2011 @4:00 am

    @GeekChick

    > I love you Clark!

    Unfortunately I've got to whip off my glasses, rush into a phone booth, and then emerge in costume to fight statism, so I've got no time for a relationship.

    Thanks, though!

  6. Clark  •  Sep 27, 2011 @4:01 am

    re "crazy monkey sex" [ I presume ]:

    @Bruce
    > That’s more tacked on than worked in.

    You're right.

    I'll strive to do better next time.

  7. Mick  •  Sep 27, 2011 @5:22 am

    Bravo…I really enjoyed your writing and topic.

    Thanks.

  8. Samsam von Virginia  •  Sep 27, 2011 @5:26 am

    "…whip off my glasses, rush into a phone booth, and then emerge in costume to fight statism…" In this era of cheap computation, you just click OPTIONS:SKINS, then select from the drop-down menu. No phone booth required.

  9. cackalacka  •  Sep 27, 2011 @7:36 am

    I'm not sure I can quantify the difference between a thoughtful, edifying essay and vapid meandering polemic, worthy of the comments section of a letter-to-the-editor at a small podunk paper in South Dakota, but I do know that the latter involves a very generous use of the word (insult?) 'leftist.'

  10. Clark  •  Sep 27, 2011 @7:52 am

    @cackalacka

    > vapid meandering polemic worthy of the comments section of a letter-to-the-editor at a small podunk paper in South Dakota… involves … use of the word ‘leftist.’

    I entirely agree, and I support you in your writing an angry pissy letter to a podunk paper in South Dakota decrying Wikipedia for defining and using this term:

    http://en.wikipedia.org/wiki/Left-wing_politics

    In politics, Left, left-wing and leftist are terms generally used to describe support for social change to create a more egalitarian society

    Also, please pen a letter to the dons at Oxford, who define it in the OED as "an adherent of the 'left' in politics".

    This is clearly a word that only mouth-breathers and creationists use.

    Also, I entirely support you in your implicit argument that all the stupid unsophisticated people in the United States live in South Dakota. Sure, some may call us "biased" or "classist" for that, but we know the truth in that we've each been there and interviewed these morons.

    …right?

  11. cackalacka  •  Sep 27, 2011 @8:16 am

    While you're on wikipedia, Clark, you may wish to also research the words 'coherent' and 'interesting.'

  12. Suidae  •  Sep 27, 2011 @8:23 am
  13. Clark  •  Sep 27, 2011 @9:17 am

    @cackalacka:
    > you may wish to also research the words ‘coherent’ and ‘interesting.’

    in·ter·est·ing – Adjective: Arousing curiosity or interest; holding or catching the attention

    Example usage: despite protesting that he/she found it very boring, cackalacka found the blog post so interesting that he/she read the whole thing and kept leaving comments on it.

  14. Ken  •  Sep 27, 2011 @9:25 am

    P.S. Oh, right. Don’t want to lose that bet with Ken. Wait. For. It. “crazy monkey sex”.

    My lovely wife, who did not read your first post explaining the context for this, has an inquiry regarding this.

  15. eddie  •  Sep 27, 2011 @9:43 am

    "cackalacka found the blog post so interesting that he/she read the whole thing and kept leaving comments on it"

    Not quite, Clark. He/she found your post boring. What he/she finds so endlessly fascinating is his/her own words.

  16. PLW  •  Sep 27, 2011 @9:55 am

    I'll see your Coase and raise you a Williamson. How do we know that Moore's law is decreasing the benefits of government faster than it's decreasing the costs. It seems like something that helps us solving the contractability problem with our neighbors, may also help us solve the commitment/monitoring problem with government just as well.

    Igotbupkis: Tit-for-tat worked for a while, but actually a "collectivist" approach recently took it down (http://www.wired.com/culture/lifestyle/news/2004/10/65317)

  17. Hasdrubal  •  Sep 27, 2011 @9:57 am

    Information costs are certainly falling, search costs probably are falling as well (though Moore's law has helped provide us with far more raw information, our algorithms are still limiting the actual valuable results. There is a lot of truth in Microsoft's Bing commercials, not just about Google but the world in general.) Traditional transaction costs are down, but humans being humans, better communication technologies allow us to create and increase new transaction costs just as quickly.

    But I think the biggest problem with anarcho-capitalism as you describe it is opportunity costs: Reducing transaction, information and search costs across the board naturally increase opportunity costs for self government. It is much more costly for me to spend my time reading over all the proposed roads and tolls and available education opportunities when I have just as many new job and entertainment opportunities to evaluate as well.

    Government is not just a method of enforcing coordination, it's also a method of delegating all that messy stuff that only marginally affects your life like garbage pickup and snow plowing. Without government I have to contract for EVERYTHING, and that's a serious resource sink.

    It's the same issue that other form of organizing activity addresses; the firm. Coase's work wasn't based on computational complexity, it's just as valid today as it was in 1937 and 1960. Start with this podcast and the listed references: http://www.econtalk.org/archives/2008/01/munger_on_the_n.html

    In this world of multi core, multi gigahertz processing power and petabits of accessable data, it's still more efficient for firms to internalize some functions than to contract everything out. I have yet to see an argument that this is not true of governments as well. Sure we should consciously reassess which functions would better be served by the market, but you'll find that transaction costs haven't been reduced by our technological marvels as this post imagines.

  18. eddie  •  Sep 27, 2011 @10:13 am

    Kudos to Clark on a splendid second post. By all means, keep it up.

    IMHO, the unsolved theoretical problem of anarchocapitalism is the geographic monopoly of force. David Friedman can have all the polycentric law and for-profit courts he wants, but when it comes time to make Alice pay for stealing Bob's TV set there's going to be exactly ONE security agency with the power to compel Alice to open her wallet in lieu of spending a month in the slammer, and that's whichever security agency has chased all the other agencies away from whatever defensible perimeter Alice lives within.

    Yes, yes… inter-agency negotiated agreements, blah blah blah. "Rather than go to war, we'll agree that if one of your clients claims one of our clients stole their TV then we'll decide the case using The Court Of So-And-So and both agree to abide by that courts ruling blah blah blah." That doesn't change the fact that Army A has practical jurisdiction over Alice, and if Aaron and Alistair and Aretha all pay the Legislatures, Courts, and Security Agencies of the Allied Area Association to make sure nobody smokes dope within a hundred miles of Auburn, Alabama, then it doesn't matter how much money Alice is willing to pay to the Bavarian Barristers and Batallions – she's stuck facing summary execution for her potted pot plant which, as a loyal and fully paid-in-full citizen of B, she would normally have the legal right to enjoy were she not an expatriot living within the geographic confines of Someone Else's Laws.

    Patri Friedman thinks the solution is for everyone to live on boats. I imagine TJIC thinks the answer is to live in orbit. Neither one works for me because my wife gets nauseous on boats, and I probably would too in space. My own crazy idea, not quite fully fleshed out yet, involves mutually-exchanged hostages.

    Here's to the future!

  19. TJIC  •  Sep 27, 2011 @10:24 am

    > I imagine TJIC thinks the answer is to live in orbit.

    Indeed.

    Now working on revising the first draft of my novel on that very topic!

  20. eddie  •  Sep 27, 2011 @11:24 am

    Hasdrubal: "Government is not just a method of enforcing coordination, it’s also a method of delegating all that messy stuff that only marginally affects your life like garbage pickup and snow plowing. Without government I have to contract for EVERYTHING, and that’s a serious resource sink."

    All that messy decision-making that can be delegated to the Government can also trivially be delegated to ANYONE IN THE WORLD. I delegate my fashion decisions to my wife, my spiritual health to my pastor, my legal views to Popehat, and my blog reading to TJIC. More practically, instead of deciding on which plumber, HVAC guy, and electrician to use for home repairs, I just ask my handyman and go with whoever she recommends.

    Anyone who doesn't feel like choosing between different trash haulers and snowplowers can just use whoever their neighbor is using, or the first name in the phonebook, or whoever. But anyone who actually DOES want to bother putting in a little effort to pick someone better is going to be screwed when some government decides that they're going to decide for you – as my government did recently when they un-privatized all our trash pickup ("because it's more environmentally friendly" they lied).

    In this hyper-connected hyper-processing hyperworld that you and I and Clark are theorizing, eliminating the costs of having to make your own decisions – whether it's choosing a school or a doctor or a housepet – will be as easy as clicking the "I'm feeling lucky" button on Google or taking the top recommendation from Amazon or subscribing to ThinkProgress' Liberal Life Management service for a very modest fee^W donation to a worthy cause.

    So tell me again what I need government for?

    "Government is not just a method of enforcing coordination"

    … oh, right. FORCE. That was it. I almost forgot.

  21. Hasdrubal  •  Sep 27, 2011 @12:03 pm

    eddie: Your "delegation" is contracting in an anarcho-capitalist world. And just like in our current world, there are transaction costs to forming contracts.

    To economize on transaction costs, you might contract large categories of related things with low marginal benefits to you under one contract, but, ta-da, you've just reinvented government.

    Trivial interactions can be relegated to Google's "I'm feeling lucky," but once you get down to brass tacks, there a huge range of nontrivial, idiosyncratic relations that we deal with every day which don't.

    Read up on Oliver Williamson, like PLW mentioned. That's exactly what I was getting at.

  22. Ben  •  Sep 27, 2011 @1:45 pm

    You make a good argument that certain things that Econ 101 textbooks claim are public goods are actually nothing of the sort. However, I don't think this actually supports your larger critique of government. The utilitarian argument for government intervention that you're invoking here isn't about public goods, it's about external costs and benefits. Public goods are one type of situation where these externalities are an important factor, but they're far from the only one. Education and transportation have large externalities associated with them, even though they're excludable, rival goods, and so the utilitarian argument for government intervention still holds up in these cases.

    (I feel kind of silly defending utilitarian arguments to someone who explicitly said he doesn't care about utilitarian arguments, and I'm curious what your actual objection is to this sort of intervention. Do you think liberty is inherently more important than happiness, or something?)

  23. eddie  •  Sep 27, 2011 @2:05 pm

    "you’ve just reinvented government"

    The difference between government and the an-cap-otopian bundle of contracted services that looks and smells a whole lot like a government is…

    … you can fire your contractors.

    If that's reinventing government, then I think we're well due for some reinvention around here.

  24. Piper  •  Sep 27, 2011 @4:16 pm

    Hi Clark, welcome (belatedly) to the blog. As one of the resident liberals/leftists/union apologists/what have you around these parts, I have one thing to say – tl;dr. I suppose I might work through it at some point, but just as with the other post I saw of yours, my eyes started glazing over partway through. I'm not sure why, but your writing style (at least for me) is interfering with your message.

  25. Rich Rostrom  •  Sep 27, 2011 @9:01 pm

    The idea of charging all road users by the mile (and ton) is quite plausible. But the value of roads is not just in the use, but the access.

    An actor may only use the road network occasionally, in small ways, and yet access to it may be critical to that actor. There may be situations where having access is essential, though it will never be used.

    I'll also throw a counter-example at you.

    The decline in transaction costs, and administrative costs of complex transactions, allows actors to create contract arrangements whose details are profoundly obscure and whose consequences are beyond comprehension.

    These arrangements may be immediately profitable, yet pose risks of catastrophic disruptions and defaults.

    That's what we've seen in the last few years. We've also seen a lot of failures to execute – i.e. mortgage-backed securities for which the mortgages are not fully documented.

    Enforcement of procedural standards is tricky, and even more when enforcement has no coercive power. The threat of future bankruptcy is not real to sociopaths who see immediate profit and expect to evade the consequences – people like, say, David and Branden Bell.

    The decline in transaction costs has enabled this increased complexity, and that has created great opportunities for such types.

  26. Dan  •  Sep 28, 2011 @6:05 pm

    @ Hasdrubal – There's a lot of free software programs out there. If I had to find, install and configure each of the ones I needed to change my PC from lump of metal and plastic into something useful, I'd be in a lot of trouble. Fortunately, there are large numbers of "distributions" I can choose among, which bundle various of these together – I just download and install a single thing. I imagine that in a world with significantly smaller or no states, third parties would bundle all sorts of things together for your convenience (perhaps a common client might be homeowners associations?). Choose the one you like best. I don't think we've reinvented government here, as I imagine there would be some choice among competitors.

  27. Mad Rocket Scientist  •  Sep 29, 2011 @2:07 pm

    Re: Assurance Contracts

    Anyone ever heard of Kickstarter?

  28. TJIC  •  Sep 29, 2011 @2:09 pm

    @Mad Rocket Scientist

    > Anyone ever heard of Kickstarter?

    If we hadn't already, we would have when we read this post, which linked to it (see the anchor text " been embraced by the hipster set ")

  29. Mad Rocket Scientist  •  Sep 29, 2011 @2:37 pm

    Ah, thanks TJIC, I missed that (there are a lot of links there).

  30. TJIC  •  Sep 29, 2011 @2:49 pm

    > Ah, thanks TJIC, I missed that

    I saw the word "Hipstr" and had to mouse over the link to see what it was referring to!

  31. John David Galt  •  Oct 1, 2011 @11:09 am

    What your theory is missing, I think, is that "nuanced bottom-up coordination" is not just hard: most people, on some level, have chosen to be mutual enemies (for instance, the greens don't want enough roads and fuel to be available for me to drive as often as I'm willing to pay the real cost of the privilege; while I don't want enough of a welfare state to be available to support most of the people now receiving dole payments). One way or another, someone is going to win each one of these arguments. Either we call that winner "the state" and live with it, or we become a feud society, where everyone who has a beef with somebody and is willing to use force can.

    And this leads us to an effect of technology I don't think you have adequately considered. While Moore's Law may or may not improve the cost/benefit ratio of traditional government, it is very likely to improve the cost/benefit ratio to a particular individual of efforts on his part to bully other people and thus become, in some sense, a government. Cheap computing makes it all the easier to be the next Osama Bin Laden, and all the more difficult for the rest of us to defend against him. If the trend continues, the result may very well be a future like a cyberpunk novel, where a few people like Al Gore, George Soros, and Rupert Murdoch are never seen but are really giving the orders, and the rest of us have no security at all.

    This may have already happened. In which case government as we know it is a sham and a shell game.