In fact Scott does not argue that his book supports anarchism, that is my interpretation. Scott shows that central planners not only map a simplification of the real world (map is not the territory idea) but they soon start forcing the real world to be like their map. Village houses are destroyed for being out of the straight line of houses. This is not more efficient for farming, even in the central planners' view, but it is easier for them to count the houses. Of course destroying a family home is a fairly small atrocity but it is also done for a trivial reason. If central planning inexorably leads to atrocities, even when not done for personal enrichment of the planners, then mere market failure doesn't seem that bad. Every description of market failure I have ever heard turns out to be one of two things. First, the result of extensive government meddling in a market where the tiny portion which is really free-market is blamed for the failure. The banking crisis was market failure in some eyes yet Title 12 of the CFR has 1899 sections, most with multiple sub-sections. These regulations were enforced by fines and court proceedings. The regulators may have been incompetent but they were not powerless. Second, genuine market failures are always fairly trivial. E.g. blind people can't use e-readers because the market fails them. Until 10 years ago nobody on the planet had an e-reader but now it is a travesty that blind people can't use them yet.
External costs are valid if a party is being harmed by the actions of another party. In such cases a dispute system of some kind may be required. Such a system may even require enforcement by violence. Obviously this enforcement is not what we would normally call a market mechanism. Hence it could be regarded as a market failure. Even here however a market solution is better than each aggrieved party simply opening fire on the other party. Referring such incidents to a protection/insurance agency allows for a professional approach to dispute resolution. Some goods are public, such as oxygen. If the supply was ever scarce enough there would be some market process to deal with it.
Thank you for your reply. A question, and a comment:
1) How would your insurance scheme work? E.g., an alleged polluter has a class-action suit brought against it, and then their insurance company pays? Does the law require some parties to be insured?
2) Goods not only have to be scarce (i.e., rivalrous), but also able to be parceled and controlled (i.e., excludable) in order to be marketed. So, in principle oxygen, if scarce enough, could be sold in gas cylinders. However, given the ubiquity of air, it is recognized to be more globally efficient to make sure it is clean and environmentally sustainable. A similar argument applies to fisheries, clean water, public safety, etc.
Perhaps the most perfect public good is the state itself, as the final arbiter of disputes.
The law does not require insurance but a polluter will make a lot of enemies, all of whom are armed. Polluters will find it cheaper to pay for damage than to pay for a small army to defend their property. Localised pollution is easy to detect and prevent. Global pollution is more difficult but a global insurance corporation can buy from individuals the right to represent their interests against global polluters. Polluters will find it cheaper to reduce pollution than to defend against attacks. Of course such a global insurer poses some risk of abuse but there will always be parties willing to point out its crimes. The state is the 'final arbiter of disputes' but what possible incentive does it have to be honest and fair? A non-state arbiter can never be final but disputes have costs for all parties. As long as incentives are not perverted (as government law often does) parties will usually settle a dispute after a few rounds of sue and counter-sue.
* Your global insurer sounds like a non-territorial state. I don't see any theoretical problems with it if the parties are rational. However, they are often not in real life. I think the situation will be like gangs with overlapping turf.
* I think traditional states have some incentive to be fair and honest if they are transparent and representative, i.e. democratic.
My idea is radical but simple : balance of firepower is the only thing that keeps people honest and respectful of each other's rights. When one group, howsoever formed, has almost all the weapons and another group is comparatively disarmed; then the first group will loot and enslave the other. This is the prime lesson of all recorded history as far as I can tell. Ethical barriers are either totally neglected or the strong group finds some sophistical reason why the weaker group 'deserves' to be looted. This theory applies whether the stronger group is an official 'legitimate' government or a barbarian horde or a street gang.
I agree that this has been the story of most of human history. But I also think that things have been changing since the jet and information ages. With enhanced mobility and ease of information group identity is more fluid than ever. The sectarian violence we see now in the world is not the same old ethnic/religious clash, but a reaction to modernity.
In some sense, the United States was ahead of its time.
So the Hatfields and the McCoy's were honest and respectful of each other's rights? How about the Bloods and the Crips?
Human beings demonstrably do not respond to a variety of incentives in the way your model suggests they ought.
Medieval Iceland was a functioning and fairly peaceful semi-anarchy for a while, although it proved to be massively unstable against statist encroachments, which makes it a very poor poster-child for anarchy. Modern Somalia is more representative of how human beings respond to "failed states", and the reason why they are considered failures is because they do not provide the basic security and stability that states do, and human beings overwhelmingly value those over all other things.
Furthermore, nothing like a corporation could exist outside of the rule of law, which would strip anarchy of the vast productive benefits that the corporate form of organization has given to stated communities.
Incentives are modulated by technology. In medieval times weapons required strength and long training to be effective in combat. Killing with a rifle or RPG can be taught in a single afternoon. The best trained and equipped army in history was challenged in Iraq for years by an enemy only 20% the size in manpower and probably 0.01% of the budget.
First, the result of extensive government meddling in a market where the tiny portion which is really free-market is blamed for the failure. The banking crisis was market failure in some eyes yet Title 12 of the CFR has 1899 sections, most with multiple sub-sections. These regulations were enforced by fines and court proceedings. The regulators may have been incompetent but they were not powerless.
Second, genuine market failures are always fairly trivial. E.g. blind people can't use e-readers because the market fails them. Until 10 years ago nobody on the planet had an e-reader but now it is a travesty that blind people can't use them yet.
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Some goods are public, such as oxygen. If the supply was ever scarce enough there would be some market process to deal with it.
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1) How would your insurance scheme work? E.g., an alleged polluter has a class-action suit brought against it, and then their insurance company pays? Does the law require some parties to be insured?
2) Goods not only have to be scarce (i.e., rivalrous), but also able to be parceled and controlled (i.e., excludable) in order to be marketed. So, in principle oxygen, if scarce enough, could be sold in gas cylinders. However, given the ubiquity of air, it is recognized to be more globally efficient to make sure it is clean and environmentally sustainable. A similar argument applies to fisheries, clean water, public safety, etc.
Perhaps the most perfect public good is the state itself, as the final arbiter of disputes.
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Localised pollution is easy to detect and prevent. Global pollution is more difficult but a global insurance corporation can buy from individuals the right to represent their interests against global polluters. Polluters will find it cheaper to reduce pollution than to defend against attacks. Of course such a global insurer poses some risk of abuse but there will always be parties willing to point out its crimes.
The state is the 'final arbiter of disputes' but what possible incentive does it have to be honest and fair? A non-state arbiter can never be final but disputes have costs for all parties. As long as incentives are not perverted (as government law often does) parties will usually settle a dispute after a few rounds of sue and counter-sue.
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* I think traditional states have some incentive to be fair and honest if they are transparent and representative, i.e. democratic.
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In some sense, the United States was ahead of its time.
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Human beings demonstrably do not respond to a variety of incentives in the way your model suggests they ought.
Medieval Iceland was a functioning and fairly peaceful semi-anarchy for a while, although it proved to be massively unstable against statist encroachments, which makes it a very poor poster-child for anarchy. Modern Somalia is more representative of how human beings respond to "failed states", and the reason why they are considered failures is because they do not provide the basic security and stability that states do, and human beings overwhelmingly value those over all other things.
Furthermore, nothing like a corporation could exist outside of the rule of law, which would strip anarchy of the vast productive benefits that the corporate form of organization has given to stated communities.
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