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An Introduction to Anarcho-Capitalism

A comprehensive look at the philosophy and ideology of anarcho-capitalism, including its founders, sects, beliefs, and justifications.

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By Harley Austin

Anarcho-Capitalism, the ideology of an absolutely free market and the abolishment of the state, is a relatively new ideology that has been gaining popularity in recent years. It is the youngest form of anarchism and the most prominent right-anarchist ideology. Many might be familiar with the internet memes associated with anarcho-capitalism (or “ancaps”), which are satirical straw-mans that don’t represent the ideology itself. However, the actual principles behind anarcho-capitalism are relatively unknown.

The term “anarcho-capitalism” was coined in the mid-1900s by Austrian-School economist Murray Rothbard, the founder of the ideology. Rothbard combined Austrian economics with the beliefs of radical classical-liberals and American individualist anarchists to form anarcho-capitalism. From Austrian economics came the subjective theory of value and the beliefs in the free market. The radical classical-liberals, notably Frederic Bastiat and Gustave de Molinari, inspired the ancap principles of natural rights and views on the role of government. And, most importantly, the individualist anarchists, especially Lysander Spooner and Benjamin Tucker, inspired the ancap beliefs in anarchism and the rights of the individual.

Anarcho-capitalist symbols include a black and yellow flag divided diagonally, similar to all other anarchist philosophies, and the traditional anarchy vector but yellow. Black symbolizes anarchy and the yellow symbolizes capitalism.

Since its inception, anarcho-capitalism has grown in numbers and influence, mostly among the libertarian community. To understand this, we must analyze the central principles of the ideology.

What is Anarcho-Capitalism?

Many people are unaware of the central principles of anarcho-capitalism. To those familiar with libertarian beliefs, ancap beliefs are similar to those and applied consistently.

Individual Rights

The foundation for all of anarcho-capitalism is the belief in individual, natural, and inalienable rights. According to anarcho-capitalism, all rights are property rights, and therefore all individuals have a right to their property and person (an extension of property rights). This is a very long and detailed topic that should be familiar to anyone who knows Objectivist ethics.

To put it simply, all people are sovereign, free-thinking individuals with free will, therefore we are born with ownership over ourselves. This self-ownership is the foundational property right for all others. A person cannot own another person 1. because that is slavery, which violates the person’s self-ownership and 2. the human will is inalienable, therefore it cannot be given away through either coercive or voluntary means.

Since we all own ourselves, we also own things that we create with our labor, known as property (in a much more complex civilization like our own this gets significantly more complicated). Since we own our property and ourselves, we also have the right to trade both property and labor in voluntary exchanges, which becomes the free market and will be discussed later. These individual rights of all people cannot be violated by others.

The Non-Aggression Principle

Libertarianism holds that the only proper role of violence is to defend person and property against violence, that any use of violence that goes beyond such just defense is itself aggressive, unjust, and criminal.” -Murray Rothbard

The violation of individuals rights is achieved through the threat or actual use of force. Violations of the ownership over ourselves include murder, assault, etc., which are obviously immoral, and violations of the ownership over property include theft, vandalism, extortion, fraud, destruction of property, etc., which are also obviously immoral.

Anarcho-capitalism believes that all unjust uses of force are inherently immoral, which is also known as the non-aggression principle or NAP. The only “justified” use of force for self-defense against the unjust use of force. All people who violate the NAP are criminals and are liable to legal punishment to the extent of their violations of the victim and their rights.

The NAP allows for retribution to the extent of the crime committed. Therefore, if someone were to commit a crime, the victim would be allowed to retaliate to the extent of the crime or else he’d be committing unjust aggression. If a victim were to punish a criminal for more than the crime committed, then that victim would be a criminal aggressor and liable to legal punishment.

Free Market Capitalism

Since the unjust use of aggression is considered immoral, a system of voluntary interaction, or voluntarism, is preferred. This system of voluntary interaction therefore must include a system or voluntary exchange, known as free-market capitalism.

Since all restrictions of the market require coercion, victimless crimes, and statism, anarcho-capitalism rejects such laws (not to mention the utilitarian disapproval of the economic problems such restrictions create). Examples of coercive economic restrictions include taxes (theft), subsidies (redistributing stolen money), fiat currency (counterfeit), and regulations associated with current American corporatism/crony capitalism along with the massive amounts of coercion, murder, and property theft required by the various leftist ideologies.

Anarcho-capitalism supports an absolutely free market where property rights are respected and coercive monopolies (aka governments) have no harmful influences. All labor and goods would be freely traded to all willing to purchase.

Anarchy

The position that separates anarcho-capitalism from other right-libertarian ideologies is the views of governments. Anarcho-capitalism views government as inherently coercive based on its own nature and a monopoly on the use of force and protection services. All government actions, including its own existence, exist through using force on others, whether it be taxes, war, victimless crime laws, spying, etc. Because of its coercive nature, ancaps support the abolishment of all government and the creation of a privatized and voluntary society.

Instead of a violent, monopolistic, and coercive state, anarcho-capitalism would use the free market to bring about peace, prosperity, and protection through voluntary means. The methods through which this will be achieved primarily involve contractual relations, property rights, and private defense agencies.

Ancaps also view government as inherently anti-capitalist because government exists by stealing the property of other people through taxation. It exists as a coercive monopoly on the justice system and restricts the free market through regulations and arbitrary dictates. Because of this, the existence of government violates the capitalist principles of competition, individual rights, property rights, and voluntary interaction.

To quote Rothbard:

Since production must always precede predation, the free market is anterior to the State. The State has never been created by a “social contract”; it has always been born in conquest and exploitation.”

Variations

In terms of variations, anarcho-capitalism has small, but important variants. Differences and divisions among ancaps usually arise in the method of achieving it, but all agree on the foundational principles discussed above. The two primary sects of anarcho-capitalism are Rothbardianism, the largest, most general sect that focuses on economics, rights, and intellectual discussion, and Hoppeanism, a smaller branch based on the teachings of Hans Herman Hoppe that emphasizes traditional values and communities.

How would it work?

How an anarcho-capitalist society would run itself is also relatively unknown to most. To put it simply, the following are theorizations of how such a society would presumably be organized based on ancap principles. The actual outcomes can vary based on individual and societal choice so long as they follow voluntarism.

Property Rights and Contracts

In anarcho-capitalism, the protection of all peoples’ property rights is of utmost importance in order to prevent injustice. Society would be organized through voluntary exchange, which is likely to be done through the formulation of contracts.

The contract sets a legal term for an agreement and defines what is exchanged by both parties. In the case where property is exchanged, should someone receive property as part of a contract and then break said contract, they would be committing theft. Therefore, they would be contractually obligated to return said property or its value. In cases where a contract is made and broken but no property has been exchanged, then the breaker has every right to do that since he has not unjustly claimed any property. However, such a practice would be discouraged based on the legality of blacklisting, which is currently (and unjustly) banned by the state.

Privatization

Under anarcho-capitalism, all property and services would be privatized. On top of the typical private ownership of land, houses, and business services, private enterprise would also provide services that had previously, and poorly, monopolized by the government. From roads and post offices to police and courts, all forms of labor would be voluntarily sold on the free market at a market price.

In a “private” monopoly, it is common knowledge that a monopoly will raise prices and provide lower quality services. This basic principle is why free competition is such a necessity in a capitalist market.

Government is a monopoly on police, courts, law, money, and whatever other services it coercively monopolizes, which mainly includes roads, post offices, and now health care. We can clearly see through police brutality, punitive justice, inflation, poor road quality, and horrendous public health services that the same concept applies. In government, as in all other cases, monopoly powers have done nothing but raise prices (which we are forced to pay in taxes) and provide worse services to the people. Therefore, these services can, and should, be provided competitively by private companies.

Private Defense Agencies

While privatizing other services have been argued by most libertarians, the privatization of security sets anarcho-capitalism apart. Anarcho-capitalism advocates the replacement of the coercive monopoly of government with private defense agencies that provide police services. These agencies would compete with each other over customers that hire their services voluntarily. This method ensures that police protection is voluntarily and that the service itself is of a higher quality than the statist variant we currently have. With free competition, police officers would also be held to a much higher accountability, which would address the police brutality issue. Another important distinction is that private police officers and agencies are always subject to the law. Any invasions of a person’s rights done by these groups or companies would be equally as criminal as if it done by anyone else.

How these services will specifically be provided is entirely speculation and will most likely vary based on specific market demands. One way is the insurance model: which charges for protection services the same way health and car insurance do. This allows for a great deal of consumer choices and competition, which is healthy for the market. Another method is having large neighborhoods, notably country clubs and apartment buildings, hire a private defense agency and charge residents as part of a neighborhood fee or apartment rent. However, these are not requirements but instead speculations.

Private Courts and Prisons

Since the enforcement of law will be done privately, the justiciary and punitive side of law will also be privatized. Like police services, courts and prisons will also run privately and in a different way from our current system. Instead of focusing on punishment, an ancap system of law will be focused on protecting property rights and reimbursing the victim for the property lost.

To put it simply, when a crime is committed, a criminal violates the rights of the victim. As an aggressor, the criminal should be required to repay the victim to the extent of the rights violated in the crime. In the cases of physical property, this is relatively simple; damaged property requires the criminal to pay back the value of the property. The criminal would also have to pay for any court and medical fees accumulated.

This justice system would be handled by private courts, which function similarly to private police and could possibly be a part of the same company. Court fees would be passed to the criminal is found guilty or the defendant if the alleged wrongdoer is found not guilty. Judges and jurors would be privately hired and paid for their services. This way, jurors are paid for their labor instead of being forced by the state to perform labor against their will. This ensures free competition of justice instead of the state’s monopoly and prevents the victimless crimes that plague modern America.

Many people might say that this system will “result in corruption”. Not only is this heavily ironic given the massive corruption and favoritism that exists in our modern justice system, but it is also not true based on the economic incentives that come from free competition. When justice is competitive, honesty and integrity are key for courts since that affects their consumer base. Should it be revealed that judge, juror, or court is biased or gives false convictions, then their reputation, and therefore their consumer base, will decrease. Biased convictions from corrupt courts can also easily be overturned or ignored by other court systems. This way, the free market will naturally promote honest courts and punish those who are corrupt. This concept works similar to companies who gain bad reputations in the eyes of the public: bad decisions lead to boycotts and lower demand which lowers revenue.

How can it be achieved?

Now that the ideology of anarcho-capitalism has been explain, how it can be achieved must also be discussed. Unlike other ideologies, anarcho-capitalism doesn’t have a specific method that must be followed, but allows for any method that complied with the ancap principles of nonaggression, voluntarism, and property rights.

Agorism

One method is Agorism, the use of counter-economics and black markets to resist the state. Because the state relies on both our stolen money (taxes) and our participation (voting), depriving it of both will help lead to an anarchist society. Agorism is economic illegalism, which advocates for the circumvention or unjust dictates of the state such as taxes and regulations.

This creates a large underground marketplace known as the counter economy. As the counter economy grows, more and more people will see the benefits of trading though it rather than the heavily regulated and corporatist white market. This will starve the state of its income and supporters until it eventually collapses. Agorism also uses technology, especially the internet, to circumvent state restrictions and improve counter economic transactions.

However, while agorism is a more peaceful and efficient means of ending statism, it also takes a large quantity amount of time. Agorism involves a form of cultural shift from statism to freedom which can take generations, time that only some are willing to give.

Localization

This brings us to the newest method: localization. This concept, coined by American activist Adam Kokesh, involves progressively shrinking government and demanding self ownership until an government is abolished. This is done through the political process, something ancaps usually avoid.

The first step of this is Kokesh’s plans of dissolving the federal government. Then, the people would shrink the remaining government more and more, which in the process makes it more localized. As this happens, there will be an effort to strengthen local communities and promote self ownership. Eventually, governments becomes so localized that the average people will realize that they don’t need a government, and they will then dissolve it and create a voluntary society. Because this process occurs progressively and naturally, it will also be the orderly.

Kokesh describes localization like this:

Localization is dismantling governments from the top down, first restoring power to local communities with the end goal of eliminating all organized coercion, and establishing a voluntary society based on self-ownership and universal nonviolence. In many places, governments provide the best means available to achieve this through existing subdivisions and the electoral process.

In some places, localization will be most effective when central governments are simply overthrown, but it must be done with a clear rejection of any central government, not just to replace it with another.” –Freedom!, Adam Kokesh

Keep in mind that this is in no way meant to be the method of appealing to the political system like the current Libertarian Party does. In Freedom!, Kokesh describes the failures of that idea like this:

The alternative to localization is to fight inch by inch, law by law. If we adopt this strategy, we will continue to lose ground as politicians pat us on the head for engaging in the political process while they laugh and take another mile behind our backs. We will not achieve a free society by begging governments for freedom. We will do it by demanding immediate restoration of power to our communities. The first places to embrace this strategy will lead the world toward freedom. They will be the most prosperous and the most secure. It is crucial to reverse the trend of consolidation of power as soon as possible. The longer we wait, the more difficult it will be.”

This method is the most peaceful and orderly way of abolishing the state, and instills the voluntarist principles into the average person naturally. However, it also requires a large number of supporters in order to achieve, which is supposedly done through education and setting a working example through local communities. While in theory this appears to be the easiest method, convincing the great number of people who blindly support statism and defeating the massive institutional corruption, the media, and political systems (even the Libertarian Party), all of which are designed to prevent things like localization, will not be easy. This has caused some to view the idea as utopian, but with no other anarcho-capitalists in modern politics, many have shown support anyway despite the pessimism.

Secession

Finally, this brings us to the most straightforward method: secession. Similar to localization, this involves individuals turning away from the state, thereby depriving it of its authority. This method is simple, since government only exists because the people allow it to, then the withdrawal of all consent will bring its collapse. If a large mass of people were to stop paying taxes, stop sending their kids to public schools, stop joining the military, stop running for office, and stop acknowledging imaginary authority, then it could cripple the state.

As this continues, individual secession could encapsulate entire communities, similar to Randian “gulches”. Once people break away from the illusion of statism, then that’s when the paradigm shift from statism to freedom can begin. However, this also requires widespread and coordinated efforts, which is also not easy to achieve.

As with most other methods, the biggest key to building a free society will is education. The more we break the mentality of statist Stockholm syndrome and blind nationalism, the more we ween people towards responsibility, self ownership and freedom.

To quote Austin Petersen:

We have big government due to the mentality of those who believe everything they hate should be banned and everything they like should be subsidized.”

Breaking this mentality is the only way to bring about the end of the state. The key to anarcho-capitalism is spreading the word through any activism possible.

Debunking Fallacies/Criticisms

Now that the ideology has been explained, we must now clear up a lot of confusion that many tend to have. From the strawman memes that many are likely aware of, to statist Stockholm syndrome, to the fallacies of pseudo-intellectuals, anarcho-capitalism faces many fallacious criticisms.

Why Government Cannot Be Limited

We’ll start with the utopian nature of anarcho-capitalism’s more moderate counterpart: minarchism (the belief in a limited state). Minarchists will often accuse anarcho-capitalists of being “utopian”. However, when you look back on history, you have to ask: when has government ever remained limited? In large nations, especially the US, attempts to limit government have all failed miserable, including the US constitution. Those who somehow believe a piece of paper has limited the tyrannical US government are invited to look at all the spying, war, gun control, taxes, regulations, corporatism, and other tyrannies that have all conveniently been enacted despite the clear violations of our natural rights.

While the failures of the US constitution are an entirely separate separate story on their own, the major point is that governments cannot, by their own nature, be limited. The reason for this is simple: power. It is obvious that power (over others) corrupts, with even the smallest amount given creating a panicked hunger for more. This brings us to governments: the embodiment of coercive power. The promise of power through becoming elected officials usually attracts two types of people: power hungry demagogues and the handful of idealists who attempt to stop them. These idealists (minarchists) are easily outnumbered and outmatched by the statist politicians, the media, and the collective mob of voters: all of which beg for tyranny. All power corrupts or will corrupt, and limits on power only create a stronger desire for more.

While the abuse of power describes minarchy in theory, let’s take a look at the flaws of minarchy in practice. The first major problem that leads to minarchy’s failure is the limits themselves. Not only do states actively work around any limits placed on them, they use and manipulate limits to justify tyranny.

Rothbard describes this phenomenon like this:

…through the centuries men have formed concepts designed to check and limit the exercise of State rule; and, one after another, the State, using its intellectual allies, has been able to transform these concepts into intellectual rubber stamps of legitimacy and virtue to attach to its decrees and actions. Originally, in Western Europe, the concept of divine sovereignty held that the kings may rule only according to divine law; the kings turned the concept into a rubber stamp of divine approval for any of the kings’ actions. The concept of parliamentary democracy began as a popular check upon absolute monarchical rule; it ended with parliament being the essential part of the State and its every act totally sovereign.” The Anatomy of the State, Murray Rothbard

To put it simply, governments can and most certainly will work around any limits placed on them. We’ll use the United States, the most ambitious attempt to limit government, as our example. The government is supposedly “limited” by the US constitution, notably the Bill of Rights. However, in our modern age the government has used the constitution to justify tyrannies that directly violate the bill of rights, which is known as “implied powers” (aka powers the government gives itself that it shouldn’t have).

The government also contains the one entity that is supposed to limit it: the Supreme Court. While the whole concept of “separation of powers” is completely fallacious and laughably false, we’ll focus on the power of judicial review. While many may think this limits government, it is actually a tool to justify its actions. While the Supreme Court may prevent an action with the verdict of “unconstitutional”, the verdict of “constitutional” can, and has, been used as a rubber stamp for government action that violates our rights. From NSA Spying, to the PATRIOT Act, to gun control, to numerous other violations of our rights, the constitution is an absolute failure and has resulted in a tyranny far worse than the Founders could’ve dreamed of.

This brings us to another major problem that makes minarchy utopian: it requires an intelligent populace who actively want liberty. Anyone who is familiar with populism, nationalism, socialism, and any other form of collectivism will know that this absolutely does not occur often and, in the cases where it does occur, does not last for very long. This is especially true in democracies, where a blindly ignorant populace can vote themselves into tyranny.

We’ll use America an an example again. When this country was founded, the average American was dedicated to maintain liberty and actively willing to rebel against any government (including the US one) that was too overreaching. As time went on, the American people became more tolerant of statism and having their rights trampled on. Fast forward to today, where an idiotic populace, dumbed down by corporate media, votes for any politician who offers social programs, blindly worships government, its flags, and its goons, and is perfectly fine with having half their income stolen through taxes. The American people went from desiring liberty to slaves with Stockholm syndrome: worshipping the very thing that rules over them. And yet they still fight over which of the two identical statist parties is better, they still vote on Election Day thinking it matters, and they still stand proudly, hand on their hearts, for the flag that symbolized the warlords that steal from them. While power can certainly not be trusted with a few people, it also cannot be trusted to a large amount of people.

As Winston Churchill once said:

The best argument against democracy is a five minute conversation with the average voter.”

The worst part about this is that every time limited government fails, minarchists ignore the massive flaws and want to start it all over. Today, you can still see them squabbling over minor issues, saying “but if we had just done X then the state would never have expanded”. Like a Marxist saying “it wasn’t real socialism/communism”, the minarchist says “it wasn’t a real constitutional republic”. And in both cases, the problem is not some random occurrence that somehow ruined the whole system, the problem is that both are flawed and utopian ideas.

The Oxymoronic Nature of Anarcho-Communism

We will now discuss Anarcho-capitalism’s more well known rival: anarcho-communists. Anarcho-communists (or “Ancoms”) like to preach that their older ideology and anti-capitalism makes them the only “real anarchists”. However, based on their beliefs, this is laughable.

To start, ancoms commonly mistake the term anarchy, the absence of government, with the ideology of anarchism, the belief in the abolishment of all hierarchies. Left anarchists argue that the capitalist workplace is somehow “hierarchal” because there is a boss. However, a capitalist business has an owner because that business was created by that owner (or a previous one) from the extension of their own property rights and self ownership. From there, employees voluntarily sell their labor in exchange for currency. To claim that people don’t have the right to buy/sell labor is to say people don’t have the ownership over their own labor, which is absurd for any supposed anarchists.

Ancoms are also very willing to use force against those they don’t like. The ancom ideology of common ownership, like all forms of leftist economic views, requires a great deal of force over those who don’t comply. This is a major difference from anarcho-capitalism, which tolerates voluntary collectives/workers co-ops as long as no rights are violated. Ancoms, however, prefer to violently attack anyone they’re opposed to, which is what paints anarchism in a negative light and violates numerous anarchist principles.

First of all, forcing beliefs on others, stealing property, and murdering opposition is exactly what the state does, hence why communist revolutions always lead to the most absolute form of statism. Ancoms also somehow believe that they can force people to abandon their rights to property, their labor, and themselves without a state, which has proven to be false. This is why you’ll always hear them say “abolish capitalism” unlike the other anarchist branches that say “abolish the state”. This is because they know that their ideology cannot be instituted naturally and requires extreme external force, such as a state.

Force and coercion are the characteristics of the state, not anarchy, and should be abandoned by any ideology that claims to be anarchist.

“Anarchy is chaos!”

Now that the criticisms of the more knowledgeable have been explained, it’s time to discuss the ramblings of the state worshipers. The most major is the belief that “anarchy is chaos”. This is untrue and hypocritical in multiple ways.

First, the belief that without the protection racket called government, people will just magically start killing each other for no reason is absurd. This is known as “The Purge fallacy” and shows just how deeply rooted the political Stockholm syndrome has become. To those who believe this, ask yourself this: would you just start randomly killing people if the government were to collapse? Most likely not. Then ask if anyone you know would do something like that. No again. Humans are not animalistic barbarians that depend on a tyrannical authority to live our lives, we are intelligent, civilized, and capable of living peacefully. The first step to understanding anarchist philosophy is to break the mysticism that the state fabricated in order to justify itself to the public.

Another fallacy is that the absence of a tyrannical elite known as government would lead to “warlords and mob rule”. This is heavily ironic given that those same people will support populism and endless war overseas. The true warlords are the ones in D.C. who steal our money, take our rights, cause countless wars, and lock people in cages for resisting. It’s also very ironic to call the endless wars, police states, mass surveillance, and fear-mongering of our government “order” and to call the voluntary and peaceful concept of self-ownership and anarchy “chaos”.

“Corporations will become states!”

The idea that corporations will become all powerful PMC’s in the absent of government is also ridiculous. This belief stems from the American people’s association of our modern corporatist economy with “capitalism”. One thing should be made clear: the corporations of modern America have the size and influence they do today because of government intervention. The fundamentals of corporatism are way too long to discuss here, but to put it simply, corporations use government to crush competition and became like they are today.

An absolutely free-market (anarcho-capitalism) would have none of that. Companies would exist and thrive through the voluntary exchanges of capitalism and would have no right (or incentive) to violate the rights of individuals.

Anarcho-Capitalist Literature

Anarcho-capitalism is a complex ideology that is best discovered through reading its literature. Here are some of the more well known examples for those interested in learning about the ideology.

For a short and simple rundown of anarcho-capitalism:

Against the State: An Anarcho-Capitalist Manifesto by Lew Rockwell

The Ethics of Liberty by Murray Rothbard

For the concepts of natural rights and property rights:

For a New Liberty by Murray Rothbard

For how the state operates and why it can’t be limited:

The Anatomy of the State by Murray Rothbard

For privatized police services:

The Production of Security by Gustave de Molinari

For modern politics and localization:

Freedom! by Adam Kokesh


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  1. I dont think you have much of a clue abut what anarcho communism is about but whatever takes your fancy. Check this out incidentally. They’re talking about you guys https://libcom.org/forums/theory/intro-anarcho-capitalism-09102018#new

    Reply

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