Libertarianism in action

Last night’s Tellybox offered us some thought-provoking political insights. I refer, of course, to BBC2’s Welcome to Lagos, the story of scavengers at the vast Olusosun rubbish tip. The curious thing is that this society seemed close to a libertarian idyll.
Not only did the scavengers sell on any rubbish of any value, but a market arose to satisfy their own needs; the tip had a café and even a manicurist. And at the nearby cattle market, every part of the cow except the hair was used for profit; even the blood that would otherwise drain away was scooped up and turned to chickenfeed.
In this sense, we saw the free market in its perfect form: sole traders exploiting every tiny profit opportunity; the minute division of labour; hard work, energy and entrepreneurship; the  lack of any waste.
We also saw that the market policed itself. The scavengers claimed that they trusted each other - though whether this was because market transactions bred bourgeois virtues, or because they threatened to burn to death suspected thieves, was unclear. What was clear, though, was that they didn’t need the state to solve their disputes.
We even saw a libertarian-type scheme of criminal restitution. When one scavenger half-blinded another in a nightclub fight, he was arrested and charged. However, because the Nigerian criminal justice system is so slow, his victim’s family offered to drop the charges if restitution was made. After some haggling, this happened. Both sides seemed to prefer this to the state’s justice.
And here’s the punchline. Although everyone was dirt-poor by western standards, they seemed happy and optimistic; there was, I suspect, more laughter and good spirits in this programme than one would get in a documentary about an English council estate. Is this because of some cultural factors that make Nigerians generally happy? Is it because they are deluding themselves? Or could it be that freedom, even amidst poverty, creates happiness?
This, though, is not the only question. The programme raised others. Why is it that the societies that come closest to the libertarian ideal are poor ones, rather than rich? (It would, I think, be a stretch to argue that libertarianism causes poverty in this case). What is it about wealthier societies that brings with them bigger government?

Comments

[Miguel Madeira]

Theory:

1) Low capital-intensive technology creates a) poverty; and b) much self-employment

2) self-employment creates a libertarian environment (without great differences between bosses and employes, there is less motivation for the sate to intervene to help one of the sides)

Them, povert yand libertarianism are both consequences of low capital-intensivness

[chris c]

What is it about wealthier societies that brings with them bigger government?

Well, I'll have a guess. Not everyone in the wealthier societies is really wealthy enough to afford to pay the people they'd need to protect them if the State didn't exist. Therefore it makes sense for the merely wealthy to insist on the existence of a State to protect their property, as opposed to the very wealthy, who tend to be so rich as to be generally able to ignore things like national borders and employ their own private people, paying them well enough and treating them well enough to be able to avoid the nastiness of being robbed by their own guards. In order to avoid being robbed by their own guards, should they still employ them, the merely wealthy need the State.

Similarly, geopolitically speaking, the more attractive a country's society, geography and economy are, the more likely they are to be attacked by another. Loss in war would in turn would deprive the merely wealthy of their own properties, so it makes good sense to foster a large government capable of raising a large armed force with advanced technology and great economic backing to stop you being robbed by the people of the bad countries.

Naturally, some countries suck at fighting but still punch economic weight - in order for them to not be robbed by their own guards, they need some kind of supra-national organisation...

That's my guess, anyway. Libertarian ideals are only attractive when they're an ideal. The reality is messy and involves people getting killed for their cars.

You may have missed something though - was it just because the Nigerian criminal justice system is slow, or were the family of the victim also Muslim and willing to take blood money in restitution? That may not be strictly libertarian in principle, but theological.

[John Meredith]

"Why is it that the societies that come closest to the libertarian ideal are poor ones, rather than rich? "

Presumably because when the stakes get bigger it is worth organising to sieze the wealth for your particular group? The cost of doing this in poorer environments would be too high when set against the possible gains.

[Jock]

Chris, there's an essay or maybe a lecture kicking about somewhere by Peter Leeson that talks about this. Essentially nobody is saying that anarchy in any given context is going instantly to propel that community to better than the best liberal democracy. It matters where it started from.

So, the short period of proper anarchy in Somalia (not, as many wrong claim everything since Said Barre, but the three years or so after Barre only and before the "international community" decided it was too offended by a stateless entity, was better than Barre's regime on many measures, but not better than, say, any of western Europe or North America. And by all reports of this program, that I didn't watch, though as an ex-resident of Lagos I am now interested to see it if it's on iPlayer, a similar thing is happening in this one small community.

And Miguel, I think your conclusion is a non-sequitur. What you can conclude from your two premises is that libertarianism can be a very efficient route out of abject poverty in conditions of low capital intensiveness. I don't think you can conclude that libertarianism is a consequence of low capital intensiveness.

Having said that, if you read either or both of Kevin Carson's main works - Mutualist Political Economy [ http://www.mutualist.org/id47.html ] or Organisational Theory [ http://www.mutualist.org/id114.html ] - we do believe that anarchy is a leaner, cleaner, greener, more human scale, way of spreading wealth through small scale ownership, self employment and, where necessary, co-operation.

But all-in-all there's nothing wrong with low capital intensiveness is there? As a general idea I mean. So long as there is a mechanism available for pooling that when you need to carry out bigger projects.

[RH]

Its the philosophy of live and let live that probably makes this happen. Its more to do with culture.You cannot be self centred to the point of denying others the advantages that you enjoy. Mrs Thatcher is the real watershed in this country. Government - and people- became less caring after her. Incidentally she was for less -and not for more - government.

[Jim]

"What is it about wealthier societies that brings with them bigger government?"

Not too complicated, really. Lots of people want what big government has to offer, as long as they can afford it, as long as they're confident they'll be able to avail of its services, and as long as it's not too horribly corrupt. None of those seem to apply for many people in Lagos at the moment.

[Nick]

Big government is a luxury that only rich countries can afford. For libertarians, It's one cost of prosperity, worth accepting but only after haggling the size of it down as much as possible.

[charlieman]

There has to be a bit more to it than that, Jim. Like, why do people want big government in the first place?

In the workplace, people generally demonstrate a desire to be managed. If there is no effective formal leadership, "natural leaders" fill the void for good or ill. In technical environments and large companies, formal management procedures and hierarchies are imposed from above. Only contrary geeks want to work for a leaderless company.

By definition, formal procedures are inflexible and create another set of problems. Workers at the bottom or middle feel constrained and unproductive, and those at the top ignore formal process for their pet projects. Alas, when you talk to workers who suffer from formal management, they'll discuss what is wrong with the current process and suggest a different methodology that will lead to the same dead end.

I presume that worker controlled companies like Baxi have to use some formal management -- regulation of the products that they produce require it -- so there is a way around it for most organisations. There must be a few other recipes for utilising employee intelligence and self management, whilst satisfying regulators.

But there is something wired into most employees that there is a magical management system that will deliver better results. It may occasionally be true in serial production where the company makes 10,000 identical widgets, but that scenario is unusual.

That wiring applies to expectations of government too. Voters assume that managerial party X can successfully replace managerial party Y. Managerialism per se is questioned by the right, but the debates are usually negative and unproductive. The left is lousy at asking questions and accepts managerialism, ignoring the fact that managerialism is the source of most voter complaints.

[Paul Sagar]

I wonder, what is the status of women - and how secure are their rights - in this libertarian paradise you describe.

And also, why does your post not control for the fact that TV is a terrible research medium? Recall that editors have enormous power to introduce their favoured spin, and that people act differently when they are on camera...

Not saying you don't raise interesting points. But it seems a little one sided.

[Paul Sagar]

"Presumably because when the stakes get bigger it is worth organising to sieze the wealth for your particular group? The cost of doing this in poorer environments would be too high when set against the possible gains."

Bloody hell John Meredith makes a good point.

I do wonder if he's realised that it may lead him into a class-based analysis of socio-economic and political power. Which won't sit at all well with kicking back and letting the market sort it all out...

[Bob]

Free time.

[Shuggy]

"What is it about wealthier societies that brings with them bigger government?"

The long postwar boom in the Western European economies and in the United States was based on two things: the growth in international trade and the growth in government. This leads to a conclusion that you may not like. Historically bigger government has been a *cause* of wealth and not just a result. It's the history of the Soviet Union that has blinded a generation of 'libertarians' to this fact but even *that* history has a few inconvenient truths for the economic liberal.

[ad]

The art of government is making sure that people do not realise that you are bribing them with their own money.

Or their childrens money, as the case may be.

[Nathan]

We may all need to be aware of a post hoc ergo propter hoc fallacy here though.

When you look at the postwar "boom" you have to consider bastiat's broken window (devastation caused by conflict between states/governments), plus the massively unequal distributions of the subsequent profits. If the growth of government has been a cause of wealth, it is a bit difficult to say that it also isn't the cause of massive inequality worldwide (something commonly blamed on the "free market" as if international trade agreements don't have anything to do with it).

I suppose the main point is that it's very easy to explain the effects you like as being caused by expanding government activity while forgetting that it is also implicated in everything you don't like about the current state of the world.

Also, there seems to be a little problem with the comments here in considering government something that people "chose" to afford, when in western europe all of the states are old monarchies patched up with "socialist" policies - for most of history the state has served the elite in power and is not "chosen" by people in general as something that provides services in preference to any alternative that involves less government power. The services we get are all slapped on to an old system which seems to fundamentally favour the people who already have large reserves of wealth.

At best the growth of government offers diminishing returns as far as I can see, and the era of the powerful nation-state may end up just being another episode in human history.

[Tom]

I'd suggest this is more to do with better, smaller, more human community, than 'liberty' or money.

[John Meredith]

"Bloody hell John Meredith makes a good point."

I am genuinely moved by that tribute, I wish you would tell my mother.

"I do wonder if he's realised that it may lead him into a class-based analysis of socio-economic and political power."

I thought I started from a class-based analysis of power, which is why I am a libertarian. Marx was a rather good sociologist even if he was a weak economist. Did you think recognising class functions (which Marx was hardly the first to do, of course) inevitably drives you towards socialism and all the new classes it creates ithout, it seems to me, elimibnating any of the old ones?

[chris c]

@Nathan

"Also, there seems to be a little problem with the comments here in considering government something that people "chose" to afford, when in western europe all of the states are old monarchies patched up with "socialist" policies - for most of history the state has served the elite in power and is not "chosen" by people in general as something that provides services in preference to any alternative that involves less government power. The services we get are all slapped on to an old system which seems to fundamentally favour the people who already have large reserves of wealth."

All systems favour those who already have large reserves of wealth, with the possible exception of the time of the revolutionary conjunction - but that's not a system, that's an event. Those who have nothing are rarely in the position to take anything, hence the success of the feudal system.

I wish I could find a cognitive bias with which to describe the statement "in western europe all of the states are old monarchies patched up with "socialist" policies" - but I don't think you could come up with anything more descriptive than Just Plain Wrong.

http://en.wikipedia.org/wiki/Monarchies_in_Europe

[Pete]

I think the answer here is probably a mix of Coase and Galbraith. The sort of large, research-intensive projects associated with a developed economy tend to require organisation and planning on a level that can't be provided through the market. If you're scavenging garbage for sale on the same day, you can do it as a lone individual, or in groups without too rigid an organisational structure. If you're sinking millions into designing micro-chips to power the next generation of PCs, you actually need to follow some sort of plan, which means a corporation, or some other sort of command and control structure.

Essentially, markets don't scale nearly as well as libertarians pretend they do.

[Pete]

Also, if there's no government to guarantee property rights, aren't we talking about anarchism rather than libertarianism?

I think that's probably quite an important point, because the libertarian reliance on the force of the state for property rights means that - as much as they may whinge about it - they never want to get rid of government. They just want it to do all the things that suit them and nothing else.

One thing that the Lagos example suggests is that anarchism may actually be a far more workable model than a lot of libertarians like to pretend.

[John Meredith]

"They just want it to do all the things that suit them and nothing else."

Is there anyone for whom this wouldn't be true?

[Pete]

@ John Meredith

Anarchists.

[Ian Bennett]

"Lots of people want what big government has to offer" (Jim | April 16, 2010 at 05:44 PM).

Yes; other people's money. There's no point plundering the productive when no-one's producing anything, but as soon as a few people are creating wealth, there's the opportunity for the parasites to live off of them. That can only happen with the assistance of the state, and the parasites will vote for a government that facilitates it.

[Olirh]

Imagine a much bigger market place, and see how its bigger because of government intervention.
Imagine how the waste being collected has to be certified and weighed - this needs an impartial outside certification, which costs. You add this cost to your prices, as does everyone else in the system. Do this for every other aspect of the trade (waste certification, insurance etc) and again, add these costs to your prices.

The end result is that government intervention has created a whole industry which employs people who are legally installed parasites onto the original business. They do serve a dubious purpose, however, it isn't to the original members of the marketplace. What they do is to help increase the turnover of the business, which helps employ more people, which eventually creates a bigger economy - which my its definition is wealthier.

Wow - having written this, I realise that governments do create jobs (even if they are just creating price inflation to pay for it) - argh, what a horrible fact to have to admit!
Of course, these jobs don't create any benefit to the market if there is a legal requirement in having the extra services. Phew, I feel better now!

[Pietro M.]

Very nice post.

Starting from a situation of no formal institution and no informal rules of conduct, which might be called anomy, there are instances in which the latter form much earlier than the former.

The economic organization of the POW camp saw cigarettes becoming the foundation of a price system quite naturally. Nigerian scavengers show the same pattern, as examples I've heard about of self-generated rules, regulations and entire legal systems (maybe the Law Merchants).

But freedom is a public good: it benefits everyone, but none in particular. Wait some time and a hierarchical structure will form, and the libertarian scavengers will become citizens of the Free Republic of the Wasteland, and a political elite will form and rule the rest of society.

Just a matter of time. In the West, it took centuries... but power has private benefits and public costs, and thus it is a public evil, whereas liberty is a public good. No doubt about which of the two will win in the long run: we are living in a tragedy of the commons and have no clue about how to solve it, mass democracy have only made things worse because there has never been so much concentration of power and loss of social capital.

It's not wealth, in conclusion, that begets power: it's time. Soon after the establishment of the Free Republic of the Wasteland, the libertarian scavengers will lose all of their social capital and will become incapable of cooperating without the loving care of their political elite, just like Tocqueville's Americans could do everything by themselves, and present-day Americans need a loan from a chinese peasant.

[Francesco Russo]

The causality could be inverted. As someone above argued, it could be that big-governments can prosper only in rich countries.

Simple correlation does not say anything in this case: I think a good 2SLS is nedeed here.