Anarchy Unbound Why Self-Governance Works Better Than You Think In Anarchy Unbound, Peter T. Leeson uses rational choice theory to explore the benefits of self-governance. Relying on experience from the past and present, Professor Leeson provides evidence of anarchy “working” where it is least expected to do so and explains how this is possible. Provocatively, Leeson argues that in some cases anarchy may even outperform government as a system of social organization, and demonstrates where this may occur. Anarchy Unbound challenges the conventional self-governance wisdom. It showcases the incredible ingenuity of private individuals to secure social cooperation without government and how their surprising means of doing so can be superior to reliance on the state. PETER T. LEESON is Professor of Economics and the BB&T Professor for the Study of Capitalism at George Mason University. He is also the North American editor of Public Choice. Previously, he was a Visiting Professor of Economics at the University of Chicago, the F.A. Hayek Fellow at the London School of Economics, and a Visiting Fellow in Political Economy and Government at Harvard University. Professor Leeson is the author of The Invisible Hook: The Hidden Economics of Pirates (2009) and a recipient of the Fund for the Study of Spontaneous Order's Hayek Prize, which he received for his research on self- governance. Cambridge Studies in Economics, Choice, and Society Founding Editors Timur Kuran Duke University Peter J. Boettke George Mason University This interdisciplinary series promotes original theoretical and empirical research as well as integrative syntheses involving links between individual choice, institutions, and social outcomes. Contributions are welcome from across the social sciences, particularly in the areas where economic analysis is joined with other disciplines, such as comparative political economy, new institutional economics, and behavioral economics. For a list of titles published in the series, please see end of book. Anarchy Unbound Why Self-Governance Works Better Than You Think Peter T. Leeson George Mason University 32 Avenue of the Americas, New York, NY 10013-2473, USA Cambridge University Press is part of the University of Cambridge. It furthers the University's mission by disseminating knowledge in the pursuit of education, learning, and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781107629707 © Peter T. Leeson 2014 This publication is in copyright. Subject to statutory exception> and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2014 Printed in the United States of America A catalog record for this publication is available from the British Library. Library of Congress Cataloging in Publication Data Leeson, Peter T., 1979– Anarchy unbound : why self-governance works better than you think / Peter T. Leeson, George Mason University, VA. pages cm. – (Cambridge studies in economics, choice, and society) Includes bibliographical references and index. ISBN 978-1-107-02580-6 (hardback) – ISBN 978-1-10762970-7 (paperback) 1. Anarchism. 2. Autonomy. I. Title. HX833.L4135 2014 321ʹ.07–dc23 2013024739 ISBN 978-1-107-02580-6 Hardback ISBN 978-1-10762970-7 Paperback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party Internet Web sites referred to in this publication and does not guarantee that any content on such Web sites is, or will remain, accurate or appropriate. In loving memory of Douglas Bruce Rogers: student, collaborator, and friend Contents Acknowledgments 1 Anarchy Unbound Part I. Self-Governance and the Problem of Social Diversity 2 Social Distance and Self-Enforcing Exchange 3 The Laws of Lawlessness Part II. Self-Governance and the Problem of Violence 4 Trading with Bandits 5 Efficient Plunder Part III. Self-Governance and the Problem of “Bad Apples” 6 Pirates’ Private Order 7 Criminal Constitutions Part IV. Self-Governance as Superior to the State 8 Efficient Anarchy 9 Better Off Stateless 10 An Argument for Anarchy in LDCs 11 A Future for Thinking about Self-Governance References Index Acknowledgments The ideas presented in Chapters 5, 7, and 10 of this book were developed with coauthors to whom I’m greatly indebted: Alex Nowrasteh, David Skarbek, and Claudia Williamson. I also thank Scott Parris, my editor at Cambridge University Press, and Peter Boettke and Timur Kuran, the editors of Cambridge Studies in Economics, Choice, and Society, the series in which this book appears, for their encouragement and for providing me the opportunity to share my thinking about self-governance with others. As usual, Chris Coyne provided excellent thoughts and suggestions, which improved my discussion considerably. My discussion also benefited from the comments of three anonymous reviewers. Finally, I thank the Earhart Foundation for generously supporting this book. 1 Anarchy Unbound This book consists of several essays. Their central argument is simple: anarchy works better than you think. My thesis sets a low argumentative bar. If you're like most people, you don't think anarchy works at all. Such readers are in good company. One of the most important figures in the history of social thought, Thomas Hobbes, shared that thinking. In 1651 Hobbes famously described life in anarchy as “solitary, poor, nasty, brutish, and short.” His reasoning is familiar. In anarchy, property is unprotected: there's nothing to prevent the strong from plundering the weak, the unscrupulous from bamboozling the unwitting, and the dishonest from defrauding the honest. There's no social cooperation, only social conflict, no civilization, only chaos. Hobbes's path out of this anarchic jungle was government. By making and enforcing rules that protect individuals’ property, he argued, government will create social harmony. Indeed, government will create society. Hobbes was wrong – on both counts. Individuals have secured property protection and social cooperation without government and still do. Moreover, in much of the world, government has proved to be the greatest depredator of property rights, creator of conflict, and instigator of chaos, rather than an innocuous antidote to anarchic afflictions. Governance – social rules that protect individuals’ property and institutions of their enforcement – doesn't require government, which is but one means of supplying governance. Hobbes overlooked the possibility of self-governance: privately created social rules and institutions of their enforcement. He also underestimated the possibility of truly horrible governments. It's therefore unsurprising that he saw anarchy as anathema to society and government as its savior. Some readers may not be quite so optimistic about government, or quite so pessimistic about anarchy, as Hobbes was. Today it's widely acknowledged that many governments fail to live up to what their advocates hope for. Indeed, some