Tuesday, January 28, 2014

Sorry Harry Binswanger, the Free Market Does Not Require Government

Harry Binswanger recently wrote an article in Forbes entitled "Sorry Libertarian Anarchists, Capitalism Requires Government." After a brief moment of being overjoyed by the fact that the term "Libertarian Anarchists" had made its way to the title of an article in Forbes, I read the article and immediately became incensed by the number of misrepresentations, bad arguments, and outright falsehoods that it contained. I was originally conflicted about writing a response; on the one hand, Binswanger's argument was not good enough to be worthy of a response, but on the other hand, I simply cannot allow such idiocy to stand unopposed.

There is much debate, especially among anarchists, as to how "capitalism" ought to be defined. This post is not intended to address that debate, so for the purpose of my rebuttal, I will use the same definition that Binswanger uses. Having been described as an orthodox Objectivist, it is quite safe to assume that he accepts Ayn Rand's definition of capitalism: "a social system based on the recognition of individual rights, including property rights, in which all property is privately owned."

One flaw in the Objectivist critique of anarchism becomes evident upon simply reading the Objectivist definition of the social system which they purport to champion. Rand claimed that in a truly capitalist society, "all property is privately owned." How then can a state exercise any power? State power is maintained though force. Subjects obey because the government has a lot of guns, and they don't mind using them. But are those guns not property? If we accept that "all property is privately owned" in the Objectivist's ideal society, then logically the government must either be private or unarmed.

Binswanger begins his article by claiming that "anarchists are ignoring the crucial, fundamental, life-and-death difference between trade and force." While defending this claim, he goes so far as to make the ridiculous assertion that "force is outside the realm of economics." From this ludicrous premise, he reasons that the economic laws which ensure that competition always improves the quality and affordability of goods and services simply do not apply to the debate about force. Anyone who has ever studied economics of any school can falsify his argument effortlessly. A major concern, if not the primary concern, of the study of economics is predicting how various government policies (i.e. force) will affect the market. But let us assume for the sake of argument that Binswanger is right and force truly is outside the realm of economics; does that not spell doom for the Objectivist state just as clearly as it does for the free market legal system? If force is completely outside the realm of economics, then the state can have no basis for knowing where to allocate its resources. It would be utterly incapable of determining how much protection to provide and how much to charge for its services. These problems are inherent to all monopoly services to a certain degree, but if Binswanger is right, his ideal state would be relegated to an epistemological abyss that makes the calculation problem seem like child's play.

He then displays total misunderstanding of the ideas of free-market legal theorists by claiming that any competition between people providing protection is an inherently violent conflict. He seems to be claiming that because the service being provided involves the use of force, the only way for providers to compete is by literally fighting for customers. This is clearly false; after all, gun companies compete to essentially sell protection to their customers, and I've never heard of Glock sending thugs to burn down a Beretta factory. What is meant by competition in the context of a free-market legal system is that multiple firms would be offering to protect their customers' rights and that market competition from other firms would force them to provide their services more effectively and at a lower price than if they held a monopoly. I would like to give him the benefit of the doubt and believe that this misrepresentation of anarchism is unintentional, but I simply can't fathom Harry Binswanger actually being that ignorant. It is clear by this point that he regards Ayn Rand's words as holy writ, and he is willing to lie to his readers in order to defend her flawed views on government.

Later on, he tries to prove that the anarchists' argument against a monopoly on force is incoherent because "that only shows that they cannot grasp what force is. Force is monopoly. To use force is to attempt to monopolize." This is of course a complete non sequitur. Yes, we recognize that force is used to subvert the will of others in a monopolistic way, but it does not follow that a monopoly on force is necessary. Some monopolies are inherently necessary, such as the monopolistic ownership of property. If we both want to bake a cake, we can't both use the same eggs to do so; one of us has to monopolize them. This is not true of the provision of protection through force. There is no tangible good known as "protection" that exists in a finite quantity and thus necessitates monopolization. Protection is a service which can be increased or decreased in quantity according to the laws of supply and demand. If I pay someone to protect me, our agreement increases the total quantity of protection in existence. Barring competition from the protection industry only serves to cause the same problems of inferior service and higher prices that are inherent to all monopolies.

Unfortunately, Binswanger's straw man argument against anarchism turned out to be the most coherent part of his article. There are many things that I could refute or mock, such as when he says, in subsequent sentences, that "force properly employed is used only in retaliation" and "the only moral use of force is in self-defense," but for the sake of brevity, I will keep this post focused only on his comments about anarchism and government.

As if the arguments against anarchism weren't bad enough, the arguments for government are even worse. His first defense of the existence of government is that "Governments are necessary–because we need to be secure from force initiated by criminals, terrorists, and foreign invaders." Can you imagine what kind of hell a society without government would be? People could steal from us, force us out of our homes, or if they were truly evil they could even kidnap us and force us to kill our fellow man. I guess Binswanger has been right all along. I sure am glad we have the government to protect us from such horrible things.

In typical contemporary Objectivist fashion, Binswanger goes on to defend the existing government by paying historically inaccurate homage to the United States Constitution. "The genius of the American system is that it limited government, reining it in by a Constitution, with checks and balances and the provision that no law can be passed unless it is “necessary and proper” to the government’s sole purpose: to protect individual rights." Is that so? I have a list of a few hundred laws that Binswanger must be unaware of. The government that the ratification of the Constitution created has been passing unjust laws for hundreds of years, so I guess his analysis is only judging the intent of the Constitution rather than the results that it actually provided. I'll address the actual intent of the Constitution later, but even if we're being as generous as possible and allowing all ambiguity to favor the side of liberty, the Constitution still has some serious flaws, such as authorizing the regulation of interstate commerce. It of course also authorized slavery, but if we are going with a truly generous reading, it is important to point out that slavery is not actually explicitly authorized anywhere in the text. Furthermore, if we are judging intent rather than results, would not the best possible Constitution simply be a piece of paper saying that no one can initiate force against another person or their property? The Constitution must be judged on the basis of what it actually created, and what it actually created is the leviathan state that Objectivists like Binswanger claim to oppose.

After attempting to describe what constitutes a just government, Binswanger asserts that "once such a government, or anything approaching it, has been established, there is no such thing as a “right” to “compete” with the government." First of all, that argument does not hold up in any other industry. Raising Cane's makes some pretty good chicken fingers, so I guess according to Binswanger there is no longer a right to compete with them by opening another restaurant that serves chicken fingers with sauce that follows approximately this recipe (you're welcome). And secondly, the US Constitution did not establish a voluntary government or anything approaching it. The Constitution was a step down from the Articles of Confederation in terms of personal liberty; in fact it was specifically made to exclude any language that would have forbidden the federal government from using "implied powers." Here is an excellent lecture by Sheldon Richman on the transition from the Articles of Confederation to the Constitution. Since the Constitution moved the federal government away from Binswanger's ideal state, it can not be regarded as approaching it, therefore his argument would not forbid competition with the United States' government even if it was a sound argument.

Binswanger concludes his article with the childish statement that "In terms of current events, anarchism means Lebanon, Somalia, and the Taliban." That's right, the three best examples of anarchism are evidently a democratic republic, a state that has had an internationally recognized federal government for several years, and a theocratic government regime. There's really not much to be said about Binswanger's closing remark other than that he's dead wrong.

It is obvious upon reading Binswanger's article that he was writing from a very closed-minded perspective. The necessity of the state was a foregone conclusion, and no amount of reason or evidence could change that. If the laws of economics prove that anarchism would be preferable, then the laws of economics do not apply. If competition is good, then anarchism must entail a different kind of competition. If the state doesn't meet his standards then it need only approach them, and if it doesn't even approach them then you can just move to Somalia. Harry Binswanger fervently defends government not because it is necessary for the existence of the free market, but because it is necessary for the infallibility of Ayn Rand.


  1. > ... because it is necessary for the infallibility of Ayn Rand.

    That's not something you can determine as factual.

    I think it's simpler.

    Because that's where his meal-ticket and lodging come from.

    That's everyone's concern: where's my next meal coming from, where am I going to sleep, and, is anyone going to try to hurt me.

  2. Really cool response. The countries he sites to anarchy are hilarious.

    Also, thanks for the recipe. I never need go to Cane's again!