Excerpt from Anarchy Unbound

This is from the introduction to Pete Leeson’s Anarchy Unbound: Why Self-Governance Works Better Than You Think:

Anarchy can also be said to work better than you think when (assuming you didn’t believe as much already) a society whose governance is based on such mechanisms produces higher welfare than it could enjoy under its feasible government alternative. The essays in Part IV consider self-governance in this vein.

The key to finding such a self-governance “unicorn” is to compare a society with a recent experience under anarchy to the same society under the government it actually had before or after moving to anarchy – or, somewhat more difficultly, if that society hasn’t had a recent experience under anarchy, to compare that society’s likely experience under anarchy to its experience under the government it’s currently under. This kind of comparison forces one to restrict his attention to relevant governance alternatives – to the kind of anarchy and government actually available to some society – and precludes the comparison of irrelevant governance alternatives, such as poorly functioning anarchy and exceptionally high-functioning government, which is the kind of comparison most people are prone to make. The self-governing society that outperforms the state-governed one is only impossible to find if one is simultaneously pessimistic about anarchy in some society and optimistic about government in that same society, which, ordinarily, he probably shouldn’t be given that the same historical constraints that limit the potential effectiveness of one kind of governance arrangement are likely to limit the potential effectiveness of other kinds.

Anarchy working better than you think does not mean that the mechanisms of self-governance I discuss always, or even often, work better at solving the problems they address than some kind of government could – especially if that government is the rare, extremely well-functioning kind most people pretend is the rule instead of the exception. I will argue that in some cases those mechanisms can work better than government – especially if one compares their performance to the comparatively common, extremely poorly functioning kind most people pretend is the exception instead of the rule. By my argument doesn’t imply that any anarchy is superior to any government one could conceive of. Nor does anarchy’s superiority in a particular case necessarily generalize.

I’ve taken a class with Leeson and read a good deal of his work, including some on which this book is based, so this does not surprise me, but it seems like it would be surprising to almost everybody who hasn’t. At least in the Western world, the usual mental comparison is between government and anarchy/self-governance is typically something like the thinker’s relatively high-functioning government vs. Somalia’s anarchy. Given a choice between any modern Western nation and Somalia, it seems like a no-brainer to prefer to live in the Western nation. But this is not the relevant comparison. As Leeson said in the book panel a couple weeks back, 1st best government obviously beats nth best anarchy, but nth best government doesn’t always.

This seems like such an obvious point to me—now, in my fourth year in GMU’s economics graduate program—but most people don’t think that way. It’s really an extension of the public choice perspective that government failure needs to be taken seriously by people who take market failure seriously. The flawless government solution to a market failure is better than the market failure condition by definition. But why in any particular instance would anybody expect the government solution to go off without a hitch?

The reason I could justify reading this book in my dissertation proposal semester is that I’m also teaching an undergraduate class, International Economic Policy, in which many of this book’s lessons will be relevant. Even if you’re not in my class, I suggest you look into it.

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Author: rfmcelroyiii

Student and instructor of economics.

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