Sunday, May 28, 2017





Component # 9, The Governance Marketplace,
the Licensed Anarcho-Capitalist Private Law Society

Purpose: to achieve exit by privatizing law
Method: a market that turns legal preference into a property right

The Executive Licencing Corporation (ELA), is a territorial monopolist. However, it does not govern the population, nor make its laws, but rather, it licences the ability to provide police enforcement services to rights enforcement agencies (REAs) and the judgement of cases tried therein to Private Arbiters, (PAs). All government services are provided by a private model in the free market, including the law itself. The Executive Licencing Corporation, also known as the ELA, is merely a licencing agency that owns a gendarmerie (national police force), an army, navy, nuclear command, and air force. It does not make the law. It makes the meta-law, or law governing the rights enforcement agencies that it licences.

It's meta law is a constitutional smart contract located on a blockchain. Encapsulation within sovereignty is the only pragmatic way for anarcho capitalism to maintain order and prevent invasion. In this respect it answers two challenges to AnCap design, namely; what happens when open war breaks out between REA's?, and, what about national defense?

It uses one of two methods.

Method One

The society consists of three layers; a layer of pure sovereignty at the top, including its military command, a layer of private law, e.g., the governance marketplace, and a third free market layer of trade and private property. The governance marketplace is inspired by David D. Friedman's description of a private law society. To quote Friedman;
Imagine a society with no government. Individuals purchase law enforcement from private firms. Each such firm faces possible conflicts with other firms. Private policemen working for the enforcement agency that I employ may track down the burglar who stole my property only to discover, when they try to arrest him, that he too employs an enforcement agency.
There are three ways in which such conflicts might be dealt with. The most obvious and least likely is direct violence-a mini-war between my agency, attempting to arrest the burglar, and his agency attempting to defend him from arrest. A somewhat more plausible scenario is negotiation. Since warfare is expensive, agencies might include in the contracts they offer their customers a provision under which they are not obliged to defend customers against legitimate punishment for their actual crimes. When a conflict occurred, it would then be up to the two agencies to determine whether the accused customer of one would or would not be deemed guilty and turned over to the other.
—  For and Against the State, Law as a Private Good

The is NOT how private law is administered under the first method of market formalism. In Friedman's description, legal protection is a right purchased by an individual against an aggressor. This places the financial burden for self-defense on the victim. In our method, legal protection is a property sold by an individual. It places the financial burden for minimum rights enforcement on the offender first, and the state second.

All persons own their bodily integrity, and to harm it it so violate their rights. The family or friends of the individual so harmed is entitled to compensation from the offender. The method used to the same method as that of medieval Iceland, as described by Friedman in Private Creation and Enforcement of Law: A Historical Case;
Another difficulty with private enforcement is that some means must be found to allocate rights to catch criminals--otherwise one enforcer may expend resources gathering evidence only to have the criminal arrested at the last minute by someone else. This corresponds to the familiar "commons" problem. One solution in the literature[19] is to let the right to prosecute a criminal be the private property of the victim; by selling it to the highest bidder he receives some compensation for the cost of the crime. This describes precisely the Icelandic arrangements.
This also describes our arrangement. The right to self-defense is a property right of the individual. When that right is violated it may be sold to a Rights Enforcement Agency in order to solve the case and apprehend the criminal. The criminal then owes the Rights Enforcement Agency payment for solving the case. But this presents a problem, because the cost of solving the case may exceed its value. In such cases a debt is generated that the criminal must pay back. If the criminal cannot pay, his life is sold by the REA to a bondsman who puts him to work.

Additionally, the state purchases an insurance contract for every individual at the time of birth, or retroactively insures the individual if the birth was not recorded immediately. The insurance protects the individuals basic rights, (freedom from murder, rape, theft, etc.), and supersedes private law in the advent of a conflict, if and only if, doing so produces more rights rather than less. The result of this system is the production of private law within a sovereign framework — of a governance marketplace for the enforcement of rights.

This is how basic rights are treated, not private law. Private law is a thing purchased in addition to basic rights. It is a contract that overlays the basic set of rights and allows for additional codifications, rights, etc., through up front payment of a monthly contract. The reason things are done this way, (the Icelandic way), and not the way that Friedman advocates in the Machinery of Friedman or his other writings, is because this way protects the rights of even the poorest members of society. Forcing people to pay for rights enforcement is immoral because it places the burden of enforcement on the victim, and discriminates against the poor who cannot afford to have their rights enforced. His system is a monthly fee system paid for protection. This is a fee for violation system backed up by an insurance bond purchased by the state. Friedman would have us live in a society where the homeless can be killed with impunity.

Basic rights are defined as those rights that 90 % or more of REAs agree on. Once the 90 % threshold is reached, a right is considered basic, and all Rights Enforcement Agencies must enforce it. This is codified in the blockchain itself as a meta rule.

Method Two

The second method also does not work the way Friedman describes. No one should ever pay an REA directly, for a reason that will become obvious.

The individual pays a mutually owned company the monthly fee. As a mutual, the company is owned by its customers. When you buy rights enforcement (police services) you select from a list of plans offered by the mutual. The mutual subcontracts REAs to provide police services to its members. The mutual acts as a collective bargaining union that gives market power to the customer. It also acts as an insurance company pooling risk, since it is willing to pursue and pay for justice far more than an ordinary individual could afford. It is required to be both a union and an insurer, and it is required to mail out ballots and hold elections for all of its executive appointments. It is both a company and a democracy controlled by its customers. It has to be, since having the ordinary citizen buy rights protection directly from the police agencies is insane. The police could extort the customer, or charge outrageous prices.

In market formalism, all private companies that have an asymmetrical advantage over their customers are required to be mutually owned by their customers; all health companies, rights enforcement agencies, and banking companies. Market formalism does not allow billion dollar companies in these industries. That would threaten public health and safety. All banks must be credit unions. All health care companies must be co-ops. All rights enforcement must be purchased indirectly through a mutual/consumer union. Period.

Market formalism brings the market into the state, and democracy into the firm. This is the correct arrangement, since the solution to the tyranny of the state is competition, and the solution to the tyranny of the corporation is democratization.

Every member of the society receives a (tiny) basic income. The person is then required to use a portion of it to purchase rights enforcement. This guarantees that even the poorest members of society have their rights enforced. The amount of basic income is about double what is needed to cover rights enforcement.

This is the only way to make the Friedman method practical, since even the homeless would have rights protection. This is probably the method we would go for: subscription-based rights enforcement + basic income + an extra amount. The case for a subscription-based system is made by Friedman in Private Creation and Enforcement of Law: A Historical Case;
If "enforcers" contract in advance to pursue those who perpetrate crimes against particular people, and so notify the criminals (by a notice on the door of their customers), the deterrent effect of catching criminals is internalized; the enforcers can charge their customers for the service. Such arrangements are used by private guard firms and the American Automobile Association, among others. The AAA provides its members with decals stating that, if the car is stolen, a reward will be paid for information leading to its recovery. Such decals serve both as an offer to potential informants and as a warning to potential thieves. Under medieval Icelandic institutions, who was protected by whom was to a considerable degree known in advance.
Naturally, conflicts will arise between rights protection agencies. In For and Against the State, Law as a Private Good, Friedman describes the likely result of these interactions, stating;
A still more attractive and more likely solution is advance contracting between the agencies. Under this scenario, any two agencies that faced a significant probability of such clashes would agree on an arbitration agency to settle them-a private court. Implicit or explicit in their agreement would be the legal rules under which such disputes were to be settled.
Under these circumstances, both law enforcement and law are private goods produced on a private market. Law enforcement is produced by enforcement agencies and sold directly to their customers. Law is produced by arbitration agencies and sold to the enforcement agencies, who resell it to their customers as one characteristic of the bundle of services they provide.[4]
The resulting legal system might contain many different law codes. The rules governing a particular conflict will depend on the arbitration agency that the enforcement agencies employed by the parties to the conflict have agreed on. While there will be some market pressure for uniformity, it is logically possible for every pair of enforcement agencies to agree on a different arbitration agency with a different set of legal rules.[5]
We are not content to simply hope that rights protection agencies will behave themselves in the absence of a big stick to keep them in line. We mandate that REAs settle their disputes through arbitration. Indeed, a fundamental condition of receiving a licence from the executive is agreement to arbitration with all other rights enforcement agencies. The moment the REA enters the market it must chose an arbiter before it's first day of business. It can then renegotiate arbiters as time goes on. The state may even assign it a temporary arbiter during a probationary period. The purpose of our private law is not anarchy. That is merely a fetish of anarchists. Our purpose is to create freedom through choice.

Democracy is a marketplace for the purchasing of law. It is a single system of governance where the law is determined by a latent civil war where the troops line up to be counted in elections, and influence peddlers create legal change. These influence are lobbyists and activists, who buy with contributions, or extort with protests, (respectively), the state to receive new laws that transfer wealth and create economic rents. It is a system of purchased coercion that raids a market commons consisting of other people's wealth. It steadily builds up legislative accumulation and economic rents until it collapses. As the level of state interference in the market grows, the payoff for controlling the state grows until democracy produces either open civil war or dictatorship. As a result, the level of propaganda and cultural civil war rises because the payoff for controlling the state rises.

In contrast, absolutist market formalism is a governance marketplace controlled by an an executive manager. Individuals still have rights and choice in their legal arrangements. The law is still privately made — through the market. There is still a "market for the purchasing of laws," but this market is not for the purchasing of other people's wealth. Nor for economic rents, special privileges, handouts, etc. The reason that an executive would use such a system is not just to reduce administrative costs. This system eliminates to an absolute minimum the amount of sheer bureaucracy that one needs to run a country the size on the United States. Bureaucracy = a threat to ones power. The greater the administrative load, the more nooks and crannies subversive influences have to hide. One is confronted by a fundamental problem of organizational scale. If an executive increases the number of managers that it relies on for power, he cannot keep track of them all. He may have intelligence officers spy on them. But now he is reliant on the intelligence officers. He may have more than one intelligence officer. But now he has increased the number of managers again. He may have all of his managers spy on each other, but they may still conspire against him. He may reduce the number of managers of the state that he is reliant on, but he increases the odds that one of them will take his position through assassination. So increasing the number of managers can create bureaucracies he cannot control, while decreasing their number empowers more potential assassins by making each of them more powerful.

By giving the commoners choice in their law, he silences criticism of his rule. By subordinating all police functions to the market, he forces formerly subordinate and potentially subversive forces to worry about business concerns and profits. In short, the whole system is an elaborate way to control subversion, establish absolute control over the organs of the state, and produce freedom among the common people.

Concerns About Problems

A rights enforcement agency cannot be allowed to belong to only one man, otherwise a wealthy individual could attempt to place himself above the law. This is why the executive licences rights enforcement agencies. It gives him the power to prevent wealthy individuals from trying to make themselves above the law, because in so doing they become as much a threat to the executive as they are to the people. A man with a private agency is dangerous to the executive.

Also, their is a danger that a rights enforcement agency might try to go to war with the state. This is solved by making them mutually owned corporations that hold elections. Now one may wonder what is the difference between this and democracy? Choice and compromise. With this you have far more choice and cannot be compelled to compromise with parasitical interests. Unlike in a democracy, any group of people may start their own REA. This is akin to allowing people to start their own governments. Since law is privately made it cannot be imposed on the unwilling. One can always escape compromise with hostile interests. It is not a coercion market like a democracy is, but a rights enforcement market.

Next, a rights enforcement market is a system based on revealed preference and not virtue signaling. Since enforcement costs money to the individual there is a penalty for making a mistake. Since an individual chose their REA there is a penalty for choosing wrong. Democracy forces hosts to compromise with their parasites. The governance marketplace does not. All one needs to do is find a few hundred like minded people willing to live in the same general area and you have the ability to form your own state. The cost of Exit is virtually non existent.

Component # 10, Investigation System, Assassination Insurance System

Purpose: to deter rebellion by REAs
Method: assassination market for the states enemies

In the advent that there is an attempt on the life of one of the executive, a violent act by a private rights enforcement agency against another rights enforcement agency, the raising of a private militia, or terrorism of any kind, contracts for investigation are activated. The assignment is random so that no one may guarantee a profit from violence. There is a nationwide pool of investigators that all rights enforcement agencies use. Investigators are drawn from that pool.

All private rights enforcement agencies are required to purchase assassination insurance. This insurance is a smart contract located on the blockchain that releases funds in the advent that certain proscribed conditions are met. If a rights enforcement agency is judged by the executive to have behaved in an aggressive manner towards either the executive or other rights enforcement agencies, then funds are released for the assassination market to kill the individuals that are responsible. All rights enforcement agencies are required to buy the insurance that kills them in the advent that they go rouge. The executive head of an REA literally has to buy his own death warrant insurance to receive a business licence.

Component # 11, The Consumer Purchasing Unions

Purpose: to prevent abuse against private citizens by REAs
Method: safety in numbers

Without a union to collectively bargain with the rights enforcement agencies there is a potential for intimidation by rights enforcement agencies. The unions pool purchasers for the purposes of purchasing rights enforcement. They are required to take 10% of the people they serve pro bono. Their costs are absorbed by the others. They are required to take the poorest ten percent within society. This prevents the homeless and desperately poor from going without rights protection.


No comments:

Post a Comment