Objections

Objections to capitalism, liberty and anarcho-capitalism

This page can start by listing objections and concerns, and link to more detailed sections to analyze and answer the problem.

Capitalism does not produce public goods

See Public goods.

The case of science. Terence Kealey offers three arguments: The first one is a recent OECD comparative analysis of growth between countries with regards to the amount of government funding of science. It shows no positive effect in countries with heavier government funding, whereas it shows positive effects when there is more private R&D investment. The second one is that economic growth trends historically did not improve when government become involved (before/after comparison). The third is the disappearance of "secret publication" of science in favor of the current open model well before governments became involved in science (ie. scientists themselves find it advantageous to share, it is not a disincentive as suggested by the "public goods" argument).

Also, anyone can say that any nonrivalrous, non-excludable good is a public good. That doesn't mean it should be produced at taxpayer expense. If, say, the Republicans want Ronald Reagan's signature to appear in skywriting over Washington, DC on President's Day, they can't prevent members of the public who made no contribution to a private skywriting fund from seeing it. But that is a far cry from demonstrating that society will benefit more from that use of resources than it would from alternative uses.

On the other hand, sometimes what people think are public goods actually are not. An example would be lighthouses. If a harbor is privately owned, and those who use the harbor can be required to pay a fee, then the lighthouse that guides ships safely to the harbor, and is paid for by the harbor owner, can be considered a private good. The free market will tend to cause such situations to come to pass.

Capitalism under-produces what society needs

More details TBD

Capitalism exploits workers

A variation of this objection is that people in difficult situation cannot afford to exercise choice. Employer can take advantage of people when there is unemployment. A counter-argument is that in many cases, workers have a great deal of bargaining power. Consider, for example, the voice actors for The Simpsons, who receive millions of dollars a year for 22 weeks' worth of work. They can shut down the show by refusing to accept what is offered. That is an extreme example, but there are many types of employees who are, to some degree or another, difficult to replace and therefore in a good position to drive a hard bargain on salary. It is not for nothing that the Hacker Test contains these two items:

0241 Is your job secure?
0242 ... Do you have code to prove it?

Those who aren't in a good bargaining position probably need the "exploitative" job that is offered, because the whole reason they are in such a bad bargaining position is that they don't have better options they can point to and say, "Look, this employer is offering me $x. Can I have a raise up to what the market is paying someone with my knowledge, skills and abilities?" Those employees need a job that will keep body and soul together while they seek education, training, experience, or whatever else will make them more productive (in the consumer's opinion, as expressed by his willingness to pay a certain amount for the work product) per unit of labor invested, and therefore more valuable in the job market. If those opportunities for self-improvement are not available to that worker, then he will probably need that job on a more permanent basis, and it would more permanently diminish his standard of living to take it away.

Capitalism leads to monopolies and cartels

It is important to understand what constitutes a monopoly and under what conditions it leads to monopolistic effects (lower quality and higher prices). What are the forces which encourage concentration? What are the forces which encourage fragmentation? How does one define an "industry" or "sector"? What are substitution effects?

Also, it is interesting to look at historical data on monopolies, in light of the above analysis. Which problems occurred? Which forces actually came into play?

For one, identifying a monopoly requires defining the scope of the market. If defined arbitrarily narrowly, it will apparently lack adequate substitutes. Is the iPhones in the market for large-screen touch-based smartphones, consumer smartphones, cellphones, communication devices, or social networking tool?

But more importantly, competitive forces (both actual competition, potential competition, and indirect competition) are sufficient to regulate how much control a company (or a cartel of colluding companies) can get over the market. Despite its dominance of a market, the company will always feel the pressure to perform well or else it will lose customers to rival companies. Anti-competitive conditions can only arise legally from the government (and illegally through other kinds of force, like the mafia). Such government-granted monopolies are indeed harmful to consumers and the market.

Mainstream economists have this theory of so-called "natural monopolies", whereby if a company manages to get far ahead in a capital intensive business with economies of scale, it creates a very difficult situation for competitors and allowing a long-term monopoly (which has bad effects on prices and quality). This theory is often used to justify government stepping in with anti-trust regulations, to "fix the market" and regulate the "unavoidable" monopoly (therefore actually sustains the monopoly). But as Thomas DiLorenzo explains in this presentation, another presentation, and paper, and history shows that such sustained natural monopolies do not exist in practice. All sustained monopolies to date can be traced back to some unfair advantage secured through government (diamonds, cable TV, phone service, railroads, ...). Also, he explains that the supposed problem of "excessive duplication" is also a consequence of a pre-existing public utility. Because of their lack of pricing, economic calculation is impossible so trade-off cannot be made on a rational basis. Even so, this can be mitigated with "competition for the field", whereby utility companies bid for a monopoly contract which is open on auction again every few years.

Capitalism may have worked in the past, but modern society is different

This argument came up in different forms in Milton Friedman's Free to Choose video program for instance, by opponents of the free-market. The argument is usually not very specific, but posits that capitalism is not applicable due to changed circumstances. For examples, more population, more complex inter-dependencies, more industrialization.

Government is voluntary, people can migrate

Let me stimulate your thinking on this problem:

• If the state is voluntary because you can move, then the mafia is voluntary too since you can change neighborhood or city.
• If the state is voluntary, then are there limits to the state?

Was the confiscation of Jew property in Germany voluntary?

• If the state is voluntary, like a club, then why is it monopolistic on a territory?

Counter argument is homeowner associations and gated communities.

• The lynchpin of a voluntary association is that it is formed with unanimous consent.

No state demonstrates this feature. On the other hand, plenty of voluntary associations do: clubs, homeowners associations, ...

Government is voluntary, people can vote

That's a simple non-sequitur. The mode of decision does not affect whether joining this "club" is voluntary or not.

Imagine that your co-workers decide to start a union, but you are not interested in joining. They decide on a democratic mode of elections and decide that every employee should pay union dues, including you.

More generally, the feedback and incentives provided by vote are much weaker than that provided by freedom of association (choosing which club you join, choosing which product to purchase). This is especially visible with government, being that it offers such a wide bundle of unrelated "services" (currency, law-making, arbitration, police, army, education, postal service, unemployment aid, low-income aid, old-age aid, sickness aid, deposit insurance, ...). The votes are not even on individual services. Furthermore the votes are on promises, whereas purchases are on finished products and services, or on contracts (pre-order).

It is often assumed that politicians have a right to break their promises if their ideology changes or it is necessary to make political compromises. Certainly there is no means provided for in law by which a citizen can sue his representative for breach of contract if he violates campaign promises. The only remedy provided by the system is to vote him out of office. This would be like if a McDonald's manager could accept a consumer's money for a hamburger, refuse to provide the hamburger (or, instead of giving the hamburger to the customer, giving it to a friend of the manager), and then say that the consumer has no right to complain because, after all, he can choose a different restaurant next time.

In the private sector, the consumer is also entitled to a refund for agreed-upon products not being provided; in the public sector, he is not. There is nothing to prevent a consumer from getting repeatedly ripped off as he bounces back and forth between two different restaurants, each of which keep taking his money without providing what was promised. In the U.S. electoral system, those two restaurants are the two major parties. The third parties are like small restaurants that, after receiving the customer's money, later say, "Sorry, we invested the money as best we could in producing a meal, but ultimately didn't have enough cash to succeed, and now the money is gone. However, if enough people buy hamburgers from us the next time around, we might have enough money to succeed."

Government is needed to define the law

Here are some points to stimulate thought on this problem:

• languages (for the most part) emerge without centralized government definition
• governments are in a state of anarchy with regards to each other (no "super-government" defining international law)
• there are already multiple sets of law (from country to country, state to state, city to city), what is the optimal number and how would we know that number?

Without government, we would kill each other (Hobbesian world)

The emergence of arbitration services and norms is more likely, as it is less costly. See historical examples of arbitration in ancient Greece, in modern black markets for drugs. TODO: provide references.

Government is needed to control and protect the national borders

Actually, the State provokes foreigners to want to retaliate against it for its acts of aggression (including propping up tyrannical regimes to serve as puppet governments that will do domestic politicians' bidding), and the citizens get caught in the crossfire as they are hit by terrorist attacks, taxed to pay for foreign wars, subjected to intrusive searches at airports, etc. We would do well to heed what Morris and Linda Tannehill wrote in The Market for Liberty:

Government can't defend its citizens, and it is foolish and sacri­ficial for the citizens to defend a coercive monopoly which not only enslaves them but makes a practice of provoking conflicts with other coercive monopolies-i.e., with other governments. In the matter of foreign aggression, government is far more of a liability than an asset, and people would be much better off with a free-market system of defense.