Anarchy Unbound, Economics Unbound

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It takes something special for an author to claim the book isn't arguing much and then spend 200+ pages not arguing much. My guess is the author is understating the size of his case.

Such is the case with Pete Leeson's Anarchy Unbound. His simple thesis is that "anarchy works better than you think. (1)"  That is about as low of a bar as an academic can set. Leeson himself acknowledges that this is an extremely simple task, especially for an academic work that includes 10 essays. While I'm at Mercatus at the moment for an Austrian economics conference, I find it fitting to write-up my thoughts on the book.

Even though Leeson claims he is not making a radical argument, many people will see this as a radical book. As soon as a book has the word "anarchy" in the title eyes are going to roll.

I experienced this reaction first-hand. The confused looks I got when I read this book around campus or up at the lake cabin was evidence of people's gut reaction to word, just the word. As with all words, it can be used to dismiss another's argument out of hand (such as that is socialist or that would be anarchy) or it can be used as a descriptive tool. That is how I want to use words.

To be used properly as a tool for helping conversation, Leeson and readers must first come to agreement on what the word means, or at least what it will mean in this book.

Leeson takes a fairly academic definition of anarchy, not the popular definition. Anarchy is not a state of chaos, as most people use the word. Instead, anarchy simply means no government.  That's all. Anytime a government is not around to enforce contracts, protect citizens, whatever it is that governments do, Leeson calls that anarchy.

But this definition really begs the question. Now readers are left wondering, what is government? That's harder to pin down. Leeson wrestles with it a little, but leaves it open. I bet some authors have spent a whole book on this question. Anarchy Unbound is about moving beyond that argument.

Leeson's defines government somewhere between Potter Stewart's definition of porn, "I'll know it when I see it", and Weber's classic definition of government as a territorial monopoly on violence. For this review, that is a good enough definition. You know it when you see it. If you want a more complete explanation, check out the first chapter. He is slightly more nuanced.

Without government, what are we left with? What structure remains when there is not a monopoly on force. Leeson argues that other rules arise to fill the void left when government is absent.

This allows Leeson to distinguish government and governance. Government is only one form of governance. Throughout the book Leeson works to show readers forms of governance that emerge without government. He applies rational-choice theory to understand this topic.

Rational people, through following incentives, develop forms of governance to improve their lives. As always in economics, actors do so because it is in their interest to. They expect life to be better with a form of governance than without one.

To take one example, even when plundering ships on the open sea, privateers had an incentive to not destroy their potential loot. If I'm going to steal your ice-cream cone, I really don't want to hit the cone into the ground in the process. That would be a loss for everyone. It is in my interest for you to hand over the ice-cream cone without violence.

Privateers faced with this incentive developed a system of governance to reduce these deadweight losses. Ransom and parole developed as a form of "Coasean contract." Leeson explains:

After overwhelming a merchantman, such a privateer offered its victims the following bargain: for a price it would allow the merchant vessel, its cargo, and its crewmembers their freedom. If the price was right, this arrangement was mutually beneficial. Provided the price agreed on in the plunder contract was higher than what the privateer expected to earn if it plundered its victim traditionally and thus had to incur the costs discussed earlier, it was happy to enter such a contract. (76)

Leeson shows that even in the worse of scenarios (people who live off of stealing), some rules developed to reduce costs. Governance does do something. It is not all violence like we imagine the Hobbesian jungle.

Again, it's straightforward economic reasoning. Rational people don't like chaos. It is expensive to deal with chaos. These rational actors develop forms of governance even when academic economists with their narrow framework don't believe they will. They make anarchy work better than you think. QED. Well not quite. Leeson has more of an argument to make.

Drawing on Leeson's extensive academic writings (seriously, check out his CV for a list of publications longer than I will have over my entire career), he lays out the ways that anarchy works. If he really wanted to raise the bar only as high as he claims (better than you think),  one essay would be enough. But Leeson gives the reader plenty to mull over. He makes an even stronger case than that. The whole book feels like a tug between modesty and intellectual radicalism. I'd venture to say for most people out there this book would convince them that anarchy works MUCH better than they think. That only happens when someone reads a radical.

Unfortunately, I'm not sure it will convince many readers that anarchy works better than they think. This isn't because Leeson doesn't lay out a good case; he lays out a completely compelling case. My appreciation of forms of alternative forms of governance rose immensely from reading this book.

Instead, I'm afraid he won't convince many because few readers will approach this book who don't already believe anarchy works well. That is, most people who pick up this book won't need any convincing. They already appreciate or love anarchy. But this book is not a typical rah-rah anarchy book. It reads like academic work, for good or bad. Actually, it reads like really well-reasoned and written academic work, not like most academic work.

At the same time, I just don't picture many people who are unsympathetic to anarchy picking up this book. People who believe, like Hobbes, that without government everything goes to hell in a hand-basket will not even know this book exists. That's not a knock on Leeson. It's a knock on the intellectual climate around the word "anarchy."

Without strong skeptics and already-convinced anarchists as the right audience, this leaves a small segment of the world who are sympathetic. Luckily, I fit in that and few positioned to write these words. My goal with this review is to convince people in all three categories to check out the book.

I'm comfortable doing this because Anarchy Unbound is completely accessible to the proverbial layman. Anyone who reads this blog can follow and appreciate the argument. When I first picked up the book, I loved his approach so much that I had to tweet it.

Leeson is writing the book that is for almost everyone, economists or not, anarchist or not.

I've framed the last few paragraphs using words the word anarchist.  That's not fair to the book. Only the last bit of the book makes any sort of anarchist points or arguments FOR anarchy.

Instead, the bulk of the book is extremely detailed explanations of the workings of anarchy. It is completely positive, as compared to normative. Leeson is adamant about this in the opening of the book. He even gets a little snarky on this, which I love:

It’s inevitable that some persons will be unable (or unwilling) to accept the claim that the analyses in Chapters 2 through 9 are positive. They will jump from the fact I'm challenging the conventional wisdom about self-governance to the mistake belief that the essays I use to do so are normative. If you're one of these persons, go back and read the allegedly normative essay(s) again. You will see that the discussion is in fact positive. If you don't see this consult a dictionary for the definitions of "positive" and "normative". If you still remain unconvinced, consider the possibility that it's not me who has the difficulty escaping normative thinking. (11)

In that way, Leeson fills in a chuck of the literature that is extremely thin, pure explanation of the workings of anarchy without value judgments. Contrary to some writers, this distinction between pure economic science and normative judgments is possible. I hope to emulate it in my work.

So how does Leeson carry out his admittedly low task? He slowly and methodically lays out (1) theory of how anarchy can work and (2) evidence of how anarchy has worked.

My only beef with some of his examples nagged me throughout the book. He explains historic and modern situations of where people under anarchy have developed forms of governance. Everything from pirates (which Leeson knows plenty about) to international trade to prison gangs to Somalia comes up. Constantly, Leeson finds forms of governance that emerge spontaneously for these groups.

For the pirates, it was democratic elections and checks-and-balances. For international trade, it is social norms and customs. For prison gangs, it is written constitutions. For Somalia, it is private provision of public goods. Everywhere Leeson looks there is some order that is emerging spontaneously. It is not chaos. To Leeson, this is evidence that anarchy works "better than you think."

But what would a society look like with NO forms of governance? What would we find it NO rules emerged? I'm left wondering what sort of evidence would show anarchy works "as bad as you think."

I'm not sure what Leeson's null hypothesis is (to frame it in traditional economics jargon). What is the hypothesis he is refuting? Some of the evidence he provides leaves me thinking, "this is pretty bad." How bad do things have to get to counter his thesis? While I am sure Leeson has thought about this and it is probably in his extensive writings, it is not clear in the book. That and the right audience are the main issues I have.

However, I can't leave this review on a negative note. This is the most interesting book I've read in months. It is a masterly piece of scholarship and worth reading for people interested in governments (or lack thereof).

I raced through it, scribbling notes the whole time. It kept me engaged in a way that most academic books can't. Leeson blends sociology, law, history, and economics together in a great work of "social science" the way the great minds that originated the field would love. No more viewing economics in a narrow box for us!

He shows that anarchy works beyond the limits that conventional wisdom puts on it. He shows that economics works beyond the limits that academic divisions puts on it. Win and win. QED.

 

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