Anarchy From a Policy Perspective

Peter Leeson has written a really nice essay on anarchy that relies on real-world facts to illustrate that, as his title suggests, self-governance works better than you think. Not only do I like Leeson’s essay, I want to say up-front that I agree with everything he says. So, rather than looking back at what he has said, I want to look forward to the policy implications of his essay.

As Leeson knows, there are a number of libertarian anarchists who argue for the complete elimination of government. Their arguments are based on two complementary lines of reasoning. One is that anarchy would work better than government (Leeson’s essay is along those lines, although he doesn’t make claims quite that strong), and the other is that the coercion that underlies all government activity is immoral. I have no quarrel with people who make those arguments, but from a policy perspective they are irrelevant. Government will be with us for the foreseeable future, so the real policy issue is not whether government should be eliminated but how to make it better.

As much as anarchists would like to completely eliminate government, many people believe we need more government. Leeson’s arguments appeal to people who are predisposed to want smaller government, but Leeson doesn’t address the arguments of people who value the government safety net, who argue that government schools and government health care provide equality of opportunity that is absent from the market, and who argue that, unregulated, people with economic power abuse it to the detriment of the public interest. Thus, their argument goes, even if government does bring with it some inefficiency, it also brings benefits by mitigating the worst effects of the market system. Leeson doesn’t say what products African middlemen were buying from local producers in his example, but maybe it was products made from the tusks of endangered rhinos being hunted to extinction for the benefit of a greedy few. None of these are my personal beliefs, but they reflect the beliefs of many Americans, and American support for their government is the main reason why anarchy is completely infeasible from a policy perspective.

Americans have it pretty good today, and they are not going to give up a reasonably comfortable status quo in exchange for an experiment in statelessness. So, regardless of its merits, anarchy has no prospect as an actual policy option. The bottom line is: in developed nations, most people support their government.

Taxation may be theft, but if it is done skillfully (as, say, in the U.S.) a majority of the taxpayers who are being stolen from actually support the institution that is doing the stealing, and a not-insubstantial share of them argue that the government should be stealing even more.

Statelessness May Not Be a Stable Equilibrium

Leeson is quite right to note that large areas of economic activity remain anarchic today. When I was a boy, I recall my father taking me to see a Cincinnati Reds baseball game at Crosley Field. (This makes me feel old, because Crosley Field is long-gone and the Reds have had two new stadiums since then.) We parked on a street near the Field and a boy offered to watch our car and make sure nothing happened to it during the game for $1. When we returned to the car after the game, it was fine, but the boy was nowhere to be seen. So, there’s an example of protection services provided without the state. You may be thinking — as I am — that if we hadn’t paid the $1 the car would have been vandalized, and the likely vandal would have been the boy who didn’t get the dollar.

My suspicion is that without government, this type of protection service would be much more common. The Russian mafia provided similar protection services to Moscow businesses after the collapse of the Soviet Union left a weakened government. And my fear is that these little mafias would engage in turf wars, and as Leeson suggests, enter into agreements for their mutual benefit, until those little mafias evolved into full-fledged governments. To use economist jargon, statelessness may not be a stable equilibrium, and the government that emerges to fill that void may be much more oppressive than the government we currently have.

Leeson gives good examples of how people overcome obstacles to engage in mutually beneficial exchange, but in his examples if the exchange does not take place both sides lose. If the tough guys can establish themselves as territorial rulers, they can use force to continue to extract resources from those they rule. My concern is that if an orderly anarchy were to be established in a prosperous area, protection firms would evolve into mafias which would coalesce into governments — governments potentially more oppressive and more destructive than those we see in prosperous areas today.

Some Governments Are Better Than Others

One major point that Leeson makes is that bad government is worse than no government, using Somalia as a case-in-point. But he also refers to “well-functioning, well-constrained governments like ones we observe in the U.S. and Western Europe.” If I am correct that we are not going to completely eliminate government, then advocating anarchy is a non-starter from a policy perspective, and the best libertarian approach to policy is to better constrain and limit the scope of government. If government is inevitable, we can still make it smaller, less intrusive, and more libertarian.

Go ahead, take the moral high ground and argue for anarchy if you want. After all, taxation is theft, the use of force is immoral, and government always involves the threat of coercion to make people comply with the government’s demands. (If people would voluntarily do what the government wants, there would be no reason to even get the government involved.) But this approach to public policy will not get a serious hearing. If we really want a more libertarian society, we can work for tax cuts, for eliminating regulation, and for protecting people’s basic rights. Some governments are better than others, and from a policy perspective, the best way to further liberty is to attack those policies that are anti-libertarian, to give us better governments.

Whether government is inefficient or immoral is irrelevant to policy issues. If we attack unlibertarian policies, we can make our society more libertarian. We cannot simply eliminate government all at once. But because some governments are better than others, it makes sense to work to make ours better.


As I said at the outset, I agree with everything Leeson says. The essence of what he says is that (1) no government is better than bad government, and (2) when cooperation can lead to mutual gains, people will find ingenious ways to cooperate for their mutual benefit. But nothing Leeson said implies that no government is better than good government. Maybe it is, maybe not. But Leeson’s arguments don’t imply, for example, that citizens of the United States would be better off with no government than their current government. I’m not taking a side on this; I’m just saying Leeson’s arguments and examples do not address this case.

I have no quarrel whatsoever with libertarian anarchists, and their arguments are a valuable contribution to the libertarian policy debate, for two reasons. First, they illustrate how every function currently done by government could be more productively undertaken in the private sector. We do not need government to do anything. (I say this despite my concern that statelessness is not a stable equilibrium. But if I am correct that anarchy is not a policy option anyway, this is irrelevant.) Second, because anarchists extend the bounds of the political debate on the role of government, arguments to eliminate this tax or that regulation become more of a middle-of-the-road proposition; e.g., “I’m not arguing that we should completely eliminate government like those anarchists; I’m just saying we’d be better off if we shut down the federal Department of Education.” Even if libertarian anarchists are completely wrong (but, I don’t think they are), in the world of public policy they will do no harm, because their agenda is not feasible.

Most of my commentary has been about the implications that some people might read into Leeson’s essay, rather than on his essay itself, because I think the essay is very effectively written and I don’t have any disagreement with it. But, couched as it is in the rhetoric of anarchy, I think its implications for anarchy and government in the developed world are limited, because the essay does not address them.

Randall G. Holcombe is DeVoe Moore Professor of Economics at Florida State University.

Also from this issue

Lead Essay

  • Everybody seems to know we need government … But pirates didn’t! How did they manage without the state? In this issue’s thought-provoking lead essay, Peter T. Leeson, the BB&T Professor for the Study of Capitalism at George Mason University, explores what pirate “constitutions,” credit institutions among 19th century African bandit traders, and the well-being of Somalians after the collapse of the Somalian state have to tell us about the possibility of practical anarchy. It works better than you think, Leeson concludes. “As long as there are unrealized gains to realize, people will find ways to realize them” — state or no state.

Response Essays

  • Bruce L. Benson, author of The Enterprise of Law: Justice Without the State, argues Peter Leeson’s defense of anarchy is too moderate. Governments in developed nations, Benson maintains, are not better than ordered anarchy. Drawing on Franz Oppenheimer’s classic account of the state as a protection racket, Benson argues that the state only seems necessary because it offers “solutions” to problems the state itself creates. Benson claims that even well-constrained states are essentially parasitic, leading him to conclude that “even when a relatively ‘good’ government exists, there still is way too much government and not nearly enough anarchy.”

  • Harvard economist Dani Rodrik is willing to accept a number of steps in Peter Leeson’s argument for anarchy, “but [Leeson’s] bottom line … represents a huge leap of faith.” Citing the work of several important thinkers, Rodrik argues that “the problem with self-enforcing agreements is that they do not scale up.” Both theory and data show that complex, well-functioning social and economic systems require the enforcement of rules by government. “Those societies in which markets work best are the ones where the reach of the state is longer, not shorter.”

  • Florida State University economist Randall Holcombe argues that even if Leeson is right about anarchy, it doesn’t much matter. “Regardless of its merits,” Holcombe writes, “anarchy has no prospect as an actual policy option.” The bottom line is that government is popular in developed nations. Furthermore, anarchy may not be a “stable equilibrium,” in which case it might “coalesce into governments … potentially more oppressive and more destructive than those we see in prosperous areas today.” According to Holcombe, if we’re going to get a government anyway, the best approach to policy is to “make it smaller, less intrusive, and more libertarian,” not to make it go away.