anarcho-capitalist

Even many who are relatively sympathetic to free market minarchist and mutualist ideals where as much as possible is done through voluntary rather than coercive statist mechanisms often have a problem envisaging a system in which no state apparatus exists.  Two of the most common objections are that we at least need a state to administer "justice" and to ensure "national defense".  Even intellectual heavyweights such as Robert Nozick felt that a de facto "state", at least at a local level, would emerge from private law enforcement agencies.

So I'm often on the lookout for literature that explains how a private law based society would work, indeed would vastly improve upon the current predominant state run model, and so I am delighted to point my reader to "Chaos Theory", a pair of short essays, one on "justice" and the other on "national defense" by Robert P Murphy.  It is available as a freely downloadable PDF at the Mises.org site.  You can also buy a dead tree version (though I find delivery costs too high at Mises.org to justify having these sent to the UK).

It also provides further illustration of the point I was making in my previous piece on how respect for private property and contracts frees us from the need for a state.

I have also prepared an MP3 audiobook version, which is attached to this post.  It's mainly just for me to listen to again on the way to work, but if you'd prefer to listen than to read, and can face my dulcet tones, feel free to use it, Robert Murphy has given his permission.  It's only an hour and a half long, so you can judge how long it will take you to read this very accessible introduction to some of the ideas involved.

Particularly on the "justice" side, I can see ways in which the Mutualist ideal of creating such institutions and mechanisms within the current system could be successful.  Since the non-aggression principle would not rely on the same ability conferred on state agents (i.e. the police) to arrest someone, there is no reason why such mechanisms could not operate successfully on private property at present.

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Thanks to Stephen Glenn for pointing me to this lovely new descriptive word for the supermarket giants, and to the Lib Dem media release website for highlighting this issue via Tim Farron.  But I'm afraid unlike Stephen or Tim I cannot actually see just in what way the Lib Dems have any better policies than the other two vacuous parties on the issue of how to protect our farmers from exploitation by the supermarket oligrarchy, or, as the title says, the "trolleygarchy".

What I do see is all three parties falling over themselves to think of new things for the state to do to address some perceived problem that even the Competition Commission seems to have suggested was not such a big issue.  But I suppose it was a farming conference so they're bound to have been wanting to promise these potential voters that they would each do something to defend their interests in return for their earth salted votes - such is what politicians do.

But it provides a useful example as to what the real, liberal, process should be to such issues.  Why on earth are we, or anyone else, calling for more regulation, more bureaucracy, more costs?  Why don't we look at how this market got to this position?  At the state's role previously and now, in disadvantaging one group and protecting the other.  And see whether there are things the state should stop doing to make this a fairer market rather than creating another state bureaucracy to try and fix problems still being created by state action?

For on both the demand and the supply side of the market for this most basic of commodities, the food that keeps us all alive, we find a trail of evidence leading back to state action that has made it ever more likely that these giant retailers would emerge in the first place and dominate from then.  Not that I am saying that big is necessarily bad of course - if they are delivering what consumers want at the right price and quality, they could have a monopoly for all I care, so long as there are no barriers for others to enter the market should they see that efficiency slip and see a way of doing better for the consumer. 

But they have had help in achieving that dominance.  There's a huge amount of food regulation that, inevitably, the bigger firm is better placed to meet, and not just to meet, but to lobby regulators to suit them too.  On the demand side, state mismanagement of everything from money supply to housing markets has resulted in a vanishingly small number of households now being able to house themselves on one income, and so hard pressed home-makers juggling jobs and home life demand more convenience foods.  No longer is a leisurely trip to a local market for raw ingredients, freshness and quality decided by eye, nose and trust in the local man or woman behind the counter, followed by an hour by the stove and time to feed the family all at once the familiar way of doing things.  So there is more demand for, and thence regulation of, more conveniently packaged and ready-prepared food - ever more ranges to stock; ever larger stores to accommodate them.

On the supply side, we caved into the EU some years ago now in losing most of our local abattoirs, so farmers are more likely to have to sell into a mass market with smaller margins than be able to sell more locally with fewer middle-men taking a cut.  The fact that we do not charge for road use means that there are benefits of scale in moving food in huge quantities around the country, again meaning you are less likely to sell direct to local retailers, but through buying groups that aggregate whole regional and even national production and put pressure on prices.  This same factor means we are happier jumping in the car and traveling ten miles to a superstore than patronising local stores in a local supply chain - and those out of town stores are not fairly taxed on their land use, as they can offer massive free car parks with no rates on them.

As premium produce tends to be more labour intensive, our tax system, based on employment, creates big disincentives in an already narrow margin industry to employing those extra people and getting better prices for premium goods.  And on the retail side, low skill jobs that sometimes probably would not be worth the minimum wage to smaller retailers can be better afforded by big operators offering shift work and annualised hours to enable them to operate when family owned retailers would all want to be in bed because their overheads for waiting up for one romantic couple in aisle three at three in the morning are just too high.

So, whilst it is obvious that this is all a lot more complicated that merely being about defending the farmer against the trolleygarchy, it should also be quite clear that the trail of blame as often as not lies in earlier and ongoing state action that helps protect the big retailers and squeeze the farmers - we have not even looked at the history of land subsidy (how do farmers expect to make money out of things that only a few years ago, relatively speaking, we kept lakes and mountains of across Europe?).  Instead of having yet more bureaucracy and regulation, the liberal response should be to look at where the market is already heavily skewed by state action and stop doing it!

Employment regulation, food laws and "consumer protection" (once it was enough to ensure that the meat wasn't green and smelly when you bought it, now it all expires days or weeks before it would actually be unfit and so in thrown out), transport policy, taxation policy, the openness of our political system to lobbying for favours - always benefiting the bigger players, all these need looking at before another layer of regulatory bollocks is imposed.

But has anyone spotted the little irony - that one of the biggest retailers the farmers are complaining about, ASDA, was once a farmers' collective, and their last Chief Executive was also a Tory MP!

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I am a "land taxer".

Some people seem to believe one cannot be both. On the one hand, we find people like Lib Dem Matthew Huntbach, who in the comments to this Lib Dem Voice piece on my opposition to the suggested "Mansion Tax" claims that as a self-described libertarian I am likely to drop the idea of land taxes, however much I may talk about them (much more than him I'd wager but there we are) as soon as the opportunity to enrich what he thinks of as my fellow wealthy libertarians allows. For the record, I don't think that I know any truly wealthy libertarians or anarchists, and indeed I know of not a few who, despite being not very well off at all, subsisting on benefits, campaign actively for the destruction of the welfare statist system that seems to sustain them at the moment. On the other hand, we find lots of other libertarians who resolutely refuse to accept even as libertarian those who would appear to want to "confiscate" the value of private property in land they hold as a near sacred element of libertarian thought.

Now I realize that one blog post by an insignificant in Oxford is not going to settle this argument once and for all. Far better economists and political theorists than I have tried. But it is a personal battle for me, because it was the ideas of Henry George that brought me to libertarianism - for his is a libertarian idea, in direct response to the "land question" raised by so many in the history of liberal and anarchist thought - from Locke, Paine, Proudhon, Spencer, Mill, and the individual anarchists Spooner and Tucker. And it is as I have heard, read and hopefully understood more by the likes of the Austrian school market anarchists that my views on George's "single tax" solution have been challenged. Yet I still hold them.

First, a bald statement: I do not believe there are many libertarians of whatever branch or flavour (and we are truly a Baskin-Robbins ideology on that score, whatever the misinformed Lib Dem detractors believe) who do not appreciate that there is an issue of equitable access to land - that which has historically been called the "land question" by many (including Murray Rothbard [pdf] even as he criticized Henry George's solution to it). Sure some place more emphasis on it than others - but I really believe that any who denies there is any issue has not thought terribly deeply about it. I'd go further - that before the early part of the twentieth century it was a touchstone of most or even all of the emerging theories of libertarianism and anarchism; that the four "great monopolies" - of land, of money, of intellectual property and of government - that the individualist anarchists and mutualists described were commonly held to lie at the root of the inequity caused by the statist systems of privilege which they wanted to smash.

It may be that it is merely a difference of emphasis. George, for example, like Proudhon believed that the land monopoly was the "mother of all monopoly" and that solving that, for Georgists as for Proudhon, will tend to render the other three insignificant. When we sat down to discuss the content of the Lib Dems ALTER's recent book "The Case for a New People's Budget" I wanted it to include pieces on the money system and intellectual property but one of the other editors, a better schooled Georgist than I felt that such was completely unnecessary, since solving the land question would solve these others.

On the other side, the Austrians today believe, perhaps, that the fiat state controlled and cartelized money system is at the root of monopolistic behaviour and that sorting that out will render the others nearly insignificant. To this extent, whilst we acknowledge there are other problems, if all we are saying is that sorting this one or that one out first will resolve those others, we are, by different means, aiming at the same ends, of equitable economic distribution of scarce goods.

Others still acknowledge that there is an historical problem - that most land title ultimately and historically descends from aggression or statist privilege - such as monarchs kicking off serfs to give rewards of land to favoured courtiers, or the state sanctioning enclosures without any recompense to those who required the land to maintain life and limb. And they might suggest, as in the excellent introduction to libertarianism by Morris and Linda Tannehill - "The Market for Liberty" (available here as a free audiobook) suggest that at the advent of a truly libertarian society such ancient titles would be revoked since they would be next to impossible to prove and that everyone would have to stake their claims anew. But to me this resolves the problem as a "one off" and not the ongoing problem that land distribution necessarily is given the propensity for populations to change and land requirements with them.

Since it is as a result of hearing Hans-Herman Hoppe on the "Idea of a Private Law Society" nearly a year ago now at last year's Libertarian Alliance Conference that I have become more interested in "full blown" non-state ideas, it is, perhaps naturally, to the Austrian School and in particular the Mises Institute that I have turned to learn more; devouring several years' worth of podcasts of the Mises University series, but also listening to various contributers to the FEE's Freedom University series. And whilst they do indeed talk very little about land, I can glean some of the following with which I find myself in agreement that relates to the "land question" in their thinking:

• If we did not have the corrupting influence of inherently inflationary and statist fiat money there would be much less speculative froth in the system to be ploughed into land values.

• If we did not have state controlled zoning and planning restrictions, more land would be made available as development was needed and land values elsewhere would tend to fall.

• If we did not have state enforceable land titles, we would have to find another mechanism for protecting our rights of ownership of land which would tend to release land that land owners felt was uneconomic to protect compared with the utility they got out of holding it.

• And, I really do appreciate the arguments in favour of the protection of private property (well, I'd rather, after Proudhon, say "possession" than "property") being the mainstay of a civil society, that without which original appropriation and therefore economic production would be all but impossible. And allied to this I feel a sense of unfairness that someone who has, in the Lockean term, "mixed his labour" with "land" and thus brought it into production in the first place, might find that simply because others have later agglomerated around his far-sighted piece of appropriation, he would be subject to paying rent on it that may price him off it.

But...and you knew there would be one...what I cannot get round is the idea that, whilst anarchists anathematize taxation as confiscation of the legitimate product of labour and therefore an attack on Lockean self-ownership, the rental value of land is really a tax on everyone else who cannot use a particular location, even though they may have a more productive capacity to use a particular piece. All of us pay for the monopolization of locations of better quality in terms of our needs, than what we are then forced to settle for. If we have to live further away from work, we pay in time and travel costs to get past those locations that would serve us better. These values feed into land values. It is not merely that land value increment is unearned by the land-owner, but it costs the rest of us in like measure. And it is a huge burden - in the UK it amounts perhaps to about a third of what is the salaries portion of GDP. This effect, whilst it may be smaller if all the other Austrian remedies above were implemented, would never, in my opinion, disappear.

Austrians, of course, reject the value theories on which this hypothesis of land values is based - the labour, or cost theories of Smith, Ricardo and other Classical Economists. They prefer their subjectivist or utilitarian theories based on the work of the likes of Carl Menger and Eugen von Böem-Bawerk. And, whilst I also do not agree with a wholly unmodified labour theory, I am becoming more and more convinced by the likes of Kevin Carson's critique of Menger's and Böem-Bawerk's criticism of the Classical cost theories in his "Studies in Mutualist Political Economy" - which is just as well since I describe myself as a "mutualist"!

On the other hand, I am with the anarchists in that I do not want a government or quasi-government institutional structure to value and collect such "rent". And so I am attracted to ideas such as those of geo-libertarian Dan Sullivan in the US, of how it could be handled by a voluntarist system of community management companies. And it is on his ideas that I think can be developed a system that fits with both the Georgist aims of collecting land rents and the anarchist aims of not having government structures impose taxes on us. In his essay "Are you a Real Libertarian or a Royal Libertarian" he says, toward the end:

Can't we do this without the state?

There are, in fact, proprietary communities operating on the single tax model. Arden, Delaware, with a population of 4900, has had no local taxes since 1900. The Arden Corporation collects a fair market rent on each land parcel, which is reappraised annually. (They actually collect only about a fourth of the rent to which they are entitled.) From that they not only pay for all the municipal services, but rebate all property taxes levied by the county and school district.

There are excellent reasons for libertarians to prefer the land trust route over the political route. Private communities can be built on explicit contracts (leases) with the citizens, can have internal democratic processes that are vastly superior to electoral democracy, can be far more flexible and free of state intervention, and can be downright profitable (even with trust investors pocketing a mere fraction of the rent). Most of all, dealing with investors is far more pleasant and self-affirming than dealing with politicians.

But what worries me about this approach, taken literally at least, is that we might end up with one agency acting as a local monopoly that becomes a de facto government, just like Nozick says that private protection would combine into one agency with a monopoly in an area (though I am yet to read "Anarchy, State and Utopia" - I bought it and promptly lost my copy! - and so haven't read his arguments, I instinctively disagree with this as an inevitable outcome) and be to all intents and purposes a coercive albeit limited government.

However, I think there is a resolution. Admittedly I have not gone into this too deeply as yet. I have not followed all the economic incentives through the processes. It is based on the idea that in a "private law society" (necessarily the case of course in a no-state anarchist system), defense of one's life and property would be handled by competing insurance, protection and arbitration agencies.

In the absence of a single, state-provided, system of land titles, one's ability to hold onto a piece of land (that is, not to fight for, but legally to defend one's right of occupancy against any other claims) would usually be handled by your insurance and protection agencies. Of course, you could opt out, but then you would have to pay for such physical protection and legal protection against claimants by yourself and on a simple division of labour basis it is likely to be more cost effective joining with others via an insurance and protection agency system. But your premiums would likely rise to be something similar to the market rent value of the location - because it is on that basis that other possible claimants would be likely to be basing their claims on. If your insurance agency were a mutual agency operating with profit policies, they would effectively disburse the equivalent of the statist "citizen's dividend" to the members with with-profit policies.

Here, there could be competition. My insurance agency would make a (probably class action on behalf of all their clients inconvenienced by your monopoly holding of land that costs us money to avoid) claim against yours, yours would pay up and that would go into the profits of my insurance firm for distribution to the with-profits members. And these firms could compete across whole areas of productive land. So, for example, you couldn't have only those in expensive locations in Mayfair joining together and insuring against each other and effectively doing so cheaply because you're hardly likely to lay claim to your neighbour's similar property if it's going to cost you money and you're both pretty happy with your lot and are not costing each other anything by your occupancy of neighbouring sites. My firm may be based in Sutton or Dagenham and have most of its clients there, but will still be likely to be making claims against yours.

Eventually it is likely that these individual claims would not be processed at all, but that reciprocal arrangements between these agencies would spread premiums around amongst them such that the dividends paid to each one's clients would tend to even out, but all the same, the claims mechanism would remain available where there were disputes, just as, for land taxers operating within a state system, there would be tribunals to adjudicate on land value disputes.

UPDATE:  I've thought of perhaps a simpler way of understanding this - it might be looked on as competing land registries paying each other premiums for recognizing and upholding each others' clients' titles.  Does that make sense?

As I say - I have not followed the economic incentives right through such a system. But I think it contains the germ of a possible solution that does not rely on confiscatory quasi-state bodies but does equitably distribute the values created by and paid for in other ways by all who need to use land within an agglomeration area.

Remember please, this is a genuine search for a reconciliation between two sets of ideas with which I generally agree but which in contemporary libertarian discourse seem to be all but irreconcilable. But if you've read this far, I'd love to hear your responses.

According to the BBC, today both Tories and Lib Dems will formally outline their current plans for dealing with the regulation of the banking sector in a post election world. Neither, it seems, are prepared to think "outside the box" as that early century cliche went: the Tories looking at returning banking oversight to the Bank of England, whence it came a few years ago, the Lib Dems more firm on plans to break up the biggest banks, starting at least with the ones in de facto public ownership. However, one thing we can be pretty sure of: neither will be proposing the single most important possible change to banking that would do the most to stabilize the money system and longer term the economy...Free Banking.

As a concept it's pretty simple: Free Banking is where banks, and potentially other organizations such as communities, trading companies and so on, issue their own currencies instead of trading in the "national" currency of the territory in which they are operating. These currencies compete against each other for users. The value of each rests solely on the soundness of the business practices of the organization issuing them. If one bank/issuer over-extends itself all the others who would normally accept their currency at par with their own (say when a business customer of theirs tries to deposit them at the end of each day) will want to pay less for them and the message will soon get round that the over-extended bank needs to change its business practices, its risk profile say, or risk complete devaluation of its issued currency. There are also lots of other mechanisms that, in a free market, but not a fiat system, would come into play to ensure the currency issuers play responsibly.

The system we have today, fiat currency "guaranteed" by the nation is whose name it is issued, is the result of a long term grab for power by the state. Why would they do that, in a market that functioned quite well? Well, there are profits to be had in issuing currency - so called "seignorage". However in the current system where fiat money tends to be introduced via lending by the commercial banks regulated to do so this seignorage profit has reduced, and has also been passed to those issuing banks rather than to the state. The big reason is inflation. We take it as axiomatic that inflation can be a good thing, if you are in debt. With your future repayments more or less fixed in numerical terms if you can inflate the money supply your payments will tend to fall in real terms with time.

Who are the biggest single borrowers in our economy? Well usually the government. So the government can inflate away the running costs of their debt. Well, okay, says you, but it also eats into the costs of everyone else's debt too, doesn't it - so we all benefit from inflation, right? Wrong. Lots of us may well be in debt, but after many decades of inflation and only a few of burgeoning private debt, the lenders have become savvy to this. How many of you are now on variable rate mortgages? Government induced inflation really assists really long term borrowers on fixed rates (ie gilt issuers predominantly).

And on that subject, on the other side of the coin, if you pardon the pun, inflation erodes savings. All of us need some of those, even if we are in debt - for example for our retirement. Inflation keeps eating into our pension funds - firms and returns have to grow faster in monetary terms just to maintain the value of our savings. But equally, if inflation undermines our savings, so it also undermines the money we have in our pockets now. If we think the prices are going to go up, we want to buy more now. Inflation actually drives us into more debt, transferring more in interest from less well off to the better off lenders, so we can buy now before the prices rise.

But inflation also distorts in all sorts of other ways - if it is more difficult for us to work out as individuals whether we should borrow to buy that new Hi-fi today and pay the interest, or wait until we don't need to borrow because it will still be there at the same, or perhaps a lower price, how much more difficult is it for people who have to make borrowing decisions about investing in capital goods? Inflation corrupts the signals that prices are sending to manufacturers for example - they don't know necessarily whether they are getting a better price because of inflation or because their product is in greater demand.

Since the US finally adopted central bank run currency, followed by a fully fiat monetary system a few years later, the state has overseen a devaluation in the currency of over 98% - roughly a period of a hundred years; the Federal Reserve system was established in 1913. But this most recent decade shows the problem at work perfectly and the government's part in it. At least until 1997 the government, through the regular collaboration between the Treasury and the Bank of England, was instrumental in setting the base rate as we call it here. That is used to create a signal to all the banks who are regulated to lend in sterling that they should lend more, if the base rate goes down, or lend less, perhaps call in loans, if the base rate goes up.

After the political turmoil caused by the events of "Black Wednesday" when speculation against the pound led the government to raise interest rates three times and to 15% at one point, we were left with hundreds of thousands of households who could no longer afford their mortgages. A housing slump ensued and led to a policy for the next few years of keeping interest rates as low as possible - lower probably than the economy deserved. Just as the housing market was getting back to relative values from before that crash, another asset was bubbling - the "dot com" stocks and shares.

When that bubble burst, there was a great concern in Treasuries on both sides of the Atlantic that the burst would turn to recession (and indeed it did in the US). Gordon Brown in the UK was so concerned that Labour's first term in twenty years would end with a recession that again base rates were kept artificially low, signaling to the commercial banks that were part of this cosy central-commercial bank cartel that they should lend even more, even more irresponsibly, and we had the housing price bubble that has resulted in the current economic carnage. All the way up that price bubble the least well off are encouraged to transfer more of their wealth to the lenders and now, all the way down, that cosy relationship means that the banks, the lenders, are the ones being baled out while everyone else will suffer vast capital losses with no compensation.

And finally, central banking and its bastard daughter inflation kills. Literally. You'll notice that the history of central banking has been closely related to when government wanted to borrow to fight wars. In the past century, more of this has been done via inflation than by direct government borrowing. If there's an inflationary surplus already in the economy, go to war, destroy some capital goods, and with it some human capital and all of a sudden there are things to spend that surplus inflationary money on. If you are already n a war, perhaps an unpopular one, and you cannot finance it via extra taxes or selling debt, inflate, inflate, inflate and you'll be able to buy up your war-goods before everyone else sees the inflation in the form of a reduction in the value of their money.

So, which of Vince, or George, will take such a brave step? Of course, we know the answer - what they really want of course is for themselves to be in charge of this vast power inflation gives. But wouldn't it be great if just for once, politicians made the right policy decision for us not them.

Let me make no bones about this: I am now of the opinion, and have been for some while, that the only true way to Liberty for all is by abolishing government entirely: traditionally termed "anarchism". I'm also not much good at gradualism: someone once said to me that gradualism is a recipe for ultimate failure, and I agree. Give me a revolutionary change; get it over and done with and let us enjoy our new way of life as quickly as possible.

This is because I am, in Hayek's terms as explained in his "Why I am not a conservative", a genuine liberal - one who is willing to take a leap forward into the unknown without first having to know absolutely the outcome; that I have an unshakeable optimism that humanity is so damned clever that it will find, co-operatively rather than coercively, ways of dealing with any problems such change throws up; that if the cause is important enough we will find along the way solutions to issues as they arise.

More importantly (and not merely because I am a recent convert to voluntarism) I feel that the best time for such revolutionary change for many generations is now. Not only that but if we do miss this present opportunity we could actually find ourselves being carried away from the direction of liberty, both nationally and globally and for a considerable time - a dark age. The way governments have been able to finance themselves and their bribes of "safety nets"- both in terms of welfare and physical security - thus far, through control and taxation of their citizens, is being challenged and undermined in ever more popularly accessible ways - whether through travel, virtualization or communication - which happen also to be the best tools for helping to spread the revolution.

For the state to maintain this control in the face of these ever widening vistas of freedom open to its citizens will require ever firmer crackdowns and monitoring of things like travel and communications, if only to try and "follow the money" to ensure that people are taxed "properly". When most international trade had to be done through intermediary companies it was relatively simple to have someone at Custom House Quay signing things in and out of the country, but when we can buy and sell things individual to individual around the globe that all arrive here in millions of small packages addressed direct to the individual involved in the trade it requires a great deal more effort to monitor. Just because electronic communications leave traces that make it possible to track them automatically does not mean we should do so. If the Royal Mail steamed open every letter or package we would be appalled - but of course if it did the whole thing would grind to a halt. In an era where we can potentially work online for anyone in the world and be paid in a location and currency of our choice, where do our taxes go?

But, where the printing press heralded the death-knell of clericalism and the steam engine of agrarian feudalism so mass communication and transport heralds the end of the need for representative government. And just as, even if the first stages of the reformation ushered in by the end of clericalism and industrial capitalism taking over from agrarian feudalism were painful for some they have both been beneficial for most in the longer term, so the wrench from a deeply entrenched statism will also likely affect some more positively than others, the pace of contemporary change and innovation is such that this could be one epochal change in which we are able to fix those problems in "real time" and spread them rapidly around the globe.

Now I am of course familiar with many arguments that most of you might want to throw at me about "positive liberty", and how collective action is essential for giving people opportunities the "market" could not give everyone: after all, I used to make such arguments as well. Let me start with what ought to be an obvious statement: there is nothing a state can do that individuals, sometimes acting together in some way other than through government, could not do, by way of creating these "positive liberty" opportunities.

Leave aside for a moment the obviously crucial issue of whether they would create such "positive liberty" opportunities in the absence of a government forcing them to do so; can you honestly think of any positive function the state currently provides that only a state could provide? Leave aside also, which is a part of the previous question, whether non-state non-coercive mechanisms could deliver such "positive liberties" as "efficiently" or "cost effectively" as the state alternative. I am merely trying to get your agreement at least that yes, we could have private education, we could have private health care, we could have private charitable welfare safety nets, we could have non-state constructed and owned transport systems and infrastructure, we could have non-state security guards, investigative services and arbitration services.

Assuming that you are with me so far then, that the state is not the only conceivable mechanism that could deliver such positive liberty opportunities we ought to look at what price we pay for having a state provide all these things. I don't mean the direct cost of these "positives" but any "negatives" having a state provide them brings; the "collateral damage" if you like.

And what an appropriate statist phrase that is, for we should start with the area in which that phrase resonates the most. It has been estimated that somewhere between 175 MILLION and 230 MILLION people have lost their lives over the past century in wars between and within states and in politically motivated atrocities, human rights abuses and recklessness about the consequences of political policy - things like the often forgotten million or two Germans that died having been ejected from Eastern European countries after WWII not caring where they were to go or how they were to get there alive. And that doesn't include all those killed, for example, through law enforcement where the "crimes" being enforced against do not or should not breach the "harm" principle beloved of liberals.

Then there is the direct cost of governments providing these "positive liberty" opportunities; the welfare state, redistribution and so on paid for largely out of taxes. Here in the UK we are approaching a point at which tax will take 50% of our national income. Despite decades of many governments trying to create a system that is fair and redistributive (what they like to call "progressive"), it is still the case that the least well off taxpayers tend to be paying a greater share of their income in taxes than anyone else. So whatever the benefits various political parties may have tried to bribe the electorate with, assuming that when liberals express concern about lack of these positive liberty opportunities they are mostly concerned about the least well off, we find that for much of the time the poor (especially the working poor) are paying the most, proportionately, for providing these services to their fellow less well off citizens. As it has been said when you rob Peter to pay Paul, you are sure of the support of Paul.

Indirect costs are just as important, though. When the state provides all these things it usually does so as an actual or a de facto monopoly. Yes, we have a small private education system, a small private health care market and so on (and even in both of them they are heavily regulated by government so don't offer an open choice), but essentially most of what the state provides is done by way of monopoly. Even if the state only finances and hires corporations actually to provide the service, as it does with much infrastructure, including all the so-called privatized utilities in the UK, the state either controls who gets the contracts or heavily regulates those who provide quasi-private services.

There is little incentive to do all this efficiently, except that at some point, and the tax-paying public are remarkably tolerant about this, we might vote them out if we think they are spending too much or not efficiently enough. There are few price mechanisms even to indicate if they are doing things efficiently and they end up inventing measures and league tables to approximate for some market mechanism. And they are frequently done on a massive scale, so that initiative is difficult and best practice spreads slowly and with deliberate politically controlled pace. The tax paying public are of course very tolerant because so long as they perceive that more people are paying more than them as individuals then they must be getting as good a deal as it is possible to get.

And finally, but crucially for me, there is the play-off, for liberals at least, with "negative liberty" that all this, and the rest of the state's interference in our lives, creates. Monopolistic services reduce choice. Regulatory burdens reduce entrepreneurialism both in the areas dominated by public provision but also throughout the economy - 80% of the sample of 25,000 small businesses surveyed recently in Oxfordshire said that their biggest headaches were regulatory burdens, especially keeping pace with what often seem like arbitrary change in regulation.

Tax, whichever way you cut it is an imposition on peoples' earnings and wealth. Even for those who feel that the democratic process means that the citizen is effectively agreeing to this as a price of their involvement in that society, in reality we always know that there are people who will not agree with the particular mix of taxes, the particular uses the money is put to and so on. For them, and this could be 49% of the voters, never mind the electorate, it remains an imposition.

In order to enforce this agreement of the bare majority (or the first past the post here in the UK of course - so it is most of the time not even a majority) the state must have the power to threaten people who do not wish to comply. This monopoly of the use of force must always be a challenge for the lover of Liberty. This monopoly is what gives the state the ability to impact on so many other arbitrary areas of our lives. Like any other monopoly it in inherently inefficient. As a monopoly wielded by one group of citizens over another and for which fierce political competition to control it exists, there is always a temptation to bid for that power by offering new restrictions on others, until you end up with the sort of bloated over-legislated state we see in the UK today, which, even with a willing government and citizenry will take many decades to dismantle.

So, for me, given all these costs of having a state monopolistic form of government, against the possibility that there are many other mechanisms for delivering the "positive liberty" type functions social liberals say makes that state essential, even if some of them are prepared to admit it might be a "necessary evil" it is they who must prove the negatives are worth those positives. Circular arguments, or arguments solely from previous authority, are not enough - "the state provides education because people look to the state to provide education, or because the state has 'always' provided education". If you want to be considered in the least bit liberal, for me, you need to have a robust cost-benefit narrative about the state that it is the most efficient, most equitable and, given those other negatives, least impacting on other aspects of life way of delivering these goods.

Is there anyone willing to give such a thing a go. I personally believe it is an impossible case to argue.

There's been a couple of blogs having a little spat about whether libertarians can ethically support having some kind of military in order to intervene in unfree countries in order to assist the oppressed people of those countries gain freedom. We can be all happy in our stateless country, no coercion, no taxes and so on. But we might think ourselves callous, careless, if we didn't worry about how so many other people on the planet are doing under their oppressive regimes.

For some this turns into a justification for a state in order to intervene abroad. It was, ultimately, Tony Blair's final plea to the people of Britain in his speech to the Labour Party Spring Conference as millions of us were marching against the Iraq war on the morning on Feb 15th 2003. So how could we help those oppressed peoples of the world in a stateless non-militarized society? Do we merely rely on our shining example of liberty making all dictators and tyrants quake and fall? It seems unlikely doesn't it?

How about "mercenaries of liberty"? Or even "charity mercenaries"? We have, I am sure, many fine men and women in our current military who joined up thinking they were going to help people around the world. Especially today when so much is spoken of our military's role in peace-keeping and policing in areas of conflict. I'm sure the likes of Col Tim Collins (he of the "We come to liberate not to conquer" speech to his troops before going into Iraq) could be cast in such a mould.

How about armed and militarily trained squads going in, funded by private charity say, alongside the Oxfam delivery in Darfur? Perhaps even developing international "protection agencies" who might advertise their services in Saddam's Iraq offering to protect your Marsh Arab village against Saddam's security forces? Always of course working on the same basis as protection agencies in our stateless private law society - spreading out private law society into another society. No initiation of aggression, but just protection. That protection could even help break down the forces of the oppressor. How much of Saddam's military, who after all largely fled when confronted with well trained troops, acted all their military careers out of fear of the consequences of not obeying orders from a tyrannical bastard?

Perhaps in defending the Marsh Arabs, with as little aggression as possible, some of Saddam's forces might come to understand that if they came under your protection too they would be able to escape from Saddam's predations until the latter is actually left weak enough for people to act against on their own to grab their own liberty. I suppose ironically this is not dissimilar to how the neo-cons at the Project for the New American Century were suggesting getting rid of Saddam without actually going to war with him - by offering protection to the people in the south and the Kurdish north until they had the confidence to act on their own.

Would it work? Is it ethical for a libertarian? How would one ensure that such an armed protection agency capable and willing to take on others' statist oppressors did not become the "might is right" monopolistic wielder of force when back at home? I suppose the market-anarchist line would be that they can only build up those businesses in the public glare if they do as their customers pay them to - if they were charitably funded by people here wanting to help Iraqis, say, that would mean only being able to build up the weaponry to take that role on, and being answerable to arbiters if they breached their contracts of non-aggression here or even in theatre. That they would be inefficient if they spent time and money developing anything more than the best defensive power, skills and weaponry.

Late with the news as usual, I'm sure you all already know that the Guardian Comment is Free lot have launched a section it calls "Liberty Central" to fight for "civil liberties". On the face of it a good idea and some good names are involved - Henry Porter's blog will be based there and the Liberty pressure group led by my university Chancellor Shami Chakrabati and of which I am a supporter will be hosting a civil liberties clinic.

So far so good; we have witnessed (or perhaps too many of us have not actually witnessed, which is why they get away with it) a steady erosion of our civil liberties (not merely over the past decade of Labour government of course, but increasingly frantic over that period). And, within reason, any high profile campaign to raise awareness of these attacks on our freedoms is welcome.

But...and you knew there had to be one...there have been a couple of articles that have to me gone out of their way to spoil the unanimity of the body of diverse people for whom civil liberties matter very much. There is actually quite a lot in Tony Benn's introductory article with which I agree - and perhaps most especially his own disagreement with the idea in one of the comments he read that "Tory principles (are) of liberty and small government". But having entitled his contribution "Liberty is not an issue of left or right..." he concludes with a big side swipe at what he calls "rightwing libertarians who want liberty and have a different approach to economic and social policy".

Conor Gearty, however, goes into more detail in yesterday's (Mon. 2nd February) set piece:

We enjoy the civilised society we have today largely because of the courageous actions of past generations of democratic activists, people determined enough to wrest political power from the few and deploy it for the benefit of the many. Such early democrats knew the value of government and well appreciated how the most resistant to regulation were those whose wealth and privilege were likely to be reined in by proper democratic government. To camouflage their self-interest in morality, these forces of conservatism described themselves as libertarian, in other words as committed to freedom and on that account opposed to governmental intrusion into their lives. These are the "right wing libertarians" whom Benn rightly excoriates at the end of his essay: the only interest they have is in their own freedom to continue to act selfishly at the expense of others. [From Conor Gearty: Is there a risk that in pursuing its liberty agenda, the left is drifting into a dangerous brand of libertarianism? | Comment is free | guardian.co.uk]

...and it is with this I wish particularly to take issue. It misrepresents, grossly, the origins of libertarianism. Chronologically and ideologically. It conveniently ignores generations of libertarian and anarchist activists that marched side by side with the radical nineteenth century fighters for democracy against the vested interests and privilege of the old order, controlled by the monopolies of land and money and protected by the greatest monopoly of them all, the state.

Libertarianism in this long historical tradition is in stark opposition to conservatism. Even those soi-dissant libertarians who have, for whatever reason, made political cause with the Conservative party in this country are rarely the champions of vested interest and privilege this passage would have us believe. Those who call themselves "anarcho-capitalists" for example follow the tradition of the individualist anarchists in demanding the break up of government boondoggling deals with big corporations that has created such a culture of corporate welfare that they see fundamentally disadvantages the poorest and weakest.

Personally I just don't believe in the concept of what Gearty and Benn call "right wing libertarians". There may be right wingers who call themselves libertarian as a flag of convenience, but their influence is limited and to write as if they make up any significant portion of the broad church that has been libertarianism over the past century and a half is to attempt deliberately to drive a wedge between those of us who do share your common cause of civil liberties most passionately, albeit as but one strand of liberty amongst many you choose to reject.

As to the underlying assumption in both Benn and Gearty's pieces that "democracy" is the end and liberty but a characteristic albeit important by-product of that, need they be reminded that we are fighting this fight against a democratically elected government, one which many of those supporting "Liberty Central" will have helped put into power. Or, as libertarian blogger Old Holborn pointed out only yesterday, some of the most egregious examples of regimes that have taken the eradication of rights and liberties to their ultimate extremes have been either democratically elected or put in power by the mob, demos.

The fact is that the collectivist left is only half a friend of liberty, if that. They have an authoritarian streak a mile wide running through them. One that says that it's okay for them to decide to take arbitrary amounts of property from one to give to another, to decide for people what's best for them, and in doing so set up expensive structures that have proven to put the poorest and weakest into a state of dependency that at times is the modern incarnation of slavery. Only this time, it's to the state, the great monopoly from which nobody can break free, in their world at least.

If "Liberty Central" cannot do better than this, it does not deserve the name, for it barely begins to understand the concept.

...that "government is the problem", or because anti-regulator Alan Greenspan named Ayn Rand as his biggest political influence, it's time you did some reading.

Each year the Libertarian Alliance awards the Chris R Tame Memorial Prize (named for the late founder of the Libertarian Alliance) for the best essay on a title chosen by its Director, Dr Sean Gabb, and this year's winner was announced this weekend at the Libertarian Alliance annual conference at the National Liberal Club - more on which in upcoming posts.

The Libertarian Alliance is the biggest grouping of the broad church known as Libertarianism in the UK, and this year's essay title was set just ahead of the main round of recent financial market troubles but focussing on the common idea that Libertarians would demolish the state, leaving what we currently know as big corporate capitalism to run amok. The full brief for contestants ran as follows:

Essay Title: "Can a Libertarian Society be Described as 'Tesco minus the State'?"

Explanatory Note

Many socialists and conservatives regard libertarians as cheerleaders for big business. Our belief in free enterprise is understood as support for the bigger, and therefore the more successful, corporations - General Motors, Microsoft, HSBC, Tesco, and so forth - and for an international financial system centred on the City of London.

Some libertarians are happy to be so regarded. They dislike the way in which big government provides opportunities for big business to acquire privileges that shelter it from competition. Even so, they believe that a world without government, or a world with much less government, would be broadly similar in its patterns of enterprise to the world that we now have. It would be much improved, but not fundamentally dissimilar.

Other libertarians disagree. They regard big business as fundamentally a creation of big government. Incorporation laws free entrepreneurs from personal risk and personal responsibility, and allow the growth of large business organisations that are bureaucratically managed. These organisations then cartellise their markets and externalise many of their costs. The result is systematic distortion of market behaviour from the forms it would take without government intervention. These libertarians often go further in their analysis by denying the legitimacy of intellectual property rights and ownership rights in land beyond what any individual can directly use.

Where do you stand in this debate? Are you broadly comfortable with a global capitalism that is raising billions of people from starvation towards affluence. Or are you a radical with a vision of a society that has never yet been tried and is as alien and even frightening to most people as anything promised by the Marxists.

You tell us.

No go and read the winning essay. Congratulations go to Keith Preston, for his entry entitled "Free enterprise: the antidote to corporate plutocracy"

But if you are too lazy to read the whole lot (c 3000 words - so no more than one of my usual posts!), it concludes...

"An economy organized on the basis of worker-owned and operated industries,peoples’ banks, mutuals, consumer cooperatives, anarcho-syndicalist labor unions, individual and family enterprises, small farms and crafts workers associations engaged in local production for local use, voluntary charitable institutions, land trusts, or voluntary collectives, communes and kibbutzim may seem farfetched to some, but no more so and probably less so than a modern industrial, high-tech economy where the merchant class is the ruling class and the working class is a frequently affluent middle class would have seemed to residents of the feudal societies of pre-modern times. If the expansion of the market economy, specialization, the division of labor, industrialization and technological advancements can bring about the achievements of modern societies in eradicating disease, starvation, infant mortality and early death, one can only wonder what a genuine free enterprise system might achieve, and would have already achieved were it not for the scourge of statism and the corresponding plutocracy. "

Now, you may still not be convinced that "government is the problem", but do us the decency of not conflating "deregulation" with "evil right wing global corporatism" and blaming "libertarianism" for the great big pile of dog-doo the state and economy is in right now. Especially those of you who claim to be Liberals, fellow travelers of Libertarianism for the past 150 years.

...and is not "liberal" either.

There are often attempts by ministers (Jacqui Smith is mentioned in Sunday's Independent for example about the recent prisoner data loss) to shirk their responsibility for government cock-ups. There are also left wing commentators who crow that these incidents are clear proof that "neo-liberal" policies of "privatising" government functions are evil and should be stopped; that the "free market" does not work in the public sphere.

But I don't consider such contracting out of work as either liberal nor as implying that ministers are no longer responsible for their incompetence. Nor, even, are they truly "privatisation". To me the doctrine that says some things are better done by profit motivated companies (or other, non-government organizations) does not mean merely sub-contracting to a government service level agreement.

Yes, such arrangements may save on costs or similar. But all they are doing is delivering the same policies and procedures designed by government. This is the "corporatisation" of government. It is inherently protectionist - the government grants usually monopolistic contracts to firms, sometimes even, like Capita, that started life as a bunch of civil servants deciding they could do better for themselves by making a profit out of what they do.

No, real privatisation, so called "liberalisation" of government functions, should mean the state divesting themselves completely from interference in that policy area. For example, just because DVLA contracts out its computer systems and administration does not mean the registration and licensing of vehicles and drivers has been "privatised". Not bothering with a DVLA at all and allowing insurance companies to work out ways of ensuring the drivers and vehicles they are prepared to insure comply with what they consider to be safe would be. i.e. a different way of working, free from government entirely, and open to proper competition where new ideas and ways of achieving similar ends can be developed. Finding new structures, free from the dead hand of government to do the things we need, rather than what politicians think we ought to need.

Similarly with ID cards or passports - it is not "privatising" simply to contract out the development and implementation of a government policy to profit making firms. Indeed, this is anathema to true economic liberals - for it is corporate welfare, money for old rope if you like. My idea from yesterday about getting rid of government validated passports entirely and instead letting people buy their own guarantee of identity if and when they need one using a new mechanism such as digital certificates would be liberal; the true privatisation of functions the state previously chose to regulate and deliver itself.

And of course, such liberalisation may not end up being delivered by "for-profit" corporations at all.

So Jacqui, stop trying to hide from your responsibilities. You have cocked up just as surely as if the person with the memory stick were your permanent secretary. You are incompetent. Indeed doubly so - for not only have you failed to do your job, but you've even failed to make sure the simpler option - getting someone else to do it for you is done properly.  You should go.

"Every few hundred years in Western history there occurs a sharp transformation. Within a few short decades society - its worldview, its basic values, its social and political structures, its arts, its key institutions - rearranges itself, and the people born then cannot even imagine a world in which their grandparents lived and into which their parents were born, We are currently living through such a transformation"

Peter Drucker, "The Post-Capitalist Society" Chapter 1, 1993

In "The Future of Money" former Belgian central banker Bernard Lietaer suggests two examples of Drucker's "sharp transformation".

First the invention of printing, and the unimaginable change it brought about in the literacy and therefore intellectual and political influence of a large part of the population from whom books were previously too remote. The ramifications of such a change included the Reformation and its huge upheavals as nations moved away from Rome, gave primacy to their own languages, and permitted scientific scholarship previously zealously suppressed by the Vatican.

Second, the invention of the steam engine which accelerated the process of urbanization, global trade in manufactures, created a working class steeped first in poverty, oppression and misery, and then rising up with revolutionary fervour.

Lietaer, following Drucker's suggestion, suggests that the next epochal change is on us. This time he paints a picture of four great movements that he describes as huge pistons pushing towards the same centre point, and that our reaction to these movements could push us to ever greater social inequity and environmental degradation to the disadvantage of future generations or to what he calls "sustainable abundance". His four great pistons are all too evident already: climate change, an ageing population, monetary instability and the advent of the super-connected information age.

So, you'll have spotted that this actually has nothing to do with the recent book from which I've shamelessly pinched the title. I haven't read it, and it appears now to be on reprint or something as Amazon can only offer 4-6 weeks delivery, but I will no doubt find it interesting once it arrives. But the point is that this epochal change will necessitate a reinvention of the state, the nation state, and probably every nation state on the planet.

Many of the institutions, commercial and governmental at least, that we have today were forged precisely because communication and information flow between disconnected markets was difficult. They are vehicles in which we put our trust when dealing with people and businesses we could not know personally. Even money itself is a construct that enables us to trust dealings with one another, a mechanism by which someone who sells us something can give us credit without knowing too much about us.

The information age changes all of this. The synopsis of David Cameron's Google speech yesterday at ConservativeHome does pinpoint the sort of changes we have seen in information flow and how they have been reflected in changes in the mode of government or, to use their word, bureaucracy. But it goes so much further than they seem to conceive (or maybe they're just trying not to scare the Tory horses too much).

The internet and other communication technologies enable us vastly to expand the networks of people whom we know well enough to form an opinion about whether we trust them or not. Look at things like e-Bay, where many participants rely on recommendations from others when making decisions about whom to trade with. An operation like e-Bay could just as well work in fact with a new, corporate, common currency into and out of which people trade other currencies as they need to. In a different vein, bringing new participants into the global economy, look at things like Kiva, the internet based microfinance scheme where people from all over the developing world can pitch for micro-loans from investors the world over to help them set up or develop their businesses.

On a more day-to-day level we have seen the internet make trade "arbitrage" available to the individual consumer - we can now search the web for the best prices in many goods and in different currencies. There is simply less of a need for national currencies. When, as we are frequently promised, we no longer need cash even for small transactions, it will not matter what currency our bank account is denominated in, so long as timely information allows us to convert it at the till into something the seller wants - which may even not have to be "money" in the conventional sense at all.

The internet is also radically changing the way we could choose to work, even if not many of us have so far done so. We could choose to live on a desert island with an internet connection and still work for our tech firm in Britain, or vice versa, we could retreat to our village virtual workplace and carry out open heart surgery on a patient in Tonga. Where do we get paid for these different patterns of working, and in what - Tesco vouchers anyone, after all you can pretty much buy anything you'd need there if you want to? How would a government know, except through every more intrusive surveillance of our affairs, what our incomes are, where they ought to be taxed and so on?

What does a state have left, if it no longer has control of information about its citizens' earnings and trading patterns? And when we can trade with smaller and smaller businesses around the world because of our widened networks of trust, what does the global corporation have left to keep us buying from them? This was the great hope of the nineteenth century anarchists, libertarians and mutualists who hoped for an end to the money monopoly held by states and bankers, and to government protectionism, which would drive down the returns to capital and drive up the returns to labour.

In the light of these huge potential changes in the ways we work, socialise, trade and trust we have the opportunity to look again at the argument, that once seemed so settled in the early part of the twentieth century, the great Liberal reform era, for truly free trade over protectionism. Individual choice over state intervention. If there is a role for the state in all of this, it is in trying to ensure that we all have fair access to the media of such a new economy - communications and delivery networks.