David Friedman's Machinery of Freedom
By Arnold Kling
The book was first published in 1973, with a revised edition in 1989. I just got around to reading it. Some excerpts and my commentary follow.p. 31:
The areas of the economy which we think of as ‘important’ tend to be those in which we can identify a single large firm. We rarely consider such ‘industries’ as the restaurant and bar business, domestic service, or the manufacturing of textiles and apparel, each of which is highly competitive and each of which employs more people than iron, stell, and automobile manufacturing combined.
On p. 37, he discusses the post office. It is amusing to consider how anachronistic that is as a topic. Years ago, it was “obvious” that the post office was a natural monopoly. Today, I doubt that it would occur to anyone under the age of 40 that the post office is a natural monopoly. We are so used to seeing UPS and FedEx trucks. The only people who care about the status of the post office are the postal workers.
On p. 66, he proposes a university in which each course is funded by tuition.
the present corporate structure would be replaced by a number of separate organizations, cooperating…one or more businesses renting out the use of classrooms, and a large number of teachers, each paying for the use of a classroom and charging the students…
Why this has not occurred is an interesting question. I tend to think that Daniel Klein’s People’s Romance theory of government may have an analogous explanation for universities. That is, we have a romantic conception of “college” that makes it seem much greater than the sum of its parts. This romance includes signaling benefits, but it also involves more.
In Police, Courts, and Laws–on the Market, we have one of Friedman’s most important contributions, which is a suggestion that we can have competition in the market for law and order. This raises the issue of jurisdictional conflict. On p. 118,
What would happen in a dispute between an anti-capital-punishment agency and a pro-capital-punishment agency? Obviously, there is no way that if I kill you the case goes to one court, but if you are killed by me it goes to another.
…If the opponents of capital punishment feel more strongly than the proponents, the agencies will agree to no capital punishment; in exchange, the agencies that want capital punishment will get something else. Perhaps it will be agreed that they will not pay court costs or that some other disputed policy will go their way.
In other words, jurisdictional disputes will be resolved by bargaining. In this example, it sounds as if the bargaining will be done ahead of time.
What I had in mind was a “higher court” that resolves such jurisdictional disputes. That is, all parties agree that any jurisdictional disputes will be resolved in a higher court, rather than lead to war. This “higher court” approach would not preclude two jurisdictions avoiding disputes by bargaining. However, it would create a backup plan in case there was no bargaining prior to the dispute arising and no reasonable way to strike a bargain afterward. The downside of this “higher court” is that it could provide a back door by which monopoly government could re-enter the picture.
As an aside, I would say that jurisdictional disputes are a growing practical problem, even under our system of monopoly government. There is the question of when international law supersedes national law, when national law supersedes state law, or when government law supersedes religious law. These issues seem to be coming to the forefront with globalization.
On p. 129,
Under present institutions the areas over which laws apply are determined by historical accident. If the majority of the population of a state supports one kind of law, everyone in the state gets it. Under anarcho-capitalism, insofar as it would be possible, everyone would have his own law. Diversity of law cannot be unlimited, since the same law must cover both parties to a dispute. But it is possible to have much more diversity than our present system allows.
On p. 133,
Most varieties of socialism implicitly assume unanimous agreement on goals…the problem of allocating limited resources to diverse ends, does not exist; economics is reduced to the ‘engineering’ problem of how best to use the available resources to achieve the common end.
The organization of a capitalist society assumes that different people have different ends and that the institutions of the society must allow for that difference.
On p. 154,
It might be argued that…politicians have no talent except for theft and that the increase in their income resulting from the government’s demand for their talent is therefore considerable. This argument is oratorically satisfying, but it is probably false…a man who is good at one thing usually can be good at others. If government were drastically reduced or eliminated, politicians could go into legitimate activities…everyone’s income would be much higher.
On p. 167,
Many libertarians appear to believe that libertarianism can be stated as a simple and convincing moral principle from which everything else follows. Popular candidates are “It is always wrong to initiate coercion” and “Everyone has the absolute right to control his own property, provided that he does not use it to violate the corresponding rights of others.” If they are right, then the obvious way to defend libertarian proposals is by showing that they follow from the initial principle. One might even argue that to defend libertarian proposals on the grounds that they have desirable consequences, as I have done throughout this book, is not only a waste of time but a dangerous waste of time, since it suggests that one must abandon the libertarian position if it turns out that some coercive alternative works better.
1. Competitive government (the term I prefer to anarcho-capitalism) might not be libertarian. Their might be a smoking ban in my neighborhood, or in the association of restaurants that includes the establishments where I eat. My religious organization could ban abortion, and it might even reserve the right to imprison a woman who undergoes an abortion.
2. It strikes me, and it probably struck Friedman, that “purist” libertarianism requires the same sort of unanimity that is required by socialism. In either case, we have to all agree on what constitutes a just society.
3. Competitive government might not have fewer politicians. My neighborhood, my religious organization, and various business trade groups to which I belong might have, collectively, many politicians.
4. The advantages of competitive government would be choice and competitive pressure. Instead of trying to change my school’s sex education policy by voting for a candidate for school board, I change schools. Instead of waiting for government to fix the traffic problems, I sign up for a “premium” toll road service or mass transit system. Choice gives me more degrees of freedom to pick a mix of public goods and regulations that I like. Competitive pressure would cause bad government service providers to go out of business.