A Hayekian Case Against Anarcho-Capitalism: Of Street Grids, Lighthouses, and Aid to the Destitute

23 Pages Posted: 27 Jan 2017 Last revised: 2 Feb 2017

Date Written: January 26, 2017

Abstract

Murray Rothbard and other anarcho-capitalists would abolish all governments. Individuals instead would voluntarily subscribe to the services of one of a number of competing private protective associations. This vision is a pipe dream. Building on the ideas of small-government classical liberals such as Friedrich Hayek and Milton Friedman, I first identify some utilitarian programs that, on account of transaction costs, overlapping protective associations could not realistically provide. These include the assembly of land for major public works and the control of air pollution. Second, and more fundamentally, competition among rival protective associations within a given territory would not long endure. On account of efficiencies of scale and scope, the provision of governance services is a natural territorial monopoly. Anarcho-capitalists, by imagining a stable system of competing private associations, ignore both the inevitability of territorial monopolists in governance, and the importance of institutions to constrain those monopolists’ abuses.

Keywords: anarcho-capitalism, Hayek, Rothbard, Nozick, public goods, territorial government

JEL Classification: B53, D02, H11, H40, K00

Suggested Citation

Ellickson, Robert C., A Hayekian Case Against Anarcho-Capitalism: Of Street Grids, Lighthouses, and Aid to the Destitute (January 26, 2017). Yale Law & Economics Research Paper No. 569. Available at SSRN: https://ssrn.com/abstract=2906383 or http://dx.doi.org/10.2139/ssrn.2906383

Robert C. Ellickson (Contact Author)

Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
203-432-7033 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
212
Abstract Views
1,290
rank
146,937
PlumX Metrics