Both The State And The Market Are Based On Coercion

It is common to hear people on the internet complain about the power of the state. It is regularly denounced for forcing people to obey its laws and pay taxes. Libertarians criticise this use of coercion and regularly compare it to a gang of thieves or the mafia. Many advocate that we either abolish or minimise the size of the state and replace it with a world where everything is based on voluntary co-operation and you are free to do what you want so long as it does not harm anyone (known as the Non-Aggression Principle). It seems like a simple choice between peaceful liberty or violent oppression. It is a handy debating trick as it allows libertarians to paint themselves as defenders of freedom while opponents look like tyrants. As nice as it sounds, it suffers from the fatal flaw that the market is just as reliant on the coercion as the state is.

For starters there has never been a truly free market in history, nor will there ever been one. When most libertarians or free marketers criticise taxes or regulations, what they are usually criticising are the taxes and regulations they dislike. The vast majority of libertarians want some degree of taxes, just not as many as we currently have. They want some level of regulation, such as those preventing child labour, prohibiting the release of toxic gas or controlling access to plutonium. When someone says the state shouldn’t tell you how to run your life, they usually don’t mean you should be free to dump toxic waste anywhere. Or when they say the state has no right to use force against people, they probably have no objection to a shop selling poison being forced to close. Most people see the unprotected and unregulated workplaces of the 19th century as a horrible place in the past rather than a glorious future we can aspire to.

However, there are a minority known as Anarcho-Capitalists who do. These people think literally every problem from building roads, to running schools and to fighting crime can and should be done by the market. Instead of the state, society will be based around private property and voluntary contracts that will supposedly spell out every right and rule of this new society. There are numerous problems with this idea. The most obvious is that private property and contracts too are based on force. If someone violates them you have to use force or violence against them in order to maintain your rights.

A simple example will do. Imagine a stranger walks into your house and sits down on your couch. In other words, they are trespassing on your private property. The only way to get rid of them (that is to say, enforce your property rights) is to either expel them with force or get the police to do this. If you were forbidden from using force you would have literally no way of removing this unwanted stranger. In other words, private property cannot exist without the use or threat of force. After all, property is at its core a claim to forcibly prevent other people from entering or using it. When someone says a house is their property, they mean it is excluded to everyone but themselves (and those they grant permission to). Without the threat of violence there would be no such thing as property.

This is true not only for individuals but businesses. All businesses rely on the threat of violence to prevent themselves from getting robbed. Libertarians often decry the state for getting compliance at the point of a gun, claiming the state could not exist without the threat of violence. This is true, but neither could capitalism. Capitalism relies on coercion, not only to enforce property rights, but also to enforce contracts. If I tell my landlord that I won’t pay him rent, he will either use the threat of violence to force me to pay and/or force to evict me. If a business refuses to supply goods that were ordered or refuses to pay for goods received, then the other party will use the threat of violence to force them to comply. If a consumer signs a twelve month subscription for a product, then the threat of force is usually enough to get them to pay even if they no longer want to. In this sense, all trade is based to an extent on force. Free trade does not exist as there are rules and the threat of force if these rules are broken. This is usually done by the police on their behalf, but it has to be done by someone.

There are numerous other areas of capitalism that rely on force. Were I to copy someone else’s invention, I would be coerced into stopping. When a patent is registered this is in effect a person claiming a monopoly over an idea and threatening force against anyone who copies it. A most unfree and coercive action, but would we have anywhere near as many inventions and discoveries without it? How could an economy function without threats of coercion against fraud? If people can freely cheat, lie and deceive without punishment, then no market economy could ever function. What else can you do about a fraud if you cannot use force? Discontinue business with them while they are free to scam others? There must be a threat of force against frauds if people are ever going to trust each other enough to trade.

Can you imagine how capitalism could possibly function without coercion and the threat of violence? There would be nothing to stop theft and pillage of businesses, no claim to ownership over goods, no implementation of contracts, no enforcement of patents or protection against fraud. There would no incentive to innovate, to invest, to trade or to do any form of business. Without some degree of coercion we would truly be in a Hobbesian world where nothing was secure. There simply would be no such thing as capitalism without the security supplied by coercion.

But, an ancap would argue, we voluntarily enter into contracts, unlike any agreement we have with the state. It’s not coercion if we have agreed to it. But this is patently untrue of private property. No one (apart from the state and the previous owners) agreed to my parents ownership of their property (I’m a man of no property myself, so I’ll have to use them as an example). No contract was signed with their neighbours and no consent was given by anyone else in society. In fact no one ever agreed that property should be privately owned. Who ever said that land could belong to any one person? To many ancient civilisations (such as the Celts and Native Americans) this notion was as strange as any one person claiming they owned the air or the sky.

Private property was only created when one tribe violently conquered another and gave the land to their soldiers as a prize. This is true the world over with the only difference being that in some countries it happened thousands of years ago (such as Europe), in others merely a hundred years ago (Africa for example). In most countries around the world, a coloniser invaded and violently stole most of the land. They and their descendants kept the land until they either sold it (to people who sold it to people who sold it and so on until the current owners) or the state (voluntarily or not) broke up the aristocrats estates.

Likewise, there is nothing voluntary or peaceful about patents. When I claim an idea as my own, I do not need to receive permission from every single person. If someone copies my idea, I am entitled to use coercion against them even if they never consented to such use of force. Like all property rights, it is based on coercion.

Now there are other objections libertarians and anarchists can make, such as claiming that private police and private courts would wield their coercive powers more efficiently. I still think this idea is daft, but that’s an argument for another time. The main point is that they are still based on coercion. You can argue about who you would rather use coercion or who makes to rules as to when coercion can be used, so long as you remember that someone has to. The crucial point is that we acknowledge that coercion is inherent in all economic systems from feudalism to socialism to capitalism to anarchism.

So yes the state does rely on coercion in order to function. But so does the market. Without coercion or the threat of it, we would not have private property, protection against fraud or the enforcement of contracts and patents. Capitalism simply could not exist with coercion. I am not trying to argue that we should overthrow capitalism or private property, but rather that we accept it for what it is. We should not treat the markets as an oasis where freedom grows and the state as Mount Doom where tyranny reigns. As hard as it may sound for those who like their politics black-and-white with clear heroes and villains, both the state and the market are based on coercion.

(Credit to Matt Bruenig and Lord Keynes for the inspiration for this post)

17 thoughts on “Both The State And The Market Are Based On Coercion”

  1. “When most libertarians or free marketers criticise taxes or regulations, what they are usually criticising are the taxes and regulations they dislike.”

    This pretty much sums it all up beautifully. Free markets is a non-existing fantasy much like the noble savage was and the honest businessman is.

  2. The idea of free markets are a self-serving justification to “do as I want to do” by having a vaguely acceptable veneer on it. Free trade is even worse. Only well-regulated markets work as has been shown time and time again but that leaves us with the problem of “who regulates the regulators?” Currently the plutocrats are regulating the regulators, which is to say … not.

  3. A small point on words. Whilst I agree with your argument here (no surprise there then) you’ve lumped in ‘anarchists’ as if they were the same as ‘anarcho-capitalists’ and ‘libertarians’. They ain’t. It’s only in North American thought (or in association with American-dominated institutions like the internet and certain areas of Academia) that such an association is commonplace. Historically anarchism has been a part of the egalitarian left, far more than of the right. Indeed, even the invention of ‘libertarianism’ may well have been a strategy of the right to tap into anti-establishment sentiment and use it for the purposes of the establishment.

      1. I wouldn’t say there are two types of anarchists. There are anarchists (mutualists, syndicalists, anarcho-communists etc) which share the same ideology, and then there are anti-state libertarians that claim to be anarchists, but has rather little in common with them.

  4. The use of force is justified when used in self defense, it’s the INITIATION of force that is always immoral.
    Furthermore, someone not complying to the contract has agreed upon signing the contract that force will be used against him in such a case. There is a choice.
    Taxation is based on a social contract of which nobody has a copy and to which you did not explicitly agree to. There is no choice.
    See the difference?
    At the end of the day all this doesn’t matter because anarchism is the only system that does not violate the non-aggression principle. Sure, the people in a stateless society will most likely violate this principle, but it’s not the system itself (or rather the lack of it) doing it.
    I agree that Anarchism would be an absolute hell on earth given the “moral quality” of the average human being, but to say that anarchism is wrong because of what would happen is an argument from consequences. Anarchism is the only “system” that has moral integrity.
    The debate I’d like anarchists to participate in is one that asks the question: Is Anarchism a responsible choice? Akin to “Is wearing a miniskirt while walking down a dark alley at 3am responsible even though it’s your right to do so?”

    Personally I think we should create a social contract and give people the choice to sign it after every election. Given that not signing it would effectively give you the rights of a monkey, I think that the vast majority will sign it. It’s what would eventually happen in an anarchy anyways; I know this because we came from monkeys and monkeys live in an anarchy (And sure, it works good enough for them, ignoring the rare events when fellow monkeys gang up on you and literally eat you alive that is).

    1. Even in a an anarchist society there will still be violence needed to enforce the system. As I detailed in the post, private property is based on violence. As is all trade. I got my hair cut today and the hairdresser would have initiated violence against me had I not pad, despite the fact I never signed a contract. Even formal contracts state what a party is required to provide, they rarely stated the punishment upon failure to honour the terms.

      As for having everyone sign a new contract after an election, I don’t see how that would work or be any improvement. I don’t think declaring open season on non-signers is an improvement on the current solution.

        1. @Mason B deception, not force. Refusing to pay the expected payment for a service provided is deception, especially since the quality of any haircut can only be assessed ex-post. It is not force or coercion by any means. The hairstylist would then initiate force to coerce him into paying up. That’s what the article is all about.

      1. Trade is based on voluntary exchange, not coercion. Person A and person B agree to trade one thing for another. Today’s market is refined by customary systems. When you go to the barber’s, he has a sign saying how much haircuts are, which you can see before you sit down in the barber’s chair. It’s still an exchange. He gives you a haircut, and you give him his fee. The same as going to the store and looking at the prices of items in the store, or going to a restaurant and looking at the menu which shows prices. It’s merely a custom, an implicit agreement, that your acceptance of the good or service indicates your willingness to pay the requested price.
        You keep using the term “violence”, but really force is the better word for it, because while force is sometimes violent, it doesn’t have to be. It could, for example, merely be the threat of force, which in itself is not violence. Anyway, force only enters into it if one party or the other violates the agreement. It is not violence, force, or even the threat of force that is the actual basis for a voluntary trade or agreement; it’s only used if the agreement isn’t kept.

        You may argue that this is just semantics, but I think it’s a clear misrepresentation to say that a market is based on violence, because it’s not really true. Also, you make no distinction about the circumstances of force used, but as has been pointed out, there is a clear difference between initiating force and defensive force.

  5. A free market is an ethical argument: that it is immoral to initiate force against another human being. It is wrong to be violent especially against peaceful people. The purpose behind the specific term ‘initiation of force’ is to clarify that preventative force is justified in defense from the initiation of force.

        1. Your argument rests on the assumption that people would voluntarily refrain from doing those things on the basis of finding them morally repulsive or that others too would either find them morally repulsive or would have the courage to do anything about it, which are huge assumptions in their own right.

  6. You have a common misunderstanding about the NAP. You fail to make the distinction between initiating force and using defensive or retaliatory force. Only initiating force is considered immoral by libertarians. If an armed robber tries to steal from me, he is initiating force, and I am morally justified in using force defensively to protect myself. If his robbery succeeds, I am morally justified in using the legal process to use retaliatory force against the robber so that my property may be reclaimed.

    Therefore to say that a free market is based on coercion is a misconception, as it is based on voluntary exchange. To say that a free market uses coercion tells us nothing about the morality of the force used. Libertarians often use the term “coercion” when they mean initiation of force, which is a bit of linguistic mistake, but it’s also a bit of a shortcut.

    1. I realized I didn’t fully address your post. The flip side to the market, government and government-regulation. Sure, government sometimes uses defensive or retaliatory force, but much government activity and regulation is based upon *initiating* force. Government itself could not even exist without initiating force, as the two primary requirements for government are involuntary taxation and a monopoly on the legal authority over the area that it rules over. I addressed your taxation is not theft argument in comments on other posts.

  7. If you consent to a form of coercion (e.g. a contact), how is it truly coercive? If you can choose not to be bound by the stipulations of a contract, how does your choice to accept them impose a form of victimhood on one consenting party?

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