The Rule of None

Posted: August 10, 2007 in Uncategorized

This month, Cato Unbound is all about anarchy, and in the lead essay George Mason economics professor Peter Leeson argues–almost entirely with empirical evidence–that anarchy can indeed be beneficial. As a motivator for people to read the whole thing, a large chunk of it involves pirates, but here are some tidbits for you lazy motherfuckers who won’t anyway.

How the need for inter-regional trade in anarchic nineteenth century interior Africa facilitated credit mechanisms:

The institution they devised for this purpose was credit. The key to understanding how credit solved the problem of force and facilitated peaceful exchange is straightforward: you can’t steal goods that aren’t yet produced, but you can trade with them.

Here’s how the credit institution worked: Producers would not produce anything today but would instead wait for middlemen to arrive in their villages looking for goods to plunder. With nothing available to steal the middlemen had two options: return to the coast empty-handed after having made a trip to the interior, or make an agreement with producers to supply the goods they required on the basis of credit. In light of the costliness of their trip to the interior, middlemen frequently chose the latter.

According to their credit arrangements, middlemen advanced payment to producers and agreed to return later to collect the goods they were owed. When they returned for this purpose all that was available for taking was what they were owed, so stealing was not an option. Instead, middlemen frequently renewed the credit agreement, which initiated a subsequent round of credit-based trade, and so on.

And in the case of Somalian anarchy:

In a recent study I compared Somali welfare under anarchy to welfare under government using all key development indicators for which data allowed comparison.[15] According to the data, of the eighteen development indicators, fourteen show unambiguous improvement under anarchy. Life expectancy is higher today than was in the last years of government’s existence; infant mortality has improved twenty-four percent; maternal mortality has fallen over thirty percent; infants with low birth weight has fallen more than fifteen percentage points; access to health facilities has increased more than twenty-five percentage points; access to sanitation has risen eight percentage points; extreme poverty has plummeted nearly twenty percentage points; one year olds fully immunized for TB has grown nearly twenty percentage points, and for measles has increased ten; fatalities due to measles have dropped thirty percent; and the prevalence of TVs, radios, and telephones has jumped between three and twenty-five times.

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