Academic journal article The Review of Social and Economic Issues

Defense as a Private Good in a Competitive Order

Academic journal article The Review of Social and Economic Issues

Defense as a Private Good in a Competitive Order

Article excerpt

INTRODUCTION

Probably the most popular argument delineating an ostensibly beneficial function performed by a monopoly of force - i.e., the state - refers to its claimed ability to supply society with certain essential, otherwise unattainable classes of goods. One such class consists of the so-called common goods - i.e., goods that produce positive externalities, which enable non-payers to benefit from their use without in any way contributing to their production.

It is often claimed that since in the case of common goods the social gains, including the gains of free riders, outweigh the private gains of the producers, the incentive to produce them by private, profit-driven entrepreneurs is significantly undermined. Thus, a monopoly of force is expected to intervene and coerce every able member of society to contribute financially in order to secure a sufficient supply of the goods in question. Absent such a monopoly, the argument goes, their supply is bound to be suboptimal (see, e.g., Willis 2002, pp. 161-3; Arnold 2004, pp. 720-3; Ayers and Collinge 2004, pp. 555-9).

The example of a common good that is most often used in the relevant literature is that of defense, particularly large-scale national defense. In this paper, however, I shall argue that, in fact, there is nothing inherent in defense that makes it belong to the category of common goods, that in this respect it is no different from other goods and services normally supplied by the market. Consequently, in view of the generally acknowledged superior allocative properties of the market (Hayek 1945, 1948; Rothbard 1956; Smith 1975; Mises 1990, 1996; Say 2001), freely competing protection agencies would provide this good at a much higher level of quality than a monopoly of force does, thus putting in doubt the rationale for the latter's very existence. In other words, the present paper aims to show that defense can be supplied in a private, voluntary, decentralized fashion, with all the economic advantages typical of such an arrangement, and without all the economic disadvantages characteristic of its coercively monopolistic counterpart. More specifically, it aims at building on the earlier literature on the subject, and making its analysis more detailed, precise, and exhaustive, thus offering its most up-to-date elaboration. In addition, it provides a concrete illustration of my more general critique of the notion of common goods (Wisniewski 2013).

SHORTRANGE PROTECTION GOODS

How might private, voluntary, decentralized protective arrangements look like?

Let me start commenting on this issue by emphasizing the fact that protective services cannot be treated as a homogeneous lump, and that their different categories should be thought of as facing different facets of the ostensible problem posed by nonexcludability. I shall analyze these distinct categories in turn.

To be sure, there appears to be no relevant difficulty in the context of providing protective services designed so as to be restricted to specific households. A specific individual (or group of individuals) contracting with a private firm for protecting his life and property does not seem to generate any noticeable spillover effects.1 At most, one might argue that when a given household is closely surrounded by other households (as in an apartment building or a row of terraced houses), some of the inhabitants of the latter could conceivably risk not buying the services of any protection agency in the hope that, if targeted by criminals, they could count on their neighbors sending their contracted protectors to their rescue. Such a claim might seem plausible insofar as it does not presuppose any angelic benevolence on the part of the free riders' neighbors, but only a mundane, self-interested concern for keeping one's surroundings free of dangerous incidents (both for reasons of personal comfort and residential prestige). In fact, it appears quite intuitive to expect that most people would call upon their protection agencies if they noticed that something unsavory is happening in their neighbor's house. …

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