Subject: Re: critique of Cowen

From: [email-masked] (Jacob Levy)
Date: Mon, 13 Dec 1993 21:30:07 +1100

Bryan,

        I apologize for the delay in responding.  I felt like I had to go
back and reread Cowen's piece, and then enough time had past that I didn't
remember your arguments in enough detail, and... now, with both of them in
front of me, I'm finally going to reply. 

        Thanks for sending the piece; I think it's quite good.  It's also
mostly out of my baliwick, so if my comments are on marginal parts it's not
because I missed the point but because I don't feel qualified to say much
about the main thrust.

        Your suspicion that Visa and MasterCard accept payments from one
another sounds counterintuitive to me-- I'd assume that they wouldn't.  But
that's a minor point.  Your credit card analogy seems to me a pretty strong
argument against Cowen.

        The distinction between self-interested boycotts and altruistic
boycotts also seems right to me-- except that it crucially assumes the
point you made in the credit card analogy, namely that there will not be
only one network.  If there is only one network (or two or three colluding
mega-networks), then an altruistic boycott which "benefits the whole
industry" isn't any different from self-interested boycott. Nothing wrong
with building on a prior part of your argument, of course.

        On banking clearinghouses: the period before the US Civil War is an
even clearer example, because (in conditions of semi-free banking and
competing note issue) there weren't even monopolistic clearinghouses to
exchange *currency*, much less to cash checks.  Naomi Lamoreaux has an
upcoming book about 19th c. US banking; or Lawrence White might be able to
supply some information.  I don't know how to get info on pre-1913
check-cashing clearinghouses, though.  (I assume that you want to publish
this somewhere, and that obviously means losing "I guess" statements from
the historical discussions.)

        I would have liked you to talk a little more explicitly about the
fact that under an anarchist legal system only crimes with victims would be
prosecuted, to get rid of the idea that David Friedman introduced and Cowen
repeates of paying for a non-libertarian legal code in an anarchist system.
 There needs to be a *dispute,* something for the arbiters to settle.  What
does it mean to say that people can buy a prohibition on other people using
drugs?  That they're going to pay their own defence agency to break into
the homes of non-clients and see if they're using drugs?  Surely everyone
would place a higher value on paying for defence against their home being
broken into than they would on paying an agency to break into other
people's homes; it will always be profitable for a defence agency to
protect its customers against other defence agencies' attempts to enforce
victimless crime laws.  Of course, a defence agency's (for example)
prohibition of drugs might apply only to members; but this is nothing
different from members making an enforceable promise not to use drugs as a
condition of belonging to a certain agency, and there's nothin
unlibertarian about that.  You mention this in passing in 6b, but I'd like
to see you (or someone) elaborate on it more, since it's always struck me
as a silly concession for Friedman to have made.  Your drug trade comments
in 6a are relevant, too-- remember that Cowen *doesn't* think that drugs
will necessarily be legal in an anarchist system, and he doesn't think that
because Friedman doesn't think that.  Making your point in 6a-- that most
interlocality crime would vanish under anarchism-- requires making the
point that anarchism would not give rise to victimless crime laws.  

I think that 5/6c and 5/6d are the really crucial arguments against Cowen. 
They seserve to be built on.  I think you're absolutely right that the
networks would be minimal coordination networks and would not themselves
create most of the industry standards, and that's ultimately why I think
Cowen is wrong.  To the reader who starts out unpersuaded, though, I'm not
sure 6c and 6d are powerful enough.  I'd suggest both elaborating on those
sections and making them more prominent-- at least make
services/coordination and designed/evolved either the first two or the last
two features of networks so you can discuss them at the beginning or end of
the section.  Obviously, if you disagree that those two are much more
important than the other features discussed, then there's no reason; but
they seem to me the most central questions.

        I'm not at all sure that I agree with section 7.  I think that if
ideology is necessary to sustain government and ideology is necessary to
sustain anarchy, then government wins.  Loren Lomasky and Geoffrey Brennan
argue, I think rightly, in their recent _Democracy and Decision_ that the
fact that a voter is nondecisive and a consumer is decisive leads voters to
behave more ideologically than they would as private economic actors.  It's
much cheaper for someone to vote for massive programs to help the poor than
to voluntarily give the amount he will later be taxed-- because the former
is expressive, not decisive; each individual voter knows that his or her
vote will not impact the final outcome, so each has economic constraints
loosed and expresses sentiments he would never express if he actually had
to choose.  Similarly, it's cheaper to vote for David Duke and "express"
racism than it is to engage in discrimination as a private actor.  The fact
that every voter thinks that he won't be decisive can lead them all to
create an outcome which none of them would have chosen if decisive. 
Ideology is cheaper to express through [democratic] governmental
institutions than it is to sustain as private action.  It's worth having a
look at Brennan and Lomasky's argument, even if only to confront it
directly in the paper; but I find it persuasive, and so disagree with your
position in section 7.

Section 8 sounds right to me.  

        If this is for publication, then it probably needs a pretty
thorough stylistic revision; but purely as a matter of pursuit of truth, I
think you score some important points against Cowen and win the debate on
the merits.

        Anyway, thanks for sending it; I feel like I understand several of
the important issues better than I did before.  On a slightly different
note, have you noticed how many of the contributors to the pro-anarchy side
are economists?  Rothbard, Friedman, Benson, Lavoie, and Anderson and Hill
are all economists (Barnett's a lawyer).  The archist side includes
economists (Cowen and Buchanan) but Sampson, Newman, Kavka, Hospers,
Kelley, and Rand are all philosophers or political theorists, and Posner's
a lawyer.  You've studied this more in depth than I have: do the
non-economists generally line up on the other side?  I'd be intrigued if
that were true, and have my guesses as to why it is.

        You'll still be at Princeton when I get there next year, right? 
I'd like to have a look at the thesis you mention.

        Hope the end of the semester's going well for you!  Talk to you later.

Jacob.
--------------------------------------------
Jacob T. Levy
Department of Politics, ADFA
University College                             
University of New South Wales           
Canberra ACT 2600 Australia                                                

[email-masked]       ph: +61 (6) 268 8889   fax: +61 (6) 268 8852  

"I could tell you of heartbreak, hatred blind,
I could tell of crimes that shame mankind,
Of brutal wrongs and deeds malign,
Of rape and murder, son of mine;

But I'll tell instead of brave and fine
When lives of black and white entwine,
And men in brotherhood combine-
This would I tell you, son of mine."    
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