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Source link: http://archive.mises.org/5704/the-state-intervenes-to-prevent-mutually-beneficial-exchange/

The State Intervenes To Prevent Mutually Beneficial Exchange

October 2, 2006 by

Yes, I know that headline could cover just about every action of the political class since the advent of the nation-state, but somehow the crack down on internet gambling strikes me as particularly egregious. If this story is right, the government is pretty well demolishing a vast industry and for no good reason. Producers, consumers, and everyone else involved will all have the quality of their lives diminished. And while you might say that laissez-faire gambling litters up towns with unseemly billboards, attracts unsavory elements, and the like, internet gambling takes place without anything like a negative externality. Those who don’t like it don’t need to bother with it. People who enjoy it do so in the privacy of their own home offices. Even Bill Bennett can avoid expensive trips to Las Vegas.

Why do we put up with this gang of thieves that views its job as diminishing the quality of life for so many people? Well, I suppose that too is a question that has been asked since the advent of the nation-state.

{ 76 comments }

Brian Drum October 3, 2006 at 3:04 pm

How on earth is “mutually benefitial” a loaded phrase? I was under the impression that this was pretty standard terminology in economics…No? I have explained repeatedly what is meant by “mutually benefitial exchange” and why all voluntary exchanges are necessarily mutually benefitial, ex ante. Please point to the error in my analysis.

“but in any event the market does not necessarily supply a moral outcome.”

Who said that it did? There is no such system of societal organization that can guarantee a moral outcome, whatever you think that may be.

Vince Daliessio October 3, 2006 at 3:10 pm

Brian said;

“There is no such system of societal organization that can guarantee a moral outcome, whatever you think that may be.”

Amen, brother!

Reactionary October 3, 2006 at 3:30 pm

Brian,

“Mutually beneficial” patently means that both parties derive benefit. Your qualifier is that this benefit is subjective with which I agree. But we also invite inquiry into the issues of beneficial to whom and for how long and whether this “mutually beneficial” activity imposes costs on others.

If Jeffrey meant “mutually beneficial” in terms of perceived benefits to the participants then I agree with him. Otherwise no, I think many (but certainly not all) forms of gambling are socially destructive and enabling credit to cover gambling losses is like passing out free booze to bums. That does not mean I think the activity should be prohibited. In fact, I’d argue strenuously that the cure is far worse than the disease.

Now, the reason I consider the issue to be an important one is that the premise of anarcho-capitalism–this site, really–is that a truly free market can supply justice. But this is demonstrably not true since a truly free market can also supply plenty of unjust things, like slave labor and prostitution. The fact that the slaves or prostitutes may be under coercion is not relevant so far as the buyers and sellers of slaves and prostitutes are concerned since they are acting out of their own perceived benefit, and that perception could be mistaken or just simply perverse.

George Gaskell October 3, 2006 at 3:34 pm

But the market is morally neutral.

I disagree. I believe that behavior in accordance with free market principles is also inherently moral. Non-aggression and mutual respect for life, liberty and property are not only economically beneficial (yielding tremendous material abundance), but are also moral and ethical goods.

I submit that our cultural senses of moral and ethical good were, over time, informed by the social and economic benefits of free markets, which helps explain the similarities between morality and free-market economics.

It will operate to supply a demand for gambling or prostitutes or bestialty as it will to supply a demand for the Gospels of Christ.

Yes, it will.

I further submit that using aggressive force to stop these things is morally unacceptable and economically counterprodutive.

Speak out against them. Disassociate yourself with anyone who does not agree with you, and encourage others to do the same. Ostracize people who behave in ways of which you disapprove. All of these things are ways to exercize your right to free speech and free association.

But using force (even superficially-sanitized force-by-proxy in the form of the State) is morally wrong. It is also economically harmful, which, as I said, is pretty much a way of saying the same thing twice.

So if the market can’t do it, what can? I have seen Reason proffered as a substitute, but Reason still doesn’t say why men should act logically, or even “reasonably.” So what’s left?

Aggressive force is what’s left. You should at least admit it.

You seem to be working backward from the proposition that these things must be stopped, and so you are looking for a philosophy or social order that will accomplish this desired result.

That’s post hoc rationalization, not a form of moral, legal or scientific reasoning.

George Gaskell October 3, 2006 at 3:39 pm

since a truly free market can also supply plenty of unjust things, like slave labor and prostitution

Prostitution can be, but is not necessarily, the product of slavery or coercion. So, let’s set that aside for the moment.

As has been discussed at length, slave labor cannot, (pretty much by definition) be supplied by “a truly free market.” This is patently false, and has been rebutted several times already. It is not free because there are at least 3 parties to the slave-trading transaction, one of which is 100% unfree.

You have not addressed this error of yours one time, and if you would like to be taken seriously, you should either attempt to do so or concede the point.

George October 3, 2006 at 4:03 pm

George,

I don’t concede the point so I’m afraid you will not be able to take me seriously.

In times past there was no question that a man could purchase the forced labor of another person, and there was a free market in the trade of human beings. The fact that the slaves had to be captured and kept by force was simply another factor in the buyers’ and sellers’ calculation of profit and loss. It was no more considered immoral than you and I would consider the buying and selling of a horse immoral.

The fact that, in 2006, the Western world considers slavery immoral does not mean a market in slaves is not truly free. For market actors not operating under such assumptions, or even for market actors operating solely under a desire to exercise power over other human beings, the fact that slavery may be morally wrong is completely external to the transaction. Indeed, in an economic sense, the fact that the object of the transaction is immoral is just not relevant.

I will concede we are coming at this issue from different ends. From the Christian perspective, there is no right to view pornography or engage prostitutes so whether and to what extent government should forbid such activities is simply a policy question.

ns October 3, 2006 at 4:04 pm

Reactionary -

[i]…enabling credit to cover gambling losses is like passing out free booze to bums…[/i]

And instead you propose…?

Brian Drum October 3, 2006 at 4:08 pm

Reactionary,

Well at least I think that we have settled what is meant by “mutually beneficial” in the context of economics. So on to your further concerns…

You say: “…that a truly free market can supply justice. But this is demonstrably not true since a truly free market can also supply plenty of unjust things, like slave labor and prostitution.”

A ‘free market in slaves’ is an oxymoronic phrase. There can be no such thing since slavery is predicated upon the use of aggressive force against another individual. Now of course there can be a ‘market’ for slaves, but never a ‘free market’. That just doesn’t make sense.

Prostitution qua prostitution, however, does not imply aggressive violence. So yes, there can be a free market in prostitution. Not in sex slaves, but in the voluntarily provided services of prostitutes, yes.

As for your claim that an ancap society cannot produce justice, I think that first you should offer up a definition of justice.

ns October 3, 2006 at 4:08 pm

follow-up on the prev question

…and who would pay for whatever you propose?
…and what to do with those who disagree?

Reactionary October 3, 2006 at 4:11 pm

ns,

Did you read my whole post, or did the reflexive jerk of your knee knock over your computer monitor?

Francisco Torres October 3, 2006 at 4:13 pm

“Mutually beneficial” patently means that both parties derive benefit. Your qualifier is that this benefit is subjective with which I agree. But we also invite inquiry into the issues of beneficial to whom and for how long and whether this “mutually beneficial” activity imposes costs on others.

Ah, I see. The “externalities” canard. If you searched hard enough, you would find “costs” on almost everything, including breathing (which is why the “externalities” concept is NOT a concept but an absurdity).

Otherwise no, I think many (but certainly not all) forms of gambling are socially destructive and enabling credit to cover gambling losses is like passing out free booze to bums.

This gives an indication of your own ethics – you would rather have people not exercise their free will because you do not like what they do to themselves. This “socially destructive” concept you wield is odd – how can the activity of ONE person become socially destructive? What YOU do with YOUR money in Las Vegas does NOT affect me, and that I can prove. I think you are just being puritanical.

Now, the reason I consider the issue to be an important one is that the premise of anarcho-capitalism–this site, really–is that a truly free market can supply justice.

A free market does NOT supply “justice”. You are misapplying a concept. “Market” is simply the network of the myriads of voluntary transactions that people generate each day, and free market is the same network except now people are not hindered by external forces.


But this is demonstrably not true since a truly free market can also supply plenty of unjust things, like slave labor and prostitution.

Again, a free market does not supply anything. Only suppliers supply a thing.

The fact that the slaves or prostitutes may be under coercion is not relevant so far as the buyers and sellers of slaves and prostitutes are concerned since they are acting out of their own perceived benefit, and that perception could be mistaken or just simply perverse.

Indeed. Bad people exist and crap happens. You have not answered my question, however: What does this have to do with gambling?

Brian Drum October 3, 2006 at 4:16 pm

“From the Christian perspective, there is no right to view pornography or engage prostitutes “

Well first of all, no one has the right to anything. I’d also say that from the Christian perspective no man has the right to forcibly prohibit another man’s viewing of pornography, or has modern Christianity moved completely from “let him who is without sin cast the first stone” to something like ‘blessed is he that first strikes the sinner’?

George Gaskell October 3, 2006 at 4:25 pm

In times past there was no question that a man could purchase the forced labor of another person, and there was a free market in the trade of human beings. The fact that the slaves had to be captured and kept by force was simply another factor in the buyers’ and sellers’ calculation of profit and loss. It was no more considered immoral than you and I would consider the buying and selling of a horse immoral.

However accurate this may be as a history lesson, this does not advance your argument.

The fact that others, in times past, may have considered their dealing in slaves to have been either moral or part of a free market does not prove that it is either.

the fact that slavery may be morally wrong is completely external to the transaction. Indeed, in an economic sense, the fact that the object of the transaction is immoral is just not relevant

You are artificially restricting your view of what consitutes “the transaction” in order to reach your tortured conclusion.

If you expand your analysis to include ALL of the parties involved (i.e., the buyer, the seller and the slave), then you would include not only the economic aspects of the passing of money between buyer and seller, but also the life that the slave would have led had he not been, well, enslaved.

What he would have done with his life had he not been enslaved is economically relevant. What would have happened if the slave-owner had to hire paid employees is economically relevant.

By failing to account for how slavery affects everyone involved (including the slave and the employee not hired), you reach the conclusion that trading in slavery is morally neutral. But you have gone to great lengths to artificially exclude all of the morally objectionable elements from consideration!

You still have not given a reason why excluding these elements from your economic analysis is warranted or meaningful. It certainly makes your pre-conceived conclusion easier to hold, but that does not make it correct.

Reactionary October 3, 2006 at 4:34 pm

Brian,

Christians are instructed by the Apostles Peter and Paul that all earthly authority derives from God, and governments are duly ordained to reward the good and punish the wicked, and we are to fear God and honor the king. It follows that a king may outlaw pornography or any other immoral activity and Christians have no complaint under such statutes. Certainly we may point out the wisdom or undue expense of such a policy.

Reactionary October 3, 2006 at 4:48 pm

George,

“You still have not given a reason why excluding these elements from your economic analysis is warranted or meaningful.”

Because, absent some forbearance based on such an analysis by the market actors, the transaction will take place regardless. As noted, for such people, the force necessary to keep the person enslaved is simply part of the costs.

“you reach the conclusion that trading in slavery is morally neutral.”

No, I said the market is morally neutral. The market (which is simply a construct, or a process) does not draw moral distinctions. There is a market for targeted assassinations, there is a market for pornography, there is a market for self-mutilation (believe it or not, people will pay to have a hole put in their skulls or be hung by the folds of their skin), there is a market for bestialty, etc.

Brian Dum October 3, 2006 at 5:48 pm

Reactionary,

So whatever the king says goes? Why would you question the wisdom of the king’s policies if they are the ordained proxies of God? What is one to do if the king outlaws Christianity? The whole idea of the king as God’s proxy on earth seems to be a very self-serving doctrine for those in power…

George Gaskell October 3, 2006 at 8:08 pm

Because, absent some forbearance based on such an analysis by the market actors, the transaction will take place regardless.

I think I am beginning to see your reasoning process:
1. Slavery is bad.
2. In an an-cap society, market actors would engage in slavery because it benefits them, regardless of the cost to the slave.
3. The only thing that stops slave-traders is self-imposed forbearance (which you can’t count on) OR a State that punishes slave trading.
4. Therefore anarcho-capitalism is bad/wrong/misguided/etc.

You might take a moment to re-think point No. 3.

Nowhere does slavery thrive as it does under a nation-state that sponsors and protects it. To date, no social order has been invented that rivals the State in its promotion of slavery.

In the absence of the bureaucratic organization that States are created to provide, slavery would never have existed in the West as it did.

Vince Daliessio October 3, 2006 at 10:42 pm

Back to gambling, and morality;

The state, in this case, is in NO WAY outlawing gambling is most definitely NOT taking the moral high ground here – they are simply outlawing competition with their favored licensees. They have absolutely NO problem with gambling – only with those who would compete with their favored interests.

It is the same everywhere – casinos in Atlantic city and rural Mississippi, horse racing in Pennsylvania, “Powerball” lotteries in two dozen states, dog racing and Jai-Alai in Florida. Most of these statist enterprises are located in the poorest areas possible. How is this moral? How is it preferable to freedom?

Similarly with prostitution – the only prostitutes who are getting busted are streetwalkers. Escorts, callgirls, and other professional women are mostly left alone. Again, the state is simply eliminating competition with its favored enterprises.

Similarly with drugs – street-level dealers and users go to jail, alcohol producers, pharmaceutical companies, and even large-scale illegal drugproducers are protected.

Once you recognize this, I don’t see how you can confuse the state with moral authority or action.

Peter October 3, 2006 at 11:47 pm

But the market is morally neutral. It will operate to supply a demand for gambling or prostitutes or bestialty as it will to supply a demand for the Gospels of Christ.

Who says gambling, prostitutes and bestiality is immoral, and Gospels of Christ aren’t?

As far as I’m concerned, gambling and prostitutes are good things, bestiality is disgusting but at worst morally neutral, and teaching nonsense to children who don’t yet have a proper grip on reality with the intention that they should believe it is definitely immoral and abusive!

Now why are your opinions about what is and isn’t moral, and what “the market” should provide (taking Brian Drum’s response into account), more correct than mine?

Reactionary October 4, 2006 at 9:19 am

George,

The state is a human institution. If there is a demand for slavery, then the market will supply it, and all other things being equal, the state will extend the same legal recognition to the trade as it may to the trade of textiles, canned goods, etc.

The reason there is no market for slavery now is due to the fact that so many people regard it as morally repugnant: nobody is willing to buy slaves and nobody is willing to be a slave. (Note too that the state, reflecting the mores of its citizens, has outlawed slavery.) So, no demand for slaves and the costs of subduing people and forcing them to be slaves (and the costs of engaging in a criminal activity) will be higher than simply employing wage earners.

Where such attitudes do not persist, the market operates to hook up slave buyers with slave sellers like it does any other commodity, all other things being equal. Slavery was not dropped out of the blue on an innocent human race by a malevolent socialist. The slave trade started because there was a demand for slave labor and an opportunity for entrepeneurs to profit from meeting that demand. If there is a demand for hit men, crack, child pornography, snake oil, you name it, and an opportunity for entrepeneurial profit from meeting that demand, then the market will operate to hook up buyers and sellers there as well.

The market can only reflect the morality of its participants. The reason anarcho-capitalists resist this basic truth is because they have put the market where God should be.

Now, regarding the debate over morality, there is no resolution other than to let us Puritans be over here in our fundamentalist stew, and let the libertines stay over there and party. I am an enthusiastic advocate of irreconcilable cultures going their separate ways.

Francisco Torres October 4, 2006 at 3:41 pm

If there is a demand for hit men, crack, child pornography, snake oil, you name it, and an opportunity for entrepeneurial profit from meeting that demand, then the market will operate to hook up buyers and sellers there as well.

It may do this. It may also provide its own safeguards in the form of protection services for potential victims of hitmen or pornographers, would it not? Or do you think only a State can provide those things?

The reason there is no market for slavery now is due to the fact that so many people regard it as morally repugnant: nobody is willing to buy slaves and nobody is willing to be a slave.

This begs the question as to how do you know people did not find slavery morally repugnant before – you simply assume they did not. The fact that some people held slaves does not mean they did not find the practice morally repugnant, only that they found excuses for it, like slaves should be only people of lower status (i.e. prisioners of war or from a different race or religion). The practice dissapeared not because people found it morally repugnant now, but because it is economically unsound, the productivity of slaves being much less than that of paid workers. It is also more costly to capture slaves that to hire workers.

The market can only reflect the morality of its participants. The reason anarcho-capitalists resist this basic truth is because they have put the market where God should be.

This is a classic example of a Non Sequitur.

As well, we can argue that the State only reflects the morality of its participants. How can the State become moraly superior to a market, if it is composed by the same people (unless you think the State is populated by superhumans)?

George Gaskell October 5, 2006 at 2:22 pm

The market can only reflect the morality of its participants.

The market IS its participants. The “market” is a mode of behavior, not a group of people.

All forms of behavior reflect the morality of the person in question. This is a tautology.

The difference between those participating in a free market and those “participating” in a nation-state is that EVERYONE in a free market is, by definition, acting voluntarily.

In a nation-state, only those who classify themselves as government agents and their supporters can be said to be “participating” in said State. Everyone else “participates” only by force, under coercion.

So, in a sense, a State reflects the morality of its participants as well. It reflects a sense of morality so grotesquely twisted and evil that it tolerates (and even actively PROMOTES) the coercive use of force to take a portion of the incomes of non-participants, and the threat of force to make these victims do or not do various things regardless of whether anyone involved is actually harmed.

Can one expect crime to exist in a market-based society? Of course. No anarcho-capitalist I have seen has suggested that the inclination of some minority of people to commit crimes will magically be erased by the abolition of the nation-state.

The proposition by market anarchists is that the State is a far more egregious perpetrator of crime, in that it organizes its criminal activity to a high degree, than any other criminal enterprise yet witnessed in history.

The proposition of market anarchists is that behavior based on FREE market principles is morally superior to those who act as agents (or promoters) of a nation-state.

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