Democracy is Not Democratic

This article will argue that an anarcho-capitalist society is more democratic than Democracy and that an a-c society is actually a populist idea.

This recent article from Reason summarizes the results of recent Cato Instituted research. The Cato research suggests that Americans would be more happy paying taxes, and in fact might be willing to pay more in taxes, if they could more strongly influence how that money was spent. Specifically, instead of allowing representatives to set the spending budget, Cato asks what would happen if Americans could set the budget themselves as part of filing out their tax forms.

Here’s a simple argument that anarcho-capitalism is populist: Assuming Cato is correct and adequately demonstrates that consumers are willing to spend more when they have better influence over how that money is spent, it follows that they have a higher willingness to pay when they have better control on how the money is spent. Willingness to pay demonstrates preference, which implies that consumers prefer to control as much of the spending of their own money as possible. The social system where consumers maximize the spending control of their own money is anarcho-capitalism.

Now, the criticism of anarcho-capitalism is that it maximizes inequality and collapses into monarchy or something, which seems to be akin to arguing for the presence of natural monopoly in the markets for governance, military, and certain other goods. I reject the notion that long-run monopolies exist accept for perhaps certain benevolent monopolies which the market allows, but perhaps those won’t even exist.

In contrast to the criticism, and while it may be true that anarcho-capitalism maximizes inequality, an a-c society is actually more democratic than a Democracy for at least three reasons. First, let’s define what a democratic society is. A democratic society, as I define it, can be defined in two ways:

  1. Each member of society has an equal voice in the socio-political process.
  2. Each member of society realizes their most fair level of voice in the socio-political process.

As it turns out, an a-c society necessarily meets both definitions in the long run, but not necessarily in the short run. A traditional democracy meets one of the definitions in the short run but necessarily meets neither in the long run.

Democracy historically turns into cronyism, oligarchy, and even monarchy, including the United States. In this society not everyone has an equal voice and neither do people realize their most fair voice, although it’s possible the United States was more democratic at the time of its origin. Even if every person had an equal vote when the U.S. was first founded, however, there would be members who did not realize their maximum potential voice. There would also have been, as there still are, certain members with inappropriately inflated voice or influence.

In an anarcho-capitalist society there would most certainly be short-run distortions, but it is not at all certain that these distortions would be larger in magnitude than the distortions which result from the present state of American oligarchy. As time goes on, however, a-c society would become arbitrarily optimal. It would be optimal because everyone would have their efficient level of voice.

The long run equilibrium in an a-c society is the most fair level. When this situation occurs everyone would also have an equal voice in two senses, but not in a third sense which is sometimes mistaken for what they should have.

  1. They would have an equal voice in the sense that everyone’s voice would be exactly as strong as they would like it to be.
  2. They would have an equal voice in the sense that everyone’s voice would be at its efficient level.
  3. They would not be equal in the sense that everyone’s voice or influence is equal in strength or degree.

They key questions which determine whether an a-c society is preferable at the present time are:

  1. Would the switch to a-c society cause distortions which are so large that the result is an inferior total welfare in the short run? If so, are we willing to endure that short-run pain?
  2. Is the switch to a-c society either feasible or desirable once we consider the distributional effects? In particular:
    1. Is the benefit of the switch sufficient to overpower entrenched interests?
    2. Would the switch harm other groups such as the poor to intolerable degrees?

My view is that we shouldn’t switch altogether right now, but we would benefit from beginning the transition right now. In other words, let’s increase the ability of people to control their own money a bit at a time, and one day let’s allow them to fully control their own money.


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