by From Robert P. Murphy’s Chaos Theory: Two Essays on Market Anarchy:“The insurance company makes its money by charging appropriate premiums, tailored to the individual client. If Joe smith has been deemed guilty in the past of violent behavior, his insurance premiums will be accordingly higher. But there are other factors that an insurance company would take into account when setting premiums, besides past behavior. And one of these factors would undoubtedly be: what sort of weapons does this client keep around the house? After all, if the insurance company is going to agree to pay, say, million to the estate of anyone Joe smith kills, the company will be very interested to know whether smith keeps sawed off shotguns—let alone atomic weapons—in his basement. Someone who keeps such weapons is much more likely to harm others, as far as the insurance company is concerned, and so his premiums will be that much higher. In fact, the risk of a client who kept nuclear (or chemical, biological, etc.) weapons would be so great that probably no policy would be offered. This approach is superior to the governmental one. This approach is superior to the governmental one. Truly dangerous weapons would be restricted to individuals willing to pay the high premiums associated with their ownership; kids couldn’t buy bazookas at the local K-Mart.” (Murphy 2010: 36).Well, that’s a relief.
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Lord Keynes considers the following as important: Bob Murphy’s Solution to a Free Market in WMD
This could be interesting, too:
“The insurance company makes its money by charging appropriate premiums, tailored to the individual client.Well, that’s a relief.If Joe smith has been deemed guilty in the past of violent behavior, his insurance premiums will be accordingly higher. But there are other factors that an insurance company would take into account when setting premiums, besides past behavior. And one of these factors would undoubtedly be: what sort of weapons does this client keep around the house? After all, if the insurance company is going to agree to pay, say, $10 million to the estate of anyone Joe smith kills, the company will be very interested to know whether smith keeps sawed off shotguns—let alone atomic weapons—in his basement. Someone who keeps such weapons is much more likely to harm others, as far as the insurance company is concerned, and so his premiums will be that much higher. In fact, the risk of a client who kept nuclear (or chemical, biological, etc.) weapons would be so great that probably no policy would be offered.
This approach is superior to the governmental one. This approach is superior to the governmental one. Truly dangerous weapons would be restricted to individuals willing to pay the high premiums associated with their ownership; kids couldn’t buy bazookas at the local K-Mart.” (Murphy 2010: 36).
I mean, I thought there might be a serious problem here, but Bob has clearly thought through the issues exhaustively….
But, to return to the real world, we are not talking about somebody with WMB in their basement. The issue with WMD in anarcho-capitalism is this: we are talking about the free production and sale of WMB by capitalists under anarcho-capitalism, where capitalists are free to produce and sell anything they want in free and voluntary exchanges.
Wouldn’t this lead to massive proliferation of these weapons?
What happens if your domestic capitalists are freely selling WMB to foreigners? Why would they or insurance companies care about what happens, say, in some far distant war in the Third World, which then goes nuclear?
And what if a high insurance premium or no insurance fails to stop capitalists from producing and selling WMD for huge profits? What if the companies are so rich and powerful they own their own insurance companies? What if they buy up insurance companies?
Or, alternatively, what if domestic capitalists are happily selling the various parts and materials to build WMD to foreigners or domestic citizens?
This latter point is just as important. Under anarcho-capitalism, there would be complete freedom to sell the parts and materials to make all kinds of WMD as well: so why would an insurance company care if a company is only making a product that might be used for other purposes, like nuclear power, but sells it to lunatics intent on making WMD?
It follows, as is intuitively obvious, that an anarcho-capitalist society would result in the massive proliferation of WMD.
Well, it turns out Bob has a solution:
“The case for private defense must deal with the possibility of nuclear blackmail. In modern warfare, it would seem that only a nation that can credibly threaten to obliterate its opponents is safe from a first strike.But how is a mere demand by an insurance company that their client not own WMD going to stop someone who is strongly intent on owning WMD? Why would such a person care?The anarchist society would probably not develop or even own nuclear weapons. In the first place, the term defense has been adopted consciously in this essay, and is not the euphemism as used in government propaganda. Because they would gain nothing from foreign conquest—since this would constitute theft and would be fully prosecuted within the anarchist courts—the owners of defense agencies would have no reason to spend money on weapons that were ill-suited to tactical defense. Precision of weaponry would be of paramount importance, since battles would be fought near or amidst a defense agency’s customers.
Another, perhaps more significant, consideration is that defense agencies would most likely be legally prohibited from owning ‘weapons of mass destruction.’ The anarchist legal system would operate on the same principles of voluntary contract that underlay the defense industry. Insurance companies would vouch for individuals and pledge to compensate anyone victimized by their clients. In an effort to limit their liability, insurers would require certain concessions from their customers. It is hard to imagine that an insurance agency would pledge, say, $1 million for any (innocent) person killed by Defense Firm X, when Firm X held a stockpile of hydrogen bombs.
Despite its probable lack of nuclear weapons, the anarchist society remains a viable option.” (Murphy 2010: 59–60).
Also, I fail to see how a mere private insurance contract demand for no WMD is in any sense a legal prohibition from owning them. It is no such thing.
It is also very strange that Bob Murphy states that the “case for private defense must deal with the possibility of nuclear blackmail,” but at the same time the “anarchist society would probably not develop or even own nuclear weapons.”
So what if, as could easily happen under anarcho-capitalism, China buys up vast territories in the United States, but suddenly becomes very aggressive against gated communities of Americans. Private defence contractors try and fight off these attacks, but the Chinese government threatens to use WMD – weapons the anarchist society is forbidden from having. So America gets conquered by China?
I also love this piece of fantasy-world optimism:
“These considerations also show why an anarchist society need not fear a foreign government using their own (advanced) weaponry against them. Private defense firms would likely sell their wares to foreign buyers (depending on the legal status of governments in the anarchist courts), but these would be designed for defensive use. There would likely be no aircraft carriers, long-range bombers or subs capable of transoceanic voyages.” (Murphy 2010: 59, n. 59).What use is that when foreigners are perfectly capable of producing aircraft carriers, long-range bombers or submarines given the necessary money and technology? Did you think of that, Bob?
There is also this bizarre idea that no private companies would be interested in manufacturing and selling offensive weapons. Imagine if the America economy was totally privatised by libertarian government, which then abolished itself. Why would America’s arms manufacturers suddenly stop selling advanced offensive weapons, given the demand for them in the world today?
BIBLIOGRAPHY
Murphy, Robert P. 2010. Chaos Theory: Two Essays on Market Anarchy (2nd edn.). Ludwig von Mises Institute, Auburn, Ala.