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Does a Capitalist Market Require Government?

Forbes contributor and self-proclaimed Ayn Rand objectivist, Harry Binswanger published an article this Friday's past entitled, "Sorry Libertarian Anarchists, Capitalism Requires Government" in which he posits that the federal government is supreme all others including the several states are subordinate and that Washington must hold a monopoly on violence lest the market be overrun with terrorists, hoodlums, vigilantes, etc.

The genius of the American system is that it limited government, reining it in by a Constitution, with checks and balances and the provision that no law can be passed unless it is “necessary and proper” to the government’s sole purpose: to protect individual rights–to protect them against their violation by physical force.

Thus, even though he admits the US Constitution has failed, there is simply no other way to build a society without the government maintaining a monopoly on force.

Of course, this tired rehash of STATE necessity initiated a fierce conversation as to the substance of Mr. Binswanger, the sincerity of his bona fides, and the usual exchange of sharply tongued barbs.

Shortly thereafter, Gonzo journalist of the Liberty Movement, Christopher Cantwell offered his counter in his signature inflammatory style, "Sorry Fake Libertarians, Capitalism Requires Anarchy" in which he offers a blistering albeit abridged history of the American Republic summarized by stating:

So if your fabled “land of the free” begins with slavery, central banking, debt, insurrection, and jailing reporters, only to lead up to a bloody civil war and full on fiat currency, before moving on to the income tax and modern Federal Reserve system, I’m sorry, but you don’t even know what freedom means.

This divide amongst the various factions is one not likely to subside in the near future, but it does offer us a keen opportunity to reexamine those views, which we hold dear and prefer not to jostle for fear of upsetting our own understanding. My personal preference for engaging in the challenge of ideas and the BIG conversation tends to get the best of me and thus I welcome the debate as more often than not, the intellect emerges more refined from the undertaking.

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The first author is correct.

The first author is correct. Historically, anarchist and near-anarchist societies as well as societies where government broke down, like Rome, have seen poverty/tribalism as their fruits. Economic theory is crystal clear: more stability means more wealth, ceteris paribus, because it allows for CREDIBLE long term investment and contract enforcement. It seems from history that the credible stability provided by a strong, relatively benign state is necessary for a capitalist economy.

Ventura 2012

Cyril's picture

The Just Law, that is, Justice, and only Justice

If government has any purpose, that ought to be the sole, commonly agreed upon by the people, use of force for the respect of the just law.

That is, the rendering of Justice, and only Justice, in the disputes between parties which bound themselves by voluntary contracts.

IF the government has ANY purpose...

"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Cyril's picture

Do I need the government to resolve an argument with my wife

Do I need the government to resolve an argument with my wife regarding the next allocation of a part of, or all of our savings, for any given shared goal or project?


Same question regarding a contemplated new source of income, in exchange of my/our labor...

I don't think so.

A 12 year old who can do the lawn, and, say, who has a taste for buying then trading baseball cards for others or anything else, has no use either for the government to interfere on the markets he voluntarily chose to enter for his own underlying motivations.

"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Cyril's picture

'Hope this helps

'Hope this helps

"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius

No, it does not.


Anybody ever heard of a power

Anybody ever heard of a power vacuum? If there is nobody in power someone will start organizing a gang, and power will be achieved through force. This is what has happened since...oh...the beginning of human history.

Lets say someone else then creates a gang to counter that and they destroy the other gang. Is that gang going to then stand down? Does power indeed corrupt, and dose absolute power corrupt absolutely? How many dictators started as genuinely idealistic revolutionaries? If you had a mansion full of fine bitches, are you going to give that up and live in a shack, penniless? There is a guy out there that wants that mansion and fine bitches, and won't give it up, isn't there?

Anarchy, includes the absence of a central authority over the people. An absence of a central authority leaves a juicy power vacuum for one to be created.

Please don't leap to the conclusion I am a fan of centralized authority, I think my statements are simply pragmatic. Can anyone explain to me how you can practically achieve a society absent of gangs springing up? Centralized authority starts as a gang, doesn't it?

Are we just going to educate everyone that things would be best without a central authority, and expect that some people won't realize that they can personally acquire more wealth through theft? Free markets are not the best option for some to acquire wealth, not when you can run a rigged game. Some people with flexible morals will get the richest through theft. What are you going to do about them, form your own gang? When no one can oppose your gang, are you going to resist skimming a little cream off the top? C'mon, you earned it, right?

Aren't gangs just capitalizing on others through force? What is the difference if someone is using money to capitalize over you? If you wind up broke as shit, does it matter if it was a gun or a cash leverage? One way is fair, the other is immoral?? For the record, I am not advocating another solution, I personally have concluded there isn't a perfect solution based on my current understanding.

Of course capitalism requires

Of course capitalism requires some government, just look at history.

Too little government: Feudalism, tribalism, anarcho-communism. -----> poverty

Too much government: Fascism, Monarchy, Communism ----->poverty

Ventura 2012


Framing the debate by way of the implicit title already calls into question the beliefs held by the accuser.

It isn't necessarily true that capitalism requires government, I'd think most agree on this point (but I'm almost always mistaken) but the main issue is when and where the constitution actually limited the government in it's quest for supremacy. As Lysander Spooner so greatly elaborated, and in not so many precise words, it has either allowed the system of government we have now or it has been powerless to stop it, in either case it is unfit to exist. So constitutional arguments aside, all that's left is to disprove the analysis of capitalism without government.

"In Order without Law Robert C. Ellickson shows that law is far less important than is generally thought. He demonstrates that people largely govern themselves by means of informal rules-social norms-that develop without the aid of a state or other central coordinator. Integrating the latest scholarship in law, economics, sociology, game theory, and anthropology, Ellickson investigates the uncharted world within which order is successfully achieved without law."


"In contrast to government's predominant role in criminal justice today, for many centuries crime control was almost entirely private and community-based. Government police forces, prosecutors, courts, and prisons are all recent historical developments-results of a political and bureaucratic social experiment which, Bruce Benson argues, neither protects the innocent nor dispenses justice."


"DiLorenzo, a professor of economics, shows how capitalism has made America the most prosperous nation on earth—and how the sort of government regulation that politicians and pundits endorse has hindered economic growth, caused higher unemployment, raised prices, and created many other problems."


And for the record, after viewing some of the comments here on The Daily Paul I don't believe Harry has much of a chance against any of the arguments put forth on this site.

"Does a capitalist market require a government?"

Does freedom require slavery?

Does liberty require coercion?

Does virginity require sex?

How is it logical that in order to protect property rights you *require* a body that necessarily violates them? Everyone on this website agrees with the notion of smaller government, but for some reason, the smallest government of all (no government) is obscene to many. How do you know when you have just the right amount of coercion? What is the acceptable amount of tyranny? Anything short of total liberty is the endorsement of the arbitrary and violent control of one group of humans over another.

Tu ne cede malis sed contra audentior ito

Forum State

Government have both have cons and pros, I think Rules and laws like property rights and anti theft laws are good to have and should have some way of being enforced.

I have thought about this a lot, I came upon the thought that maybe we could use a computer program that worked like a forum for laws and government control, the forum should be redundant and work like similar to bitcoins.

Each "wallet" represents a person and each person can either vote for themselves or grant voting power for another person (which can be revoked at any time and is revoked if the person don't log on for a certain amount of time).

To validate that each person is who they say they are, an open redundant register with DNA binding each person to only one wallet. The wallets are then validated once each year.

Threads are created to add/remove laws or if locally to create and larger project, like powerplant construction and how the funds will be provided for. Forum members/wallet owners can discuss each subject then vote for or against the suggestion a certain voting participation must be reached to be allowed to vote. Passing laws require 66% approval rating revoking them requires 50% to keep bad laws out of the system.

Threads are divided on both global and local level, getting laws passed on global level should be much much harder than on local level.
There will be no administrator, a person can only post a certain amount of post per day, this is to prevent spammers. Comments in threads can also be voted on to have a higher read priority.

The main objective with this idea is to prevent or minimize the effects of corruption and to prevent voting fraud.


Those who choose to defend the innocent and powerless against the criminals who may or may not claim to be the authorities.

Those who choose to target and exploit the innocent and powerless; are those who do so with or without claiming to be the authorities.

That is the battle for Liberty which is a battle to defend or to exploit the innocent and the powerless.

Call it government and see only ONE side of that battle.

Call it anarchy and see only ONE side of that battle.

Call it a battle and two sides become obvious.

If the battle is won by the defenders, then those who may yet choose to target and exploit (with or without false claims of authority) the innocent and powerless can't afford to do so; it is too costly for them to do so. They may still do so; at their own cost.

If the battle is won by the criminals (with or without the false claims of authority), then those who are the innocent and powerless are dwindling in numbers, growing weaker, and the end result is that everyone left is a criminal, and everyone left is at each others throat because there are no more innocent victims left to exploit.

If the battle swings back and forth for centuries, then it may be a good idea to stop calling false government anything other than a very well run crime organization that takes over the power of legal money world wide; whereby those few who run that crime organization have the power to steal everything everyone produces and then use that stolen loot to perpetuate their Confidence Scheme.


Cyril's picture

Your founders had a working answer and someone gave a refresher

Your founding fathers had a working answer**, and someone gave a refresher 75 years after - wrt. the just law and how it relates to the purpose and use of force - that is, "government":

Proper Legislative Functions

It is not true that the legislator has absolute power over our persons and property. The existence of persons and property preceded the existence of the legislator, and his function is only to guarantee their safety.

It is not true that the function of law is to regulate our consciences, our ideas, our wills, our education, our opinions, our work, our trade, our talents, or our pleasures. The function of law is to protect the free exercise of these rights, and to prevent any person from interfering with the free exercise of these same rights by any other person.

Since law necessarily requires the support of force, its lawful domain is only in the areas where the use of force is necessary. This is justice.

Every individual has the right to use force for lawful self-defense. It is for this reason that the collective force — which is only the organized combination of the individual forces — may lawfully be used for the same purpose; and it cannot be used legitimately for any other purpose.

Law is solely the organization of the individual right of self-defense which existed before law was formalized.

Law is justice.


AFAIC, both the original answer and the refresher still "work for me" - as a fresh immigrant.

My personal conception is it's a working answer as long as people care enough about their language - History has shown us that, per the very nature of such an answer, based on natural language - and no matter what is the form of (inclusively, representative) government - the implicit human society contract systematically starts failing along with the growing neglect of language used by the people.

Tyrannies or oligarchies or etc. will always aim at turning the idea of the law - in their subjects' consciousness - into (large scale) "human management", instead of justice and only justice.

This is because they want to be, or think they are, Supermen.

See also: http://bastiat.org/en/the_law.html#SECTION_G063


"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Ivory tower intellectuals.

I'm afraid Mr. Binswanger has been shielded from the real powers practiced by government too long.

Yes, some government is needed -- to punish wrong doers, not to protect us from the wrong doers. That is impossible as the force required to do so would compromise the entire free market culture.

The central government of the United States was not created to protect individuals. The only direct force that that a central government can protect us from is invasion, or armed insurrection, depending on who is insurrecting of course.

Before the Supreme Court began rewriting the Constitution the federal government power over individuals extended to settling cases involving citizens from different states. Personal protection was reserved to the citizens by the second amendment.

"Caveat emptor" - "buyer beware" prior to the progressive take over of the federal government and its regulatory agencies in the 1960's and 1970's was pretty much the norm in the market place.

As an example of that, prior to the late 1960's used cars sold on lots usually had their odometers turned back to zero. It was up to the buyer to be savvy enough to evaluate his purchase. Americans took pride in their automobile trading skills. It was the same way when Americans rode, traded and sold horses. They had the skill necessary to buy good horseflesh. That's not to say there weren't some traders who tried to scam the system, but that was accepted as a part of the risk as was buying used cars. If you got stung it was your own fault unless a guarantee for your purchase was offered.

The feds regarded the American people's intelligence so lowly that a banking act was passed a while back that changed the way loans were written up. After the act was passed all loans had to have the APR in the contract. Why? I dunno, as the difference between the APR and the actual loan rate is miniscule. Who cared? I know I didn't.

It only takes one to KEEP AMERICANS FREE. Know your duties & rights as a juror. Stop the unconstitutional conviction of innocents in federal custody. The Fully Informed Jury CALL 1-800-TEL-JURY www.fija.org IMMEDIATELY if not sooner. It's that important.


"Yes, some government is needed -- to punish wrong doers, not to protect us from the wrong doers."

What do you suppose the motto for government ought to be in a self proclaimed Christian society comprising an alleged majority?

Forgive us not our trespasses because we forgive no one?

To hell with grace and mercy, we want the old covenant of law?

Lead us into the temptation of repaying evil with evil but do not deliver us from any evils of repaying evil with evil?

In Law We Trust?

Contra Bonos Mores?

Fiat Justitia Ruat Caelum?

Perhaps you have a suggestion?

There will always be government

"Anarchy" is a theoretical state that has never existed anywhere. There is always a big guy with a snapped-off table leg who decides he's in charge. Always.

Anarchy requires that a group overrules all the big guys with table legs, even if they band together. This is a government.

This isn't to say that every society must have a corrupt Bureau of Indian Affairs and an $800 billion military budget, but there is inevitably a group of guys who decide they are in charge.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.


Also author of Stick it to the Man!



Apologies GS but I respectfully disagree on your assessment that Anarchy has never existed:

"For two thousand years the disparate groups that now reside in Zomia (a mountainous region the size of Europe that consists of portions of seven Asian countries) have fled the projects of the organized state societies that surround them—slavery, conscription, taxes, corvée labor, epidemics, and warfare. This book, essentially an “anarchist history,” is the first-ever examination of the huge literature on state-making whose author evaluates why people would deliberately and reactively remain stateless. Among the strategies employed by the people of Zomia to remain stateless are physical dispersion in rugged terrain; agricultural practices that enhance mobility; pliable ethnic identities; devotion to prophetic, millenarian leaders; and maintenance of a largely oral culture that allows them to reinvent their histories and genealogies as they move between and around states."


No True Scotsman

You are positing the "No True Scotsman" fallacy which is most often seen by those who advocate raising the minimum wage, since there is no definitive "proof" that raising the minimum wage leads to higher unemployment.

Thus remember, just because something has never been or has yet to be, does not preclude the condition from existing in the future.

For once upon a time, the world had never seen a Constitutional Republic until such time as America seceded from Great Britain, i.e. The Great American Experiment.

You keep claiming that

You keep claiming that fallacy, I don't think you understand what it means. No true scotsman fallacy is when you pretend someone isn't a "real" _____ian if they don't believe the way you believe. I don't see anything remotely resembling that in his post. What I do see repeatedly on this thread, is anarchists claiming non-anarchist libertarians aren't really libertarians.

The claim ...

property articulated would be:

If a belief in the non-aggression principle is an element of being libertarian then one who believes any entity, such as a state, can justly initiate aggression to trespass against any individual, who has done no harm, in the name of authority to enforce its own decrees does not actually believe in the non-aggression principle and logically can not be libertarian because a vital element of being libertarian is absent.

That presupposes that

That presupposes that government must initiate aggression in order to exist, which is utterly false.

I'm done with this.

Just to be clear,

on your original question, yes markets can and do constantly exist in the absence of government. The black market is a free market that exists in spite of government, and it functions quite well.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.


Also author of Stick it to the Man!


Um The Black Market

The Black Market EXISTS solely due TO government regulation. Without government regulation/prohibition there is NO black market. lol

The market exists, but it

The market exists, but its just no longer black.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.


Also author of Stick it to the Man!


By all means, it's a good idea

and all basically true, but if you set up Anarchytopia next to Brazil, or Canada or Tajikistan, and have anything worth taking, you will discover yourself being annexed and having to band together to defend your stuff/freedom/land.

Borders, administration and quite possibly (voluntary?) taxes to support a military will grow out of this reality.

There are too many people too willing to scoop up your rights and keep them for themselves for a free people to exist without ferocious defensive zeal. Ultimately, if you have anything worth taking you've got to be organized to resist the best of organized crime. People call those organizations governments.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.


Also author of Stick it to the Man!



Indeed, as mentioned in an earlier comment, I have no silver bullet answer to adequately address the potential for outside invasion. That issue alone is what kept me in the minarchist camp for quite some time.

Nevertheless, I am interested in investigating and understanding the Articles of Confederation to a greater degree, as one potential solution, ergo a federation of voluntaryist communities temporarily banded together in times of invasion.

I noticed you refer to Thomas Paine in your signature ...

Perhaps you are not familiar with "The Rights of Man" by Thomas Paine?

Chapter one, paragraph one:

"Great part of that order which reigns among mankind is not the effect of government. It has its origin in the principles of society and the natural constitution of man. It existed prior to government, and would exist if the formality of government was abolished ... In fine, society performs for itself almost everything which is ascribed to government."

RE: '"Anarchy" is a theoretical state that has never existed anywhere'

roflol ... I love a good irony!

I totally agree with Thomas Paine on this,

the greatest majority of people are peaceful, want to get along, and wouldn't steal/kill/intimidate one another in a society with no government whatsoever, and government is by no means essential.

But from proto-human cavedwellers to private islands owned by billionaires and everything in between, there is always someone who claims to be in charge.

Even though anarchy would work fine for almost everyone, human nature dictates that eventually someone with a thick neck and a table leg will show up and claim to be in charge. If you can point to an exception anywhere on earth today, I'll gladly concede the point because I'd love to reference it myself as a successful governmentless society and guiding light.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.


Also author of Stick it to the Man!


No one denies that:

"someone with a thick neck and a table leg will show up and claim to be in charge"

won't happen. What is rightly pointed out is along the lines of what are the odds of that happening in a world where most people do not use force against other people everyday?

Are we talking odds of a car accident?
Terrorist attack?

If the odds are very small of that happening why choose to live in fear of it and give a king your sons for war, the first fruits of your crops, etc.?

Is the problem really some random thug coming along with a table leg or is it more along the lines people do not recognize their own power and pledge their allegiance to the first random thug who comes along to protect them from any others? I could agree the former is likely resolved with force (ie. self defense) but would argue the latter is resolved with enlightenment.

That's not my point.

The guy with the table leg becomes king, and scares enough people into giving him stuff, sons, etc. This happens constantly, everywhere. If history is any teacher, a "leader" shows up 100% of the time for better or worse. Read Saddam Hussein's biography, it is exactly that.

I agree that the problem isn't the existence of the thugs, it is surrendering to them, but how do you convince 66 year-old ladies with arthritic hands to rise up against body-armored police representing said thug?

People take over other people unless they defend themselves, and to a large extent, one another. In a large enough group, that collective defense-force becomes a government, and much of the time they aren't very good for anyone but the people in charge. Unfortunately, power corrupts, but fortunately that's what guns are for.

I agree, a world without violence and force is better for everyone. But we live in a world super-saturated with violence and force. Let's change that, but reality is what it is.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.


Also author of Stick it to the Man!


I do not propose

a world without violence. I think it is impossible and if you believe something to be impossible why would you exert any effort towards the impossible?

Minarchists have proposed separation of powers will keep power in check.

Minarchists have proposed eternal vigilance will preserve limited government.

Anarchists point out separation of powers and eternal vigilance are failed theories and suggest ... since you folks are out of good ideas ... how about trying something proven like ... competition ... in justice for instance.