A PDF version of A Penrose Stairway is available here.

A Penrose Stairway: Why the Free Market
and Limited Government Are Incompatible,

by Ronald N. Neff

Table of Contents for A Penrose Stairway

December 23, 2016


Chapter Four

Minimizing the State


THERE IS AN ODDNESS IN Jacob Hornberger’s arguments that I have not touched on, and it is that they are not really arguments for the need for a government at all. In this respect, his arguments are not different from those of most proponents of a night-watchman limited government: most of them share in this oddness.

The oddness is the more stark among those who do not base their arguments on matters relevant to national defense.

In particular, they will argue that a government is necessary to hold a kind of monopoly on the use of force and to be the “final authority” in disputes. Their arguments, of course, show a great confidence in the ability of government to oversee matters, to make sure that private security companies do not get out of line, to make sure that court procedures are fair and follow certain procedures deemed necessary or good for reaching just decisions, and so on.

The advocates of the night-watchman limited government must, in the nature of things, have a fairly high confidence in government’s ability to do the things they want it to do, and to refrain from doing the things they do not want it to do. They must have a fairly high confidence in their own ability (or someone’s) to write a constitution that will “work” and not be subverted in any major way over a long period of time. In other words, they have utopian expectations for their government, as opposed to the dystopian expectations they bring to discussions of free-market defense agencies.

For my present purpose, let us assume that government is every bit as capable in making prudent judgments as its advocates say it is, that it will, or at least can, enact the provisions that will guarantee the procedural rights that Hornberger finds so necessary for justice to prevail.

A careful reading of the arguments will show that they never produce a conclusion of the form, “Therefore, it is needful that there be a legislature.”

There is never an argument with the conclusion, “Therefore, it is needful that there be an executive branch in government.”

There is never even an argument — appearances to the contrary — that justifies the conclusion, “Therefore a government court system is necessary.”

A careful reading of the arguments will show that all they call for in the end is some kind of monopolistic agency that can exercise some oversight function over the market for defense and adjudication. Hornberger himself claims that free-market defense and free-market adjudication would be permitted in his night-watchman limited government. His concern is that there be a final authority to enforce the decisions; his concern is that there should be certain “bill of rights” type guarantees. He never argues that the government should take the form of a republic or a democracy. (Neither does Ayn Rand, for that matter.) These are mere assumptions they make because ... well, because they think there has to be a government.

Every function Hornberger cites as calling for a government can be supplied by a kind of “executive licensing agency.” If the primary concern is that defense agencies provide certain guarantees and protections to those accused of crimes, nothing more is needed than a licensing agency to meet government standards, and that can be the end of the matter. That is, let the “state” be nothing more than an agency that defines “civil rights” and the procedures according to which defense and court services operate, and all the concerns voiced by proponents of the night-watchman limited government will have been met.

Let all security services operate under a license issued by the state. Let the requirements for being licensed be as strict and detailed as the proponents of the night-watchman limited government wish them to be. Compel the services (on pain of losing their license) to agree to follow whatever procedures the state now requires of its own forces. Put in place whatever protocols the limited-government advocates want included.

And let a similar course be followed with respect to the court system.

This is not so very far-fetched. Consider that in most states, the government does not provide alcoholic beverages. Rather it regulates them. It requires the suppliers to function according to some pretty well-defined rules. And there is plenty of free-market competition among them. Or at least competition that resembles free-market competition. I am not suggesting that alcoholic beverages be licensed. What I am suggesting is that the current system for licensing a particular market can inform the writers of a New Constitution for a New Country about how they can configure their state.

There will be plenty of competition, then, among the many licensed entities. Probably there will arise certification societies and professional associations (competing ones, at that) that will help to educate police and court services about the latest techniques, the latest thinking, even the latest regulations.

And let there be no mistake: the night-watchman limited government will be a regulatory state. It will regulate the means for apprehending criminals, for determining guilt, and for adjudication in civil matters. It will — unavoidably, inevitably — regulate some aspects of market activity. And it will use force against those who do not abide by its regulations. A state can perhaps exist without taxation. Perhaps it can exist without waging war. But it cannot exist without regulation of some commercial activity — that is what being a final arbiter entails. That is what defines the legal monopoly on the use of force.

With the licensing system, virtually every question of just how to constitute a limited government vanishes. Clearly the question of how to finance it is addressed, even if, as we shall see, it has not been solved: the licensing and fees (including the all-important renewal fees) will have to be set at a level sufficient to keep the licensing offices in business.

And what of “gypsy” police services and “rogue” court systems? Nothing could be simpler to deal with. Part of the licensing may require that the “official” services and systems will bring their influence and force to bear in putting an end to that competition, uniting in the effort, if necessary. The licensing provisions could even spell out how such alliances are to be assembled and how they will function. There is no reason for the state to be hands-on in this matter. It had already deputized private industry to address such matters when it drew up the licensing (and, again and equally important, license-renewal) instruments.

Even the need for the “final arbiter” is satisfied, for the procedures for dealing with all the issues that are said to result from its absence can be folded into the terms of the license. Free-market defense agencies will be, as it were, deputies of the state. They will enforce the judgments of the free-market courts according to the terms spelled out in their license.

But what if a licensed entity refuses to abide by the terms of its license? That, too, can be dealt with in the terms of the licenses of the other agencies. They will enforce the licenses on each other, according to the terms the state has defined.

What if so many of them refuse that there are too few loyal ones to enforce the terms of the license? Well, in that case, what you have is a revolution against the state. And that can happen whether the state is merely a licensing agent or a police state (interesting term) under Fearless Leader or Duvalier or anyone else. So that once again, it would be the case that any objection that can be brought to bear against the licensing entity applies as vigorously against any state.

The system I am describing, I submit, answers every need of government that limited-government advocates advance, with the advantage that government itself lacks the means of directly committing acts of tyranny. To be sure, nothing prevents corruption in the licensing process, but there is nothing distinctive about this problem. Even the most ardent defender of the night-watchman limited government will surely not assert that government itself is free from corruption. Indeed, every objection that might be leveled against this system would merely be a special case of an objection that a free-market anarchist might level against a more-traditional limited government. Or, for that matter, that an advocate of limited government might level against a government with much wider powers.

It cannot even be argued that the state could not possibly function as a licensing bureau, for it already does. All the duties of a proposed U.S. Licensing Bureau of America are already prefigured in its current dealings with police and courts. And if the state truly cannot be expected to design competent and justice-seeking oversight provisions for licensed police services and courts and write them into its requirements for licensing, it perforce cannot be expected to run them itself. The state dictates how police forces shall be operated, and they more or less operate that way. The state dictates what shall be admissible in court, and courts follow that direction.

Moreover, if proponents want a “federal” system of government, there can be as many subordinate agencies as anyone thinks may be good. And the degree of independence they enjoy can be further defined by the licenses that create them.

Let us go further: there is no difficulty in creating this overarching licensing bureau, this U.S. Licensing Bureau of America, that is not also a difficulty for creating the more expansive, more traditional constitutional government. If the difficulties for founding the latter can be solved — especially the difficulties captured in the problem of legitimacy — so can the difficulties for the former.

“But who will design these licenses? Who will decide what goes into them? Who will decide who will ‘serve’ on the bureau?”

I confess that I do not understand why such questions will be asked. But since they surely will be asked, let us reply, “Essentially the same people who will do it in your government.” If private defense and private arbitration agencies are permitted to function (as Hornberger assures us they will be), lacking only the property of being a final authority, the state will necessarily have some system for controlling them, if only by overruling them, whether that system is one of licenses or of some other that takes the place of licenses. Someone will be defining the terms under which they may exist and under which they may operate. And someone will have to determine who will be doing that defining. Who will that be?

If the reader has followed none of my arguments to this moment, let him attend to this reply: That is the limited-government advocate’s problem, not the free-market anarchist’s. I do not say that there are or should be people in a position to make those decisions. The proponent of government (any government) says it. It is the proponent of government (any government) who says that there shall be men with certain powers and authority that other men lack.

Let me be clear on what I have been asserting here. I have not been asserting that a U.S. Licensing Bureau for defense agencies and court systems is necessary or desirable. I have not been advocating it. What I have been at pains to do here is to look at the arguments of the advocates of the night-watchman limited government and to ask myself what institutions are implied to satisfy those arguments. I am saying that even if we grant all the arguments offered in support of a limited government, there is no need for a Constitution for a New Country. There is no need for a legislative body. There is no need for any of the structures of government except a licensing bureau that licenses the defense agencies and court systems, which licenses will be the means of “guaranteeing” that they operate the way those fearful of a free-market anarchism want them to operate.

I am not arguing for the legitimacy of licensing or for the possibility of guarantees. But if one can swallow the camel of traditional government institutions, with all the problems of legitimacy and financing that they present, surely one can swallow the gnat of a state that is nothing more than a licensing bureau.

Indeed, it may even be less than a gnat. For the licenses can even define the terms under which the defense agencies and court systems can disband the Licensing Bureau and create a new one.

Naturally, it will be objected that there needs to be some provision against the agencies’ banding together to form a corrupt bureau that favors existing agencies and disfavors new entrants, that limits competition somehow. And again, in this objection, we see dystopian expectations for a (near-) market system and implicit utopian expectations for the government system.

For consider: in a night-watchman limited government, what will prevent any cabal from banding together to disband it, either justly or unjustly? Nothing prevented it in 1787, when the Articles of Confederation were overthrown. Will there be a sufficiently powerful standing army to preclude it? None prevented the discarding of the Articles of Confederation. And surely the night-watchman limited government that libertarians would fashion would not be any more powerful than that formed by the Articles.

Remember also that the night-watchman limited government depends on consent of the governed for its legitimacy (or, at least, no other basis is to be found in contemporary writings). Any uprising, any cabal, any intrigue ipso facto constitutes a loss of some degree of consent.

In other words, I contend that if it is possible to fortify a night-watchman limited government against arbitrary dissolution or dissolution to be followed by tyranny, then it is possible to similarly fortify a licensing bureau.

But even this idea of a government that is nothing more than a licensing bureau — nothing more — is also a Penrose stairway. Perhaps, let us say, a lower one, a stairway with fewer steps and fewer turns. All the questions that pertain to the founding of a more familiar government pertain to founding it. And the attempt to answer them when they are asked of it will involve us in the same contradictions and impossibilities that we have already seen when we ask them about government.

And even a small defiance of the Law of Contradiction is a metaphysical calamity. All assertions follow from even one contradiction, no matter how small.

December 23, 2016


Chapter Five: Financing a Limited Government

© 2016 Ronald N. Neff. All rights reserved.
Published in 2016 at The Last Ditch by Croatoan Books, a division of WTM Enterprises.

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