NAP Fails on Transaction Costs Alone


–“Yes…transaction costs exist. But that simply means that a market can potentially give sub-optimal outcomes. It does nothing to undermine the internal coherence of NAP.”–

[I]t does everything to undermine the willingness of individuals to reduce their demand for the state.

Science requires external correspondence not internal consistency. Internal consistency is a property of our logic not of reality. It is not materially useful if something is internally consistent if it fails the test of external correspondence.

So if you feel that the NAP is sufficient for the rational reduction of demand for the state, you can make all the internally consistent statements that you wish, but unless you can empirically demonstrate that people will do so, your internally consistent argument is false.

NAP is not false, but insufficient. It is insufficient because people attribute greater resistance to risk and therefore transaction costs, then they to do third party intervention.

For example: Does the NAP forbid blackmail? Rothbard doesn’t forbid blackmail in his books. Walter block doesn’t either.

Each marginal improvement in the trust necessary for marginal reduction in demand for the state, requires disproportionate suppression of additional means of cheating (involuntary transfer). The progression is not linear. We can measure it. We have.


How could slavery reduce transaction costs? Couldn’t voluntary organizations do it instead?

>Curt Doolittle

(Sorry, Osku. Not sure the logic you’re using to get to slavery. NAP is insufficient for reduction of demand for the state. People DEMONSTRATE that it is insufficient for reduction of demand for the state. So what is absent in the NAP as a test of property rights theory, that maintains demand for the state? Slavery isn’t the test, because slavery is satisfied by the NAP. NAP is sufficient to suppress slavery, violence and theft. It is not sufficient to suppress even the low standard of ethics set by blackmail. How can a voluntary society, a free society use the NAP as its critieria for the test of property rights?)


So you are saying, that people like to be slaves of the state, because they are afraid of blackmailing and transaction costs? I would suspect, that if demand is high enough, the competing legal systems would offer a service, where blackmailing is punished. This would not be against NAP, because, it’s voluntarily agreed sanction, like some communities could punish from alcohol consumption, or some other vice.

If we define society as a co-operative organization, the first principle has to be NAP. Coercion is the opposition of co-operation, so they would be mutually exclusive. The property right to things outside your body, would be next obvious way to co-operate. It’s a way to co-operate more efficiently. Bad manners, like black mailing would be either restricted by social sanctions, or agreed voluntary legal sanctions.

There is no universal ethics, like in christian theology (except for Christians). Ethics is a concept we use to behave as a social animal in society. NAP and property rights are so elementary for social animal, it’s in our genes to understand them. We also have genes to be altruistic, that helps to lower the transaction cost, when living in closely related tribes. Then there is of course genes, that try to use the free riding strategy.

If people are free to leave legal orders and societies, and free to form their own, they are living in voluntary societies. If people are forbidden to leave, they are slaves. There is the problem of free riders and they have high demand for public and private slavery. This slavery is supported by violence and propaganda. A slavery can’t fix problem of transaction costs, because it would destroy the benefits of co-operation. People could still want to be or to have slaves, but if enough seceding communities would emerge and compete with each other, most people would have to follow the price signal.

>Curt Doolittle

“So you are saying, that people like to be slaves of the state, because they are afraid of blackmailing and transaction costs?”

The pejorative term ‘afraid’ is an attempt to introduce a fallacy. Instead, praxeologically, it is simply a rational choice that we reduce the burden of many independent interactions with a few major and invisible transactions.

“I would suspect, that if demand is high enough, the competing legal systems would offer a service, where blackmailing is punished.”

Agreed. However, I don’t dispute that. I’m arguing that without prior promise of constraint of blackmail, we cannot reduce demand for the state. Private Property only developed where unethical and immoral conduct was suppressed at every possible level.

The EVIDENCE is that the demand for private property only exists in the suppression of immoral and unethical conduct. Criminality is insufficient. So it’s not RATIONAL to argue that the NAP is sufficient. The trust necessary for private property must exist PRIOR to the demand for private property, and the reduction of demand for the state. Further, it’s not evident (it’s contrary to the evidence) that the market suppresses unethical and immoral behavior. Just the opposite. The expansion of the market INCREASES opportunity for immoral and unethical behavior. Immoral and unethical behavior is cheaper than honest ethical and moral behavior, which imposes costs on the participants. Property rights are a cost. Every time they are respected. Forgoing those opportunities requires trust. The result of forgoing opportunities and TRUST creates property rights. Not the other way around. Private property does not create trust. Once you suppress criminal, unethical and immoral behavior, the only POSSIBLE means of interaction is via private property.

We cannot confuse cause and consequence.


So, again, trust (willingness to take risks / low transaction cost exchange) requires the suppression of criminal, unethical and immoral behavior. And the trust that appears to be sufficient for demand for private property requires near total suppression of unethical behavior.

We must suppress even MORE unethical and rent seeking and corrupt behavior in order to reduce demand for the state. If we are to define property rights as the basis of a moral and peaceful society, then what is the definition of property rights that prohibits not only criminal behavior (the NAP) but also unethical, immoral, as well as free riding, rent seeking, and corruption?

I think that it looks like the state would be the natural means of transforming criminal, unethical, immoral behavior into free riding, rent seeking and corruption in an effort to decrease transaction costs. Now, how do we FURTHER suppress free riding, rent seeking and corruption without the state? Privatization. But for privatization we must have a set of property rights that increase suppression of free riding, rent seeking and corruption, without sacrificing the reason for the state: suppression of unethical and immoral behavior.

It’s non logical to ask people to yet bear again that which they have rid themselves of, by clear and demonstrated preference, almost universally. People have already demonstrated that they are willing to trade unethical and immoral behavior, for corrupt and rent seeking behavior. And they were rational to do so. You cannot tell them that they are gaining something by simply reverting them to a previous state that they have already rejected.

We can only offer them something BETTER. Which is to ALSO prohibit rent seeking and corruption AS WELL as unethical and immoral behavior.

So no. The NAP was a terrible mistake for the liberty movement. It was tragic. I understand why they resorted to ghetto ethics, because they didn’t understand where liberty and the high trust society came from.

But now that we do (or at least I do) we must base any argument that we deem ethically superior on a set of property rights that is a net gain, not a net loss, for the population.

This is very difficult for Rothbardians to swallow, but pride and personal investment in a failed ideology are less important than the achievement of freedom.


Doesn’t make sense to me. Do you mean, that NAP is incorrect ethical goal, and we should have some anti-NAP goal, that is more achievable? Or are you saying, that the logical reasoning of NAP is not appealing for masses, but could sell them the the private property principle, and NAP would follow by definition from that?

>Curt Doolittle 


NAP is an INSUFFICIENT ethical test of the violation of property rights needed, (or the ‘goal’ as you say), to COMPENSATE people with the sufficient suppression of immoral and ethical behavior, that they will reduce their DEMAND for government as a means of suppressing that unethical and immoral behavior.

So, yes, it is an incorrect ethical goal because it is an insufficient goal for rational adoption of anarchy. People will demand a much broader definition of property than ‘criminal’.

This is not a criticism of Hoppe’s solutions, private government, or minarchy. It is a criticism of the definition of property that is sufficient for people to tolerate private government or minarchy. Any system that is dependent upon property rights as the means of resolving conflicts, would requires a broader definition of property, that accurately reflected the property rights people demand. Nowhere do people demonstrate a preference for property rights as limited as the NAP except in ghettos.

(There are many ways to approach this argument, but this is the most direct.)


So if you are defining property rights according to people’s demand wouldn’t you have to define property rights in thousands of ways for thousands of groups of requests for these? (i.e.: ghetto – NAP, as mentioned.)

And could it not be the case that the NAP be part of this rather that the whole? So maybe it is insufficient but necessary? How do you see this Curt?

I see the NAP as necessary, but insufficient. The NAP prohibits crime, and we might argue that through the NAP (as Osku suggested) we could prohibit the state, but we cannot prohibit unethical and immoral behavior. And as such we cannot reduce demand for the state to suppress unethical and immoral behavior.

I think I’ve managed to define the suite of property rights pretty simply actually. However, given that reproductive strategy determines the desirability of some of those rights, and other institutions make some of them more or less necessary, the scope of property rights would need to be specified in a shareholder agreement in private competing governments. (or Constitution that enumerated property rights in minarchic government.)


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