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Jan. 20, 2007 - Freedomain Radio - Stefan Molyneux
27:10
609 Will DROs Become Governments?

From rating contracts to riding the black helicopters!

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Good morning, everybody. It's Stefan Molyneux from Freedom Aid Radio.
I hope you're doing well. It is, gosh, what is it?
Quarter to ten on Saturday, January 2007.
And I'm going to run through a couple of things to do with anarchistic political organization.
Gripping topic will make you about as popular as Elvis at dinner parties.
And the main reason that I wanted to do this this morning is because I've received a question, which is not the first time that I've received this question, which is how, oh how, oh how does anarchism avoid having a social organization that reproduces some functions of the government End up coalescing, blobbing together and rearing its ugly head and becoming another government.
So, the acronym that I use in my explanation of these things is DRO, which stands for Dispute Resolution Organization.
And there's lots of explanations about this term on my blog or on my Lua Rockwell articles or early on my podcast series.
But basically, a DRO is an agency that if you and I want to do some sort of business together...
And we don't know each other well enough to trust each other and our reputations are not so well established that we're willing to sign deals and work together, then what we do is we contract a third party that we both agree to arbitrate our disputes,
right? So if I'm buying a house from you and I promise to pay you half a million dollars, although in an anarchistic society it'd probably be about a hundred thousand dollars without all the government overhead, but If we agree to some sort of transaction and then I take possession of the house but don't pay you your money, then we agree to mediate ourselves through a third party and of course then everyone says, well what if you just don't agree to that third party and so on and I've gone into all these explanations about how this can all work in other areas.
So a dispute resolution organization is that agency which is used as a third party to resolve disputes by people who aren't comfortable that they can resolve their disputes between themselves.
And of course they're sort of transitional insofar as one of the most amazingly powerful things in the world is a man or woman's reputation.
So once you have a reputation For fair dealing and honorable commitments to your contracts and so on, after 20 years or 30 years or maybe even 10 years of being somebody who pays back his debts, for instance, then you get very cheap rates when it comes for people, a time for people to lend you money.
So just in the same way, if you gain a reputation for honest dealing and there are agencies which would report, you know, yes, he paid his debts on time, yes, he fulfilled his contracts to letters of the law, no, he's never been involved in a dispute, so you're going to be somebody that people will trust in terms of doing business with, maybe even without any sort of third party.
All it really requires is an economic calculation that says, okay, well, I'm doing business with you for half a million dollars, You spent 20 years building up your reputation and thus don't require all this overhead of all these people to back up your contracts.
Basically, what happens then is that the value of your accumulated reputation would simply be less than the half a million dollars you might get from stealing from me, and that's a calculation that works quite well.
We don't spend a lifetime of borrowing and paying back our debts simply to run away with $50,000 from someone, because it's quite a lot of work to run away with $50,000.
Plus, it means that for the rest of our life, the reputation we have built up so assiduously It's totally gone, as somebody said about reputation.
It takes a lifetime to build and only a moment to destroy.
These dispute resolution organizations would also, of course, if we were in business for $100,000, I would only myself, if I didn't know you well enough to trust you with that kind of interaction, I myself would only choose a DRO that would say, look, If the guy you're doing business with welches or runs off with your $100,000, we will pay you the $100,000 instead.
This can all work very well economically and so on.
This is why people's reputations would be very important.
In the same way that you sort of have eBay, where eBay is one of the world's largest employers.
300,000 people or so make their living from eBay.
There's no police. It's international.
There's no law courts. There's simply reputation, and it works very, very well.
That doesn't mean it works perfectly.
There's no perfect thing twixt heaven and earth, but it works very, very well with very little overhead.
There's no state intervention and no contracts and so on.
It's really just a rating agency.
So, that having been said, and if you accept that there's a possibility, That the functions the government claims to provide at the moment, which of course it doesn't really.
I mean, there's very, very few people who can effectively use the existing law courts that the government provides.
So, we're not comparing an imperfect anarchistic solution With a perfectly humming and running state solution, really.
I mean, if the state were working a lot more effectively, even if it wasn't perfectly, and even if you didn't have moral issues with the way that the state works, which is to put guns to people's heads to take their money and force them to do this or that or the other, and draft them and create wars and all this kind of stuff, If the government was working much more effectively, then the argument for anarchism at a purely practical level would be much weaker.
But the government is just wretchedly not performing its state-and-function duties of protecting citizens, of arbitrating disputes in a just and timely manner, and so on.
If you accept that there's a possibility that these DROs could work and be used in a sort of private way to resolve disputes, the next question that people have, it's a perfectly sensible question, of course, is, okay, so we've got all of these state-replacing DROs,
which are resolving disputes between citizens, What would stop, or what would there be to stop one of these DROs from becoming another government, from getting big and buying up all the other DROs and suddenly boom, you know, it's got, you know, the sky is darkened with swans of black helicopters and stealthy accountant ninjas popping out of the bushes and molesting your cat and so on.
What would stop one of these DROs from popping up to become another state?
Perfectly sensible question.
So I just want to run through a few counter-arguments to that.
The first counter-argument really is one of universality.
Imagine if I said this to you.
Imagine if I said, you know, I'm just dying to move to Chicago.
You know, it's toddling, it's got long winters, I just can't wait to move to Chicago.
And you say, oh, when are you going, Steph?
And I say, well, I'd really like to go, but I'm really, really worried that there's not going to be any food there.
I'm sure you'd be a little baffled.
You'd say, what do you mean there's no food in Chicago?
I said, I want to eat.
I like eating.
It lets me live.
But I'm just really terrified that I'm going to move to Chicago.
Maybe there'll be food for a little while, but then the food will just not be there.
I can't grow enough in my little apartment in Chicago on the windowsill to eat food.
And I think part of you would maybe worry for my mental health, but part of you would just sort of say, look, dude, there's millions of people in Chicago.
They all want food. So where do you think people are going to send the food?
They're not going to dump it down a mine in Montana in the hopes that some crazy guy with a beard longer than his hair is down at the bottom waiting for the apocalypse who needs the food.
They're going to ship it to Chicago because, you know, people want the food in Chicago.
Sorry for this rather insulting parable, but the sort of idea behind it is that Where there's a great demand, this is where people supply goods and services.
This is what the free market is all about.
People like to eat because they're, you know, fundamentally addicted to breathing, so that's where people send the food, where the demand is.
In the same way, I've never talked to anyone about anarchistic philosophy in this kind of manner, wherein the person has not said a couple of things, you know, what about the poor, what about the sick, what about the old, but also what about DROs turning into governments.
Perfectly sensible fear, Everyone has it.
You're not alone. Everyone has this fear of DROs turning into governments, of private resolution agencies for disputes turning into just another government, right?
So, you know, well, meet the new boss, right?
Same as the old boss, thankful I don't do that in some.
So, naturally, if everyone has the same demand, which is, or the same fear, or the same concern, or the same need, Which is, I don't want my DRO to turn into another government.
Then, naturally, just like people bring food to Chicago, people bring solutions to that worry, to that fear, to that concern.
That's what the free market does.
If people are worried about something, or concerned about something, or need something, or want something, and the more universal, the more resources get applied to it, that's what the market does.
So, if you were the only human being in the world...
Who cared about the power of the state or corporations turning into a state, then you'd have reason for concern.
But it's a totally, let me reassure you, it's a totally universal fear.
So it's like people's need to eat in Chicago and worrying that DROs are going to turn into governments and therefore should we be anarchistic in our philosophy or not is exactly like saying, well, I don't want to move to Chicago.
I'm really concerned about moving to Chicago because I don't want to go there and then find out there's no food.
Of course, there'll be food there, because that's what people want.
So, let's just look at some of the methodologies, some of the possible methodologies.
You can't predict the future, but these are some ways that it could work, I think, in a pretty productive and positive way.
Everybody's nervous about DRO power, right?
So some, you know, mustachioed evil DRO representative knocks on your door and says, hey, I'd really like to solve your dispute for you, man.
What are you going to do? Well, first you're going to look at the contract and you're going to say, you know, there's nothing in here about you guys not becoming a government.
So, I think I'm just going to work my trusted relationships for now.
And then some other guy comes along and says, you know, we really want to represent you in your disputes and so on.
And we only take 1% of the deal and we guarantee you this and we'll track how well everyone complies and we'll release it.
And every time you comply with a contract, you go down by a tenth of a percentage point in terms of your next deal or whatever they're using to incent you to sign up with them.
And you look through the contract and it says, you know, Clause 7.
We guarantee that we're not assembling hangers full of black helicopters and training our elite accountant ninjas to take over the world.
And here's our independent auditor who goes through and makes sure that we never purchase arms, that we never do this, that we never do that.
And by the way, if you ever find out that we're doing any of these things, we will pay you $10 million cash.
So they'll just dangle a bribe out to make sure that everyone has an incentive to keep checking up on them.
If everyone has a fear that their DRO is going to turn into a government, then the first thing that the DRO is going to have to do is reassure people about that fear.
That's natural. Here's another thing.
DROs, there's lots of them.
There's lots of them. Being a DRO is not exactly like being Microsoft.
Not everyone has to be on the same standard.
There would be some data exchanges that would be helpful, but not everyone has to be on the same standard.
It's really just about tracking and data keeping and so on.
The barriers to entry are not enormous, right?
So lots of people could set up DROs.
There's going to be lots of competition.
Would there be one dwarfing market leader?
Well, you know, perhaps, and so on.
But certainly DROs would have to have reciprocity agreements the way that cell phone companies do and so on, and that people who build train tracks don't change the gauge on you, so you plunge into a river or something.
There would have to be these reciprocity contracts so that people would feel comfortable that if they did business with someone on the other side of the country or the other side of the world, that they would be covered and you would choose DRO coverage for more remote things.
Maybe it would be a little bit extra, like long distance or whatever.
But there would have to be these reciprocity arrangements and DROs would have to provide that sort of widened net for people who did business.
Hey, you're just doing business in your own town.
Who cares about a DRO reciprocity agreement in Singapore?
But if you do do business in Singapore, you would want that.
So there's lots of DROs, lots of capital invested, lots of people who are concerned about the capital that they have invested in their DROs.
So, there's lots of DROs, and they're all watching each other, keeping a beady eye on each other, and that's exactly what you'd expect.
Because every DRO owner, and every DRO shareholder, and every DRO employee knows that if one DRO turns into a mega-monolithic core, which turns into a government in some RoboCop scenario, the first thing that that new government is going to do is get rid of all the other DROs.
Naturally. I mean, that's what you do when you become a government, is you eliminate all the competition.
I mean, you can do it through legislation, you can do it in a slightly more Stalin-esque, thirties-purge kind of way, but that's what you do.
You eliminate, the government is all about monopoly, eliminate the competition.
So, all of the DROs We're going to be keeping very beady eyes on each other, right?
Because if I've spent 20 years building up a DRO, and then I'm worried that someone's going to come along, be a government, and eliminate me completely, and maybe even throw me in jail, of course I'm going to keep an eye out, right?
So DROs themselves would fund auditing agencies to check out another DROs, and if a DRO started to get too big...
They'd simply start playing off the fears of the population, right?
So they'd say, well, according to our audits, the DRO's doing this, the DRO, don't you think they're getting just a little bit too big?
Don't you have any concern about that, the freedom of your children and this and this?
And they'd put out, I mean, they'd put out ads and they'd scare you and so on, right?
Or maybe they'd do it in a funny way, but DRO's would constantly be watching each other, right?
There's no solution to the problem of human corruption except freedom of association and competition.
There's no solution.
You can't impose any monolithic agency that is going to solve the problem of human corruption and the desire for power.
Lots of people in the world have a desire to rule over others.
And you can't solve that with any government.
Governments always just make it worse, as we can see.
They just keep growing and growing until they collapse.
Well, not just them, but the society as a whole has trouble.
So there's no solution to the problem of human corruption except freedom of association, which is anarcho-capitalism, market anarchy, and the resulting competition, which is everyone keeping an eye on each other.
Who watches the watchers?
It's the big problem. It's the problem of a recursive to infinity challenge, right?
Like, everything which exists must be created, therefore God created it.
Well, God exists, therefore God must have been created, and you just go sort of all the way around, and that doesn't get you anywhere.
So, say, well, there's a problem with human corruption and a desire for power, So let's impose a government to watch everyone.
Well, you've just created an institution composed of human beings with near infinite power, and the problem it's supposed to solve is that human beings abuse power.
So you've just made the problem infinitely worse by creating a government.
We can see that sort of occurring all around us.
So there's no solution to the problem of human corruption, the desire for power, and so on, and the problem of monopoly.
Except for freedom of association and the resulting competition that is the balance of power, right?
It's why nuclear powers never attack each other, right?
Because that's a balance of power.
So this diffusion of power that the anarchistic model proposes is the only proven solution to this.
It's the only way to solve this issue.
So, people's fears of DROs turning into a government would not vanish, right?
So, if people started to feel that a DRO was getting too big, just a little too big, you know, it's got 40% of the market share, feeling a little uneasy, what do they do?
They simply... They cancel their subscription.
They go to another DRO. There's 8 million other DROs out there constantly offering better deals.
And this is not an embedded thing like an operating system or other areas where a natural monopoly could make sense.
Or at least, not a monopoly exactly, but like Microsoft got 90% of the operating system market just because it's easier for people to have the same operating system and so on.
If people start to fear DROs, they'll just stop going to that DRO. They'll take their business elsewhere.
And that's bad for the shareholders, right?
So the shareholders would say to any DRO that's saying, hey, you know, we can buy up these other 50 DROs and we can get to be 90% of the market.
People would say... You know, I don't think that's a good idea.
I'm going to block that as the board, as the shareholders are voting or whatever.
I'm going to block that because if we get 90% of the market, people will just stop doing business with us because they're just terrified that we're turning into a big government.
So, the people who would watch that kind of growth of power are the very leaders, the shareholders, the board, the people who are responsible for the accumulated value of that DRO. They would make sure that they never freak people out by becoming too big and they certainly wouldn't want to do it surreptitiously.
Because if they start assembling these black helicopter hangers of whatever, whatever, and they have this contract which says $10 million to anyone who finds this, then people would start to find it.
There'd be rumors on the internet. People would leak the story from internally.
It would have to be a bribe large enough to overcome anything that they would pay internally to keep it secret.
You just have to make it economically inefficient.
So then somebody who was on the inside would put something out on the web or would email his friends and say, hey, you know, call 10 of your closest friends, meet me at this black helicopter location in Utah and we'll all take photos and then we'll all go and get our $10 million and this and that.
I mean, I know this is a bit of a silly argument, but this is easily how it could work or it could be some other thing.
So, that doesn't seem to me to be particularly likely.
It's a great deal of risk, obviously.
And, you know, capitalist companies, I mean, those that operate in the free market, not the ones that are sort of hanging off the stake these days in this sort of fascistic mercantilist model.
They're kind of composed of different people than the army, right?
I mean, people in the army don't tend to do very well in business in many ways, unless they're, again, in this sort of revolving door of state corporate privilege.
But the people who are in companies, and I've worked mostly in the software world, they tend to be kind of different from the people who are in the military.
So it's not like everybody, it's not like Bill Gates is like, ooh, I want to become a Leninist-style uber-dictator.
I mean, it's not really his bag, so to speak, if I could speak for Bill himself.
So and remember, DROs are overhead, right?
If you and I can do business together without involving a DRO, just based on a trust relationship or a relationship that has been built up over somebody rating how well we have performed our contracts rather than having somebody insure our contracts, then that's better.
People will be constantly working to eliminate DROs, because DROs are mere overhead to a business deal, so there's going to be a constant pressure not to have DROs grow and become more powerful, but for DROs to shrink and become less powerful because they're overhead, right? I mean, government's overhead, but we can't get rid of government except through a peaceful and philosophical revolution, a moral sort of advancing in the way that getting rid of slavery was and recognizing the rights of women was in advance.
Getting rid of central monolithic agencies of violence like the state is where we've got to go next, based on the evidence that's all around us.
So I just wanted to sort of put that out there that it's certainly understandable why people are afraid that DROs would turn into another state.
It makes total sense, but there's enormous numbers of reasons as to why that would never occur and why there's so many vested interests all over the place that would never allow that to occur based on their own self-interest and so on.
And the final thing that I'll sort of say is that let's say that there's a 10% chance.
I don't think there is.
I would argue very strongly that there isn't.
But let's say that there's a 10% chance that An anarchistic society would just turn back into a government-run society for whatever reason, right?
Although, remember, the main reason that we're a state of society at the moment is that the government trains the children for 14 years, right?
It's not exactly a free market in molding the minds of the Uyberians, so there is quite a strong propagandistic element to the way that children are raised.
14 years in a state school, It's not like there's any evil people trying to program the children.
It's just kind of natural that you don't hear a lot of negative things about the state from a state-paid teacher.
I mean, it would look kind of silly, right?
I mean, the state is an immoral agency.
Well, who do you work for? Well, the state, kiddies, but I'm working from the insides.
And you wouldn't last anyway, right?
It's just a general tendency, right?
Whoever pays the piper calls the tune.
It's not like we expect that an ad put out by General Motors is going to be objective about the quality and value of General Motors relative to all other options for your money.
No, they're putting forward a position.
It's not corruption, it's just self-interest.
And the same thing is true of state schools.
You don't hear a lot that's directly critical of the state.
You may hear a left-wing bias against right-wing policies or vice versa, but that's not really critical about the state.
As an entity as a whole, it's like saying, this team should win rather than that team should win, not, should we even be playing this game?
That question really doesn't come up very much.
So, if you feel that there's a 10% chance or a 20% chance or even a 50% chance that an anarchistic society would just turn into another state-run society, I would argue that it's still worth doing.
It's still totally worth advocating it with the sort of metaphor of saying that if you're in a plane and the engines are down and you're going to crash into a mountainside and you only have a 90% chance of surviving, if you jump out of the plane and roll in the snow, would you jump?
Well, of course, everybody would jump.
You'd jump even if you've only got a 1%, even if you'd have no idea whether you have a chance of surviving.
Because you know that if you stay in the plane, you're going to hit the mountainside, right?
And based on the national debt and so on, and the increasing social problems, the lowered birth rate, the bulge of the baby boomers about to hit retirement, and so on, I mean, this can't continue, right?
I mean, national debts don't go on forever, and all prior societies that have escalated the size of government, which is all prior societies, end up collapsing because of state overspending and going through radical and often unpleasant changes, right?
Um... So, the current course with a monopoly of state power with governments definitely is going to lead to a very, very bad place.
And so, that plane is going into the mountains, so my argument is, well, even if you think that it's 10% likely that an anarchistic society might at some point in the future, End up becoming a state society again.
It's still worth doing. I mean, because it's like jumping out of the plane and saying, well, I've only got a 90% chance of surviving if I dive out of the plane into the snow, so I'm going to hang into the...
You only stay in the plane if you think the plane's going to clear the mountain and land safely, and it's not.
It never has happened. Historically, it never will happen.
State power grows like a cancer, right?
It grows until it consumes the whole society.
So... So, if you feel that it's possible, that's not a reason not to jump, in a sense, to make the leap to anarchistic philosophy.
And the very last thing that I'll say is this, that...
If you're worried about monopolies, if you're worried, say, well, anarchism could become a monopoly.
Again, if you're worried about monopolies, which, you know, you and I are in the same boat, brother or sister, so if you're worried about monopolies, then I fail to see how the current system could be satisfying, right, in any way, shape or form.
If you're saying, well, there's a possibility that some DRO could become a government at some point in the future and this and that and the other, I totally understand that, so what you're concerned about or what you find problematic is a monopoly, a state.
Well, you know, tax season is coming up and you may have noticed if you read the newspaper that we have kind of one of these already, right?
So, you know, if you've got a cancer that's going to kill you and some doctor comes along and says, well, we've got to perform the surgery, definitely going to die if you don't, and you say, well...
I don't know if I want the surgery because I could get hit by a bus in 10 years.
I don't think people really think like that.
They say, oh, I'm going to die and there's a chance I could live?
Let's go that way, right?
And that's really what the anarchistic philosophy is saying, is that states historically always end up destroying the whole society.
It's just the logic of human corruption, monopoly and power and the ability to inflict violence to get what you want, which is fundamentally what the state is all about.
Although it outsources the violence and pays for it in a sort of mafioso kind of protection way, it pays for that violence by the very people who it inflicts the violence against.
The taxpayers are forced to fund the violence.
Anyway, we don't have to get into all of that, but if you really are concerned about monopolies, and that's Some sort of opposition that you have towards anarchistic philosophies.
I really do fail to understand the logic of that because we already have this terrifying, terrible monopoly with nuclear weapons and powers and wars and massive taxation and enslavement of the poor through welfare and just all of the messes that go along with a monopoly of brutal power which corrupts and destroys the human soul and everything it touches.
It kind of is like, you know, we're offering a way out of the destruction that is involved in and the corruption that is involved in a monolithic and monopolistic state agency of violence.
So, if you feel that there's some risk in that, I can understand that, but I'm telling you that the plane is going into the mountain, and probably within our lifetimes, and probably not that far away, the same thing happened to Russia, the same thing happened to Germany, and the same thing happened to Italy, and the same thing happened to England in the past during the Glorious Revolution, all these sorts of things.
So, this is not unprecedented in history.
Mathematically, any situation which can't continue, kind of won't continue.
So, you know, we're saying...
Hey, it's not even snow.
There's a parachute into paradise off the plane that is going into the mountainside, and it's called Anarchistic Philosophies and Market Anarchy, and there's lots of things that you can do to learn about this, which I'd really encourage you to do, because it gives you a lot of, I think, hope and excitement about the future.
So there's a great parachute that lands in paradise, and if you are concerned about death, danger, and destruction, I don't think that staying on the plane is the right way to go.
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