Wednesday, April 29, 2015

An Unusual Proof

I have argued in many essays* that the free market, far from being a force for "warmongering capitalists" or "exploitative, imperialist entrepreneurs", is actually a force for peace, that those engaged in free and open trade have every incentive to maintain a peaceful relationship with the rest of the world**. Obviously, this is not universal, even in a fully laissez-faire economy, there will be individuals who choose a violent course, or those who misunderstand the best path to fulfilling their own interests and think theft or violence provide a valid shortcut, but, overall, the incentives offered by trade tend to encourage pacific behaviors***.

The reason I bring this up again is that recent events brought this to mind.

While watching the riots in Baltimore, I started thinking about how not only the riots, but the subsequent curfew, must be hurting the restaurant and bar/nightclub trade in the City, which then led me to think of what other businesses must be suffering. Interestingly, the first that came to mind was drug dealing. Then again, perhaps that is not so strange, since Baltimore is notorious for its "open air drug markets", and the open secret that the police, though they will periodically sweep a few drug corners to make the news, generally don't do much to curb these low level drug merchants. What struck me in particular was, that, while many of their peers might be looting, the drug dealers themselves were likely to view the riots more like the shopkeepers and other honest citizens, since the riots not only brought unwanted police attention, but also kept out many of their customers, losing them considerable amounts of money.

Thus, it was not much of a surprise when I heard news stories of various gangs banding together to keep order. I know, many conservative view these claims with skepticism, but to me it makes perfect sense. After all, the gangs make their money by drug dealing. Every day the riots continue, they are losing a small fortune, as well as losing the loyalty of those who relied upon drug money for a living. In short, because they rely upon buying and selling, the gangs too want a peaceful city (for the most part), in order to keep their income flowing.

And if there is any better endorsement of the pacifying ability of the free market, I can't think of it. That is can take several hostile gangs and make them come together as supporters of law and order seems to me the best proof of the way the free market encourages peaceful coexistence.


* See "An End to War", "The Road to Violence" , "The War of All Against All", "Greed Versus Evil", and "Competition" among others.

** In contrast, even small interventions, such as protectionist measures, or currency manipulation, tends to create hostility between nations, while inflation, government patronage and privileges create hostiliuty within a nation. See "Inflation and Uncertainty", "Perverting Self Interest", "Free Trade, Employment, Outsourcing, and Protectionism", "Cheap Lighters, Overseas Dumping and Monopolies", "Computer Games, Immigration and Protectionism", "Government Funding and the Creation of Strife", "Missionary Zeal and Human Discord", "How the Government Corrupts Relationships", "Hard Cases Make Bad Law", "The Consequences of Bad Laws" and "Why Freedom Is Essential".

*** An interesting case study could be made of the medieval and renaissance trading cities of Italy (Venice, Genoa, Amalfi, Pisa, etc). In larger terms, they fits this pattern quite well, generally opposing wars, even initially opposing the crusades, as they would disrupt trade. On the other hand, on a smaller scale, they often warred with one another, but mostly due to the protectionist policies pursued by the cities, and the tendency of medieval rulers to grant monopolies to single trading partners. Stay tuned for a future essay on this topic.



Some will doubtless point to the gang's normally violent interactions as a counter-argument, but I would disagree. The violence within the drug market exists because it is not entirely a free market. To be a free market, it would have to have legal mechanisms for settling disputes and be recognized as a legal venture. Because drugs are illegal, disputes must be settled violently, and market competition is done, not only through price wars, but also with bullets. The same was once true of alcohol sellers, but, once alcohol was legal once again, the market lost its violent character. Thus, the violence of drug dealers is not an argument against my thesis, but actually supports it as well.

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