As a boy, one of the recurring themes in my social studies books was that monopolies are bad. I learned that a few big ones had sprung up during America’s Gilded Age and that ‘robber barons’ were to blame—that is, until Trust Busters bestride white horses came to the rescue.
History’s a funny thing. Remember all those eighth-grade tall tales about how FDR’s New Deal got us out of the Depression? Tales of Gilded Age trusts and trust-busting are sometimes just as tall. Generally speaking, though, almost everyone across the political spectrum, including economists, thinks that monopolies are suboptimal. After all, monopolies give us:
Barriers. Monopolies, especially state-sanctioned ones, create barriers to entry that make it nearly impossible for new entrants to compete.
Sticker Shock. Because there is little-to-no competition, a monopoly can set prices far above what it could expect in more competitive conditions.
Discrimination. The monopoly can arbitrarily change the price and quantity of a good or service, often determining the market price alone.
No Substitutes. There are almost no substitutes for products in monopoly conditions, so the consumers of goods and services have no alternatives.
Poor Quality. A single seller will offer poor quality products or customer service.
While reasonable people will disagree about how monopolies form and what should be done about them, most agree that market competition is better for everyone.
Trust is Busted
I’m reminded of a now-classic passage by philosopher Michael Huemer:
“Imagine that someone proposed that the key to establishing social justice and restraining corporate greed was to establish a very large corporation, much larger than any corporation hitherto known—one with revenues in the trillions of dollars. A corporation that held a monopoly on some extremely important market within our society. And used its monopoly in that market to extend its control into other markets. And hired men with guns to force customers to buy its product at whatever price it chose. And periodically bombed the employees and customers of corporations in other countries.”
What an awful vision! You might see how people would quickly lose trust in this corporation.
“By what theory would we predict that this corporation, above all others, could be trusted to serve our interests and to protect us both from criminals and from all the other corporations? If someone proposed to establish a corporation like this, would your trepidation be assuaged the moment you learned that every adult would be issued one share of stock in this corporation, entitling them to vote for members of the board of directors?”
Readers who have had their coffees will notice Huemer is referring to the government. The question becomes—if our current system isn’t really so different from that description—why does anyone trust a national government to protect and service the rest of society?
Bust the Trust
Think about how much competition there is for Americans among the fifty U.S. states: New Yorkers are moving to North Carolina in droves. Californians are gobbling up homes and starting new businesses in Texas. According to reports, a bunch of crazy libertarians have moved to New Hampshire, which jockeys with Florida for the title of freest state.
You’d think people would see the benefits of competition in governance, even though there is not nearly enough variation among the fifty options we have.
According to Decentralists, we can do better than outsourcing our concerns to authorities far, far away. And it’s not merely that we can. We should. Not just because people will enjoy the right to organize into the communities and systems they choose. Violent factionalism threatens social unrest and civil war, especially as each faction wants to ram the One True Way down everyone’s throats.
That’s just monopoly talk.
It wouldn’t matter if you formed a small kibbutz or a free private city. What matters is the institutionalized right of self-determination—governance pluralism. In the interests of a grand compromise, even a modest measure of decentralization creates more opportunities for people to eat their ideologies and have them, too. The only cost of such a compromise comes in no longer being able to impose the One True Way onto others.
To a lot of partisans, this idea will seem downright radical. Oddly, federalism is now considered extremist, while agitating for more central control has become the norm. And more oddly still, the most rabid centralization activists call everyone else fascists. But to save some vestige of our liberal experiment, we need more experiments in governance, not fewer.
But Thomas Jefferson’s timeless admonitions are as relevant today as then:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government,… (Emphasis added.)
Whether or not you consider the Declaration to be a companion to America’s founding charter, I hope to persuade you, at least, that it is a cosmopolitan ideal toward which we must evolve. Sure, philosophers can quibble about any theological justifications of rights. As long as we secure them, we can justify them in any number of ways.
The underappreciated punchline here is consent.
I don’t mean majoritarian rule, hypothetical social contracts, or some vague General Will. I mean real agreements and real civil associations. And this idea isn’t entirely new. Belgian liberal Paul Emile du Puydt described panarchy as far back as 1860. What de Puydt sets up is competition among civil associations – governance pluralism. As statesman Charles de Brouckère wrote of his contemporary:
de Puydt [has furnished] an outline of a system that would have the advantage of submitting the industry of security production, otherwise known as governments, to a competition as complete as that in which manufacturers of fabrics, for example, engage in a country under free trade, and achieves this without having recourse to revolutions, barricades, or even the smallest act of violence.
The competitive dynamics of different systems would become a great discovery process for better governance. At the very least, it would allow one to live according to her own principles within a general framework of rights and responsibilities protected by common law.
We could resolve our conflicts and solve our problems if we recognized the justice of consent-based order. Thomas Jefferson was a radical and is still a radical by today’s standards. Sadly, the world has been enchanted by the scions of Alexander Hamilton with his love of big banks, great powers, and Broadway shows, which have set the Republic on a path to ruin.
Instead of the ‘systems thinking’ foisted upon us over the decades by proxies of the administrative state, we need stark, simple rules. We need less voice and more exit. Instead of activist judges, packed courts, and progressive policy ideas, we need to let people try out all their goofiest ideas at the most local feasible level. Catholics call that subsidiarity. Political theorists call it federalism. Darwinians call it evolution through devolution.
There are a hundred ways to skin the Decentralist cat.
The most familiar way is already written in the Constitution. We would need only to enforce it and live within its auspices. But for some reason, that now seems impossible.
The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.
That’s the Tenth Amendment. It’s been dead for more than a century.
An army of con-law grads is waiting to tell us why the powerful summarily ignore the plain text of this vital constraint on federal power. For more than a century, so-called “Living” Constitutionalists have used their curious rationale to make up jurisprudence so that the powerful can do whatever they want. 90 percent of what the US federal government does is unconstitutional, though plenty of silver-tongued lawyers say otherwise.
The execrable Woodrow Wilson once said of the Constitution:
Society is a living organism and must obey the laws of life, not of mechanics; it must develop. All that progressives ask or desire is permission – in an era when “development,” “evolution,” is the scientific word – to interpret the Constitution according to the Darwinian principle; all they ask is recognition of the fact that a nation is a living thing and not a machine.
Wilson is correct that a nation is no machine. But it is not an organism, either, though Mussolini would have been delighted at such claptrap. Society is an ecosystem like the Amazon Rainforest or Great Barrier Reef. Wilson wanted to help our society evolve by replacing its DNA with Intelligent Design. Today’s intelligentsia is no different.
Indeed, technocrats have treated our socio-economy as a machine to be run, fixed, or designed. And who better to run, fix, or design society than those self-same technocrats? If our country is truly to evolve, though, we must empower local communities to experiment with governance. Some experiments will live. Others will die. But those that survive will be, you know, fitter based on the value they create for their members. Otherwise, authorities running our top-heavy superstates have set one big, slow catastrophe in motion.
We have to be prepared.
And when the dust settles, we need to:
Let the Bretton Woods status quo wash away in a sea of red ink.
Dismantle central banks, which create distortions, moral hazard, and political abuse.
Restore free banking, which means competing institutions issue competing currencies.
Develop standards and practices that require issuers to mitigate risk and be transparent.
Let many such currencies rely on secure reserves and commodity standards; others might be digital commodities, such as bitcoin.
Allow market actors to determine the price of credit, not political appointees.
Let users drive discovery processes instead of politicians exerting power.
Allow people to self-organize into communities and civil associations.
Let systems compete, whether in money, markets, or governance services.
Criticize by creating.
If we don’t soon make such changes, brutal circumstances will make them for us. The technocrat’s machine has begun to sputter and stall. When the Empire can no longer oil its jaws with our fears, and debt-spending no longer powers its vast bureaucracies, we’ll be ready.
Let’s break up the monopoly. We will trust the institutions we build and use together.