War, Free Trade and Liberty – Strange Bedfellows?

Speech Transcript: Trading With the Enemy: some inevitable consequences of progress towards liberty

Given at the Youth 4 Liberty Summer Camp in Orono, Ontario, Canada, 25th May, 2002

Sarah Fitz-Claridge

I've just flown here from England and I'm still recovering. First, to get my flight, I had to get up after only two hours' sleep, at the obscenely uncivilised hour of noon.

Then I thought I was going to miss the flight, because the man in front of me was arguing about whether or not he could take his valuable “ornamental sword” in his hand luggage.

Then I set off the metal detector and had to wait for a security guard to come and pass her hands over every inch of my body...

[Thumbnail of me being searched]

Airport Security checks my camera.
You can't be too careful.

Then they wanted to search my bag, and I had rather a fright, trying to recall what I'd put in it. Then I remembered that these days, I live dangerously and don't pack spare underwear or handcuffs in my hand luggage. And of course they asked me to remove my shoes and various items of clothing to check them for explosives. I had to wait around for ages while they did all this. Presumably, the security chap thought, “A HA! Fair-haired respectable thirty-something woman? Clearly she must be a terrorist. Better give her a thorough going over.”

More likely he wanted to prove that they are not doing any racial or sexual profiling. Wouldn't do to hurt any terrorists' feelings, would it?

Then on the aeroplane I broke a nail and of course there wasn't a pair of nail clippers or scissors anywhere on board. Ouch!

And don't even get me started on the Customs and Immigration interrogations I usually get before being let in. Clearly, anyone wanting to visit Canada must be up to no good.

Still, at least I managed to get here. I've read that some people have been prevented from travelling altogether because of the increased security.

The post 9-11 measures are all very inconvenient, aren't they? As a result of all this I might not be able to do one of my speaking engagements, because of some new visa arrangements. Some foreigners have even been imprisoned without trial. And then there's the wiretapping. I trust that whoever is listening in to my phone calls enjoys them as much as I do. (So much for privacy!) And I expect they're debasing the currency, like they always do. If this war goes on, the costs are going to keep increasing, and eventually they will raise taxes to pay for it.

If we were living in a libertarian world we wouldn't have ghastly things like wars and terrorist attacks. It was a bit inconsiderate of bin Laden to declare Jihad on the West. I find it worrying. These days, the first thing I do when I get up is turn on the television to watch the evening news. And check whether New York is still here.

If we were living in a libertarian society, I could have chosen to travel with an airline that didn't subject its passengers to the indignity of all these delays, and searches and prohibitions against nail clippers. I could be armed. And there'd be no tax rises because there'd be no tax, and there would be no borders and no immigration controls and no questions about why I carry a suitcase full of English tea wherever I go. Well really, one must get one's priorities straight. Who needs clothes anyway?

Someone said: “War is the enemy of liberty. But war is not inevitable. People won't fight wars if they are freely trading with each other. What we need is free trade, not a war.” Let's consider whether this statement is true. Will people fight wars if they are freely trading with each other? Should the West be fighting the war on terrorism? What about the danger fighting a war poses to our civil liberties? Is war the enemy of liberty or is it necessary to protect liberty?

First, what does free trade mean? It means that if I'm prepared to sell my Cartman toy and someone else wants to buy it, we can do that. [I HOLD UP A SOUTH PARK SOFT TOY WHICH SAYS IN CARTMAN'S VOICE, “I'M NOT FAT, I'M BIG BONED,” AND OTHER THINGS.]

I have this, and Joe Bloggs has an English teapot complete with filter, which I want. [HOLD UP TEAPOT] Joe thinks my Cartman toy is cool. Who wouldn't? [I MAKE IT SAY SOMETHING AGAIN.] We make the exchange, and we're both better off. No one is harmed. That is the basic transaction of a free trade society.

But what if, after I have given Joe my Cartman toy, he then takes the teapot too and goes home.

That's not free trade. In fact, not only is it not free trade, but a society in which things like that happen prevents free trade even among honest people.

If there's no mechanism for preventing and dealing with theft, you can't be confident that you'll keep your property. If I thought that I'd give up my precious Cartman toy in return for the teapot, only to have the teapot stolen from me, whether by a random thief or by Joe himself, what would be the point of bothering in the first place?

If there are no mechanisms for enforcing this, that's the end of free trade, because then, not only would bad people be enriched at the expense of everyone else, but that would destroy what even the good people are doing, because property that can be stolen with impunity at any time is not worth much – often it's not worth creating in the first place.

In short, unless we are prepared to use violence to defend trade, free trade doesn't exist.

Some would say that if that were to happen in a libertarian society, I should simply take my gun and shoot Joe. Or threaten to. After all, as Al Capone said, “You can get more with a kind word and a gun than you can get with a kind word alone.”

But what if the reason Joe had taken back his teapot was that the Cartman toy didn't work any more? What if I said that's because he didn't treat it with care. What if he said I didn't give him enough warning of that, and took his teapot back anyway? I'd say that shooting him then would have been a trifle excessive.

What if it was all a terrible misunderstanding, and Joe had thought I was giving the Cartman toy to him as a gift? Misunderstandings do happen. All the time.

A society in which people go around shooting each other when they have a disagreement like this, is not a society which can possibly have free trade.

If, whenever people disagreed about the terms of a trade, they'd fight a duel to the death, or just give in for fear of that, it would be too unsafe to conduct any trade. You'd be in too much fear that you'd be shot over a misunderstanding.

Free trade implies the rule of law. Everybody getting out their gun and shooting people implies the rule of man, which is the opposite of the conditions for free trade.

For a society to have free trade, people have to feel safe, and to feel confident that their property rights will be respected. So we need mechanisms by which people can resolve disagreements peacefully, backed by force. Arbitration, for example.

A friend of mine who was selling his business made the mistake of thinking that all that is needed for free trade is for the absence of any external constraints. He had kept his business under the government radar in various ingenious ways I won't go into here, and had managed to avoid paying much tax. So when he decided to sell the business, naturally he was keen to make it an unwritten, undeclared contract.

It so happened that someone he'd met at a Libertarian conference was interested in buying the business. They carefully agreed terms for the contract, which involved, amongst other things, several payments, one immediately, and the others later. They further agreed that in the event of any dispute later, they would go to arbitration, which would consist of a panel of three libertarians whose judgment would be binding on both of them.

I won't go into the details, but the person who bought my friend's business ended up getting it for a fraction of the agreed price, and costing my friend many thousands of dollars in arbitration fees on top of that. My friend won the arbitration. But the purchaser ignored the judgment.

The reason that contract was unenforceable was that the arbitrators didn't have the power to enforce their judgments (and of course neither party wanted to bring it to the attention of the government and the IRS). In a libertarian society, there wouldn't be that constraint. There would be not only private arbitration tribunals, but private enforcers of the rule of law. As this example illustrates, free trade can't exist without effective mechanisms for enforcing contracts.

So free trade doesn't mean the absence of force, it means force applied according to certain rules, or laws.

The fact that the institutions of contract law and so on are backed up by force is a condition for people who don't know each other well to be able to reach agreement. It's only because I know that there's a mechanism by which my property rights will be enforced that I dare to place an order in a shop, or leave my home unattended.

Now imagine that it's the year 3000 and we're all living in England, which of course by that time is bound to be a libertarian society, unlike the rest of Europe. What will it be like?

One friend of mine is adamant that in a libertarian society, there'll be no need for private security agencies and detectives and legal systems and agencies enforcing rights because it is government that creates criminals. (But governments are criminals, aren't they? So who created the first one?)

Anyway, even if we have no criminals in a libertarian England, what about France? If we have no security, and presumably no immigration control either, all the French criminals will come and do their thing in England.

If you were a bad person living under a harsh regime, you might well choose to do your stealing in a society having no security, rather than in your own non-libertarian society, where if you steal stuff you'll have important parts of your body cut off – such as your head.

As long as there are still criminals and non-libertarian societies in the world, it will be necessary to be ready to use violence to defend our property and our liberties. Otherwise we'll be overrun by criminals from outside. And there are criminals other than thieves. There are murderers, rapists, and believers in imposing tyrannical dictatorships or imposing a certain religion on everyone. Some of those people get together in large, highly organised, heavily armed groups.

So a libertarian society would definitely have security guards, detectives, legal mechanisms, and ways of defending our society from terrorist attacks and invasions. In my view these things will all be private not State bodies but they will exist.

Now of course, because these services won't be run by government, they'll be more efficient and make fewer mistakes. And because we won't have all the stupid laws we have now, no doubt we'll need fewer policemen (or security guards and detectives) than we have currently. On the other hand, we'd need far more police/security guards than we have now if, for whatever reason, there were ten times as many criminals as productive people.

And if the threat we're facing is a whole state, or a large terrorist network, or the whole rest of the world, then we'll need to use more violence to defend ourselves and our property. But the object of the exercise would still be exactly the same as it is in the case of an attack by one criminal, namely, the self defence of those being attacked.

If Saddam Hussein nukes England, our little libertarian society won't survive if our only defence is everyone carrying a gun. Obviously, the amount and type of violence we'll have to be prepared to use to defend ourselves depends on the threat we are facing.

If you are a businessman who exports goods by sea, and your ships keep being attacked by a large number of well-equipped pirates, who take your property and enslave or kill your crews, your business won't survive unless you do something about that. If there is a major piracy problem, that will destroy any forms of free trade involving sending goods by sea. You will no longer be able to get insurance, or the insurance companies will increase their rates, to cover the cost of sending a private army to sort out the pirates.

Consider the example of the Barbary pirates. In the late 1700s, Americans had to go to war to protect their fledgling free trade system. Pirate ships from Northern Africa were attacking American trade in Africa and parts of Europe, seizing ships and enslaving or killing crews. (Incidentally, notice that these attacks happened despite the fact that Americans were trading with people there – indeed, because of that! American ships were attacked because they were in the area. It can't have been because of any imperialist foreign policy on the part of the American government, because there was no American government until later.)

Before America obtained independence, American merchant ships and sailors had been protected by the military might of the British navy, and later by a contract which required France to protect “American vessels and effects against all violence, insults, attacks, or depredations, on the part of the said Princes and States of Barbary or their subjects.” But after the United States won its independence, Americans had no such protection against the Barbary pirates. First the government tried buying them off with $80,000, but that only resulted in further blackmail.

Jefferson argued that “it would be best to effect a peace thro' the medium of war,” and tried to get an international coalition together to fight the rogue states from which the pirates operated. But the other governments rejected the idea on the grounds that war is horribly expensive and that it was cheaper to pay ransoms. In 1795 alone the United States was forced to pay nearly a million dollars in ransom demands.

After Jefferson became president in 1801, he decided that enough was enough, and that unless America was prepared to use force to solve the problems of the Barbary pirates, American trade abroad would soon be impossible. He went to war.

The Barbary pirates were persuaded to stop seizing ships and enslaving American crews only when they could see that if they attacked American ships, bad things would happen to them.

To avoid having to use large-scale violence to protect free trade, we have to be ready to use large-scale violence. People the world over need to know that we will use force to prevent them compromising our free trade system. Contrary to the assertion that I quoted near the beginning, being prepared to defend liberty is a precondition for liberty. Si vis pacem, para bellum (if you want peace, prepare for war).

The fact that this war against the pirates took place had nothing to do with the existence of government. If the US had somehow set up an anarcho-capitalist system instead of a democratic republic, someone would still have had to go after those pirates. And they would have had to go in large numbers with ships and cannons. And someone – presumably the traders, their customers, the fellow-clients of their mutual defence company, or any allies that they could muster among fellow-victims abroad – would have had to pay for it all.

In a libertarian society, how much protection I get will depend on the conditions of my protection contract. No matter what they do, the protection agencies must make some provision for what happens outside our society, or they won't get any custom from anyone doing business abroad. The decision of the protection agency about how much protection to give its clients in far flung parts of the world is probably going to be similar to the decision the government now takes about how much of that to do.

It is irrelevant, for the purpose of this argument, exactly what form the institutions protecting free trade will take. Whatever is enforcing free trade in our libertarian society, it is going to be faced with challenges from outside our society.

There will be criminals from abroad, there will be criminals from here going abroad, there will be trading with people abroad, transactions with people abroad, there will be people in our libertarian society doing things abroad, there will be people from elsewhere doing things in our libertarian society, there will be disputes about rights and wrongs between people in our libertarian society and people abroad.

If a thief steals something outside your society and brings it in to your society, and someone wants to use force to retrieve it, you have to take a position on whether that force is legitimate or not.

Suppose you try not to take a position. Presumably then, anybody who chases someone into your society for any reason will be left alone. But if that thief chooses to defend himself using violence, innocent people in your society might be killed in the cross-fire between the thief and those in pursuit.

If this sort of thing happens often, no one is going to bother buying insurance and protection, because it will be a complete waste of money. And then, the people in your society will no longer be ready to defend themselves against any large-scale attacks.

If you refuse to intervene, that means that you have a policy of not intervening in foreign wars not only on foreign soil but also on your own soil. You are then going to have the collateral damage of wars any foreign governments choose to fight on the soil of your libertarian society.

And if the individuals your agency is protecting join army A or army B, and invoke the protection clause in your contract, you'll have to decide which of them is entitled to your protection and which of them has violated that contract (which presumably says that your protection is void if they initiate force or help someone who has).

To do that, your tribunals will have to decide who (if anyone) is right in the dispute between armies A and B – even though they're disputes originating outside your territory among people who aren't your clients.

Also, not only can the protection agencies not draw the line at a particular boundary, in general, they can't easily draw the line at their own clients. This is because the rule of law, which is what the protection agency is selling its clients, requires certain types of treatment even of non-clients.

For example, if somebody in the middle of Kansas refuses to buy protection from ballistic missiles, they still have to protect him, because otherwise they won't be protecting their clients, his neighbours, who'll get hit by the blast – just like a fire protection agency can't save only the building of their own clients if the building right next to it is also on fire and might spread to their building again.

The fact that you are trading with people in a particular place does not guarantee that you won't be attacked by people in the same area, as American traders found out in the case of the Barbary pirates. Before the first world war, many thought that there would be no war because there was so much trade happening between people on the two sides. Obviously, those people were mistaken.

Moreover, sometimes, trading freely will in itself cause bad people to want to attack you. On Politically Incorrect, one of the guests suggested that Westerners shouldn't trade with people in Muslim countries because it makes them angry with us.

If you're an American who's exporting arms or even just food to England in the second world war, Hitler may get very angry with you for helping the Allied war effort and you might find yourself with a war on your hands if you don't desist.

But if you cave in to Hitler's demands to stop trading with people in England, you thereby collaborate with Hitler's scheme to starve an innocent country. There is no way not to intervene in favour of one side or the other.

If you insist that it is illegitimate in such cases to use force to defend your trade, or your clients' trade, then you must also simply take it when they harm you or your clients. And in that case, there is no longer free trade: Free trade depends on the right to property and to defend property, and if it's illegitimate to defend property, then free trade is illegitimate.

Trading is not the only thing that may cause bad people to want to attack you. Quite aside from trade in goods and services, you'll still have exactly the same problem from the flow of your ideas. The bad guys don't want your subversive ideas to corrupt their people. It's ideas that are the greatest threat – or liberator, depending upon your point of view.

That's why Iran made it illegal to own a satellite dish – because the powers that be there can see that if their people have TV access to Western ideas, their culture will die.

Whatever agency enforces free trade in a libertarian society might one day receive a threat like the American government received after the Ayatollah Komeni seized power in Iran.

The deposed Shah of Iran had fled to the USA. The Ayatollah took the American Embassy staff hostage, saying, “If you don't give us the Shah, we'll kill your people.”

If you don't give us such-and-such a criminal who has fled to England, we'll kill these hundred clients of yours. If the “Ayatollah” came to take him, the “Shah” would defend himself, and that could cause collateral damage. Some of your clients would help him and some would help the “Ayatollah” and they'd both invoke their protection contracts with you. You'd have to take sides – and according to some definite moral rules at that – or your promise of protection is worthless and clients would switch to companies whose protection is worth something.

If our transactions are going to be subject to the threat that unless we do certain things, somebody among us will be singled out and killed, or our ships sunk, the whole system of free trade we have will be destroyed. Free trade wouldn't survive everyone just sitting back and letting individuals be picked off one-by-one, saying, “No, I won't do anything until they are attacking me.” In fact, people will club together to form mutual defence agencies that have the property that if any one of them is attacked, the others will collaborate in defending him.

A top insurance businessman and guru, Warren Buffett, whose companies have taken a 2.4 billion American dollar underwriting loss as a result of the 9-11 attacks, said recently that a nuclear attack on America is inevitable. No insurance company is covering risks of large-scale terrorist attack or war damage. Buffett said that only the federal government can insure against those. But can a Libertarian agree with him that only the government can provide this service? Of course not! One day the free market will do exactly that.

The cost of a nuclear attack could be in the trillions of dollars. In a libertarian society, the insurance companies would have to find a way to spread the risk, because there would be no government to tax people to pay for the damage.

If the insurance companies could decrease their potential losses by fighting a war to prevent the attack in the first place, then, even if those wars cost billions of dollars, they would certainly do it because it would save them so much more.

So if we were living in a libertarian society, and Saddam Hussein appeared to be about to nuke New York, I conjecture that the insurance companies would immediately hire an army to go and take out Saddam's military and nuclear capability, to defend their clients against annihilation. If it involved raising their rates, they would raise them, because the alternative would be that they could not honestly offer insurance against Saddam-inspired risks.

So in a libertarian society, although defending ourselves would not cause any increase in taxes, it would cause an increase in our insurance premiums. Faced with the threat of state-sponsored terrorism, we would have to spend more on security and defence and intelligence and protection and so on, than otherwise.

Someone recently suggested to me that going to Afghanistan to destroy Al Quaeda isn't defending the WTC. But going there and getting rid of Al Quaeda several years ago would have defended it. Fighting there now is preventing the murders which were already being planned, and that's what an entity that maintains free trade has to be doing. Because preventing crime – by punishing existing criminals, and thwarting existing criminal conspiracies – is a condition of free trade. If crime isn't stopped then property isn't worth anything.

I've argued that when there's a terrorist threat to our libertarian society, the insurance companies will fight. But they won't just fight: they'll also take many other steps to minimise their potential losses.

They're bound to hire private intelligence people to help them identify possible terrorists, so that they can keep an eye on them. If they think that the terrorists are going to plough planes into tall buildings, they're going to require any airlines whose planes they're insuring – or whose planes could threaten cities they're insuring – to bring in security.

The airlines are likely to hire the services of intelligence experts, or buy their lists of terrorist suspects, and not let them fly. They're likely to be very jumpy about flying anyone remotely suspicious, because they won't want to lose any planes and they won't want the bad publicity resulting from a successful terrorist attack using one of their planes. Nor do they want to be sued by the dependents of the passengers killed by the terrorists.

George Bush was recently furious because an airline didn't want to fly one of his staff. Without Bush and the government forcing them not to do racial profiling and so on, the airlines would probably refuse to fly more people, not fewer.

And yes, when faced with a threat like the one that faces us now, airlines in a libertarian society would sometimes refuse to fly people with the perfectly legitimate reason for wanting to go to America, that they want to learn to fly jet aeroplanes and turn them but not land them.

And sometimes, airlines in a libertarian society will make mistakes and refuse to fly perfectly law-abiding anti-capitalism demonstrators. I hope that they won't make a mistake in the other direction, and allow a shoe-bomber to fly, like happened recently under the existing system.

In a libertarian society, there won't be customs searches, but the airlines may well make it a part of the contract under which they fly you, that you permit them to search your luggage.

Another thing I mentioned at the beginning was wiretapping. Under certain circumstances, victims have the moral right to intercept the communications of those who are attacking them. They are also entitled to intercept communications from innocent people that might be from people attacking them. And they are entitled to hire a private detective to do this for him, or indeed a protection agency, or a mutual defence agency.

For example, if we think that the GPS (Global Positioning Satellite) system is about to be used to guide a bomb to kill us, we have the right to eavesdrop on it, switch it off, or blow it up, or kill people, or whatever is necessary to prevent ourselves being attacked, even though the majority of communications happening on that system are perfectly innocent.

So given a threat like the one we face now, even if we were living in a libertarian society, we'd still be facing many of the inconveniences and costs I complained about at the beginning. The specific measures being taken in the current war against terrorism are no doubt sub-optimal in many respects, and no doubt many bad mistakes are being made. But it doesn't follow from the fact that war fought by governments is inefficient and error-prone, that we shouldn't be fighting the war at all. That's just like saying that because the NHS is inefficient and makes bad mistakes including medical ones, we shouldn't have a medical system at all.

As Bastiat wrote: “Socialism... confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.”

Fellow libertarians, let's not make the same mistake.