When I hear “Silk Road,” I think “Marco Polo.” When I hear “Dread Pirate Roberts,” I think The Princess Bride. So I was all confused when this guy who went by the name Dread Pirate Roberts was arrested for having some anonymous website called Silk Road where people bought and sold things like stolen credit cards and drugs. Call me naïve, but I hadn’t even heard of the “deep web” until I saw, If Google Was A Guy. I thought it was a joke. But apparently not. Basically, it is just a “layer” of the net that doesn’t show up on search engines — website owners can “opt out,” but few want to.
So when I heard the description of Henry Farrell’s aeon article Dark Leviathan, I was confused, “The Silk Road might have started as a libertarian experiment, but it was doomed to end as a fiefdom run by pirate kings.” I thought I was headed for a history lesson about 13th century European exploration. But no. It was a story about Bitcoin and anonymous trade in illegal products. And it blew my mind. But it shouldn’t have, because Farrell shows how these “libertarian” experiments worked out exactly the way I’ve always argued: they lead not to “free markets and free minds” but to “might makes right.”
The fundamental problem with these markets is that they are anonymous. It is a classic example of the prisoner’s dilemma. The question is how buyers and sellers can trust each other. Enter Ross William Ulbricht — also known as “Dread Pirate Roberts.” He was originally selling psychedelic mushrooms on the “deep web.” He got a reputation for honesty, so he branched out into being a kind of middleman for transactions. This eventually led — over the course of just two years — to Ulbricht being blackmailed for a half million dollars and his hiring a hit man to kill the blackmailer for $150,000. At least, that is the aligation.
The point that Farrell makes in his article is an obvious one to any outside the cult of libertarianism: there is a reason that governments exist. They didn’t start up because one group of people wanted to oppress another group of people. It is actually rather the opposite. The multitudes wanted protection from the few who oppressed them. In the absence of that, there will be people like Ulbricht who rise up to fulfill that role. As Farrell discussed in his article, Ulbricht didn’t start out as a thug; he was highly idealistic. And even to the end, he was trying to protect his customers. But he was totally unaccountable.
Libertarians live in a fantasy land. They want to get rid of government. But that leaves two options. First, you could allow critical government elements like the courts. But there you are depending upon the courts to be perfect and requiring the government have the power to enforce the decisions of the courts. In the end, this just leads back to a total non-libertarian discussion of what it is we want the government doing. The second option — the one preferred by the Silk Road types — is that government functions should all be done in the free market. This, of course, leads to madness.
Basically, it is as follows. You don’t think the private security force for your community is doing a good job protecting your house? You can hire another private security force. The magic of the marketplace! But all this does is create rival gangs. This would be 1920s Chicago but much, much worse. And that’s what has happened on the “deep web”: it’s turned into a collection of crime syndicates.
This is the ultimate folly of libertarianism. The most fundamental mistake they make is to think that all coercion comes from the government because it has a monopoly on certain kinds of power. But as we know from economics, it doesn’t matter if a market is a monopoly or an oligopoly. What difference does it make if I have the “choice” of paying protection money to Capone or Moran? Despite the claims of libertarians, barring a sudden evolution in morality in humans, their “free markets and free minds” lead only to “might makes right.” We should be working to maximize freedom and happiness, and an efficient and transparent government is critical to that. Libertarians are looking in the wrong direction.
 I find it annoying to have to mention this, but libertarians come around here and complain all the time. Many libertarians will say, “But policing is one of the things the government should be doing unlike providing healthcare!” Okay, let’s leave aside the fact that I face a far greater danger of dying from an abscessed tooth than marauding gangs. How is it that libertarians think that the two things that the government should be involved in — police and military — are the two things that governments have always used to oppress their people?! In such a world, you don’t need marauding gangs; the police and the military are the marauding gangs!
H/T: Paul Krugman.