Are Nozick’s protective associations natural monopolies?

We continue our review of Chapter 2 of Anarchy, State, and Utopia. As we noted in a previous post, Chapter 2 is divided into five subsections. Here, we review the third subsection (pp. 15-17), which is aptly titled “The Dominant Protective Association.” Aptly titled because Nozick conjectures that a single, all-powerful protection society (or a small group of territorial protection rackets) will eventually emerge in a Lockean state of nature: “Out of [Lockean] anarchy, pressed by … market pressures, economies of scale, and rational self-interest, there arises something very much resembling a minimal state or a group of geographically distinct minimal states” (pp. 16-17).

Alas, Nozick’s conclusion is false. Strangely enough (given the plethora of economic jargon in the quote above), Nozick doesn’t refer to the economic concept of “natural monopoly”; yet he is essentially arguing that protection groups are a kind of natural monopoly. If this crazy conjecture were really true, we would expect cities like Chicago or Los Angeles to have one dominant gang or a city like New York to have one single crime family, not five. While it’s true that gangs and crime families divide up territories and strictly enforce their turf, it’s not for reasons of natural monopoly or “economies of scale”. Rather, as soon as we gaze beyond the friendly confines of the Ivory Tower, we see that gangs, crime families, and protection rackets generally are organized (perhaps “arationally”) around family ties or for ethnic, linguistic, or other cultural reasons. But culture, family, and ethnicity are all missing from Nozick’s ahistorical account of the state of nature.

Worse yet (from a truth-value perspective), at the end of this subsection Nozick further speculates that an “outlaw agency” (an aggressive as opposed to defensive association that exists for the sole purpose of engaging in exhortation, pillaging, and plundering) will have a hard time attracting members. Once again, Nozick is off the empirical mark. After all, isn’t the real world (even with the existence of full-fledged states) full of such outlaw agencies?

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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1 Response to Are Nozick’s protective associations natural monopolies?

  1. Pingback: Monopolies in the state of nature? | prior probability

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