Abstract
Can anarchy be efficient? This paper argues that for reasons of efficiency, rational, wealth-maximizing agents may actually choose statelessness over government in some cases. Where markets are sufficiently thin or where government is prohibitively costly, anarchy is the efficient mode of social organization. If total social wealth under conditions of relatively lower levels of trade is not substantially smaller than it is under conditions of relatively higher levels of trade, the cost of government may exceed the social benefits it provides. Likewise, if the cost of a state is sufficiently large, even substantial differences in social wealth under these two scenarios may prove too small to justify the formation of government from a cost-benefit perspective. The framework I provide explains the persistence of anarchy in two major areas where we tend to observe it: among primitive societies and at the global level. (JEL P48)
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Alesina, A., Baqir, R., & Easterly, W. (1999). Public Goods and Ethnic Divisions. Quarterly Journal of Economics, 1234–1284.
Alesina, A., Devleeschauwer, A., Easterly, W., Kurlat, S., & Wacziarg, R. (2003). Fractionalization. Journal of Economic Growth, 155–194.
Alesina, A., & La Ferrara, E. (2002). Who Trusts Others? Journal of Public Economics, 207–234.
Alesina, A., & Spolaore, E. (2003). The Size of Nations. MA: MIT Press.
Anderson, T., & Hill, P. (2004). The Not So Wild, Wild West: Property Rights on the Frontier. Stanford: Stanford University Press.
Anderson, T., & McChesney, F. (2003). Property Rights: Cooperation, Conflict and Law. Princeton: Princeton University Press.
Barclay, H. (1990). People without Government: An Anthropology of Anarchy. London: Kahn and Averill.
Barton, R.F. (1967). Procedure among the Ifugao. In: Bohannan, P. (ed.), Law and Warfare. NY: The Natural History Press.
Bates, R., Greif, A., & Singh, S. (2002). Organizing violence. Journal of Conflict Resolution, 599–628.
Bates, R. (1983). Essays on the Political Economy of Central Africa. Cambridge: Cambridge University Press.
Beito, D., Gordon, P., & Tabbarok, A. (2002). The Voluntary City: Choice, Community and Civil Society. Ann Arbor: University of Michigan Press.
Benson, B. (1989). The Spontaneous Evolution of Commercial Law. Southern Economic Journal, 644–661.
Benson, B. (1989). Enforcement of Private Property Rights in Primitive Societies: Law without Government. Journal of Libertarian Studies, 1–26.
Benson, B. (1990). The Enterprise of Law. San Francisco, CA: Pacific Research Institute for Public Policy.
Benson, B. (1999a). To Arbitrate or Litigate: That is the Question. European Journal of Law and Economics, 91–151.
Benson, B. (1999b). An Economic Theory of the Evolution of Governance and the Emergence of the State. Review of Austrian Economics, 131–160.
Böckstiegal, K-H. (1984). Arbitration and State Enterprises: A Survey of the National and International State of Law and Practice. Deventer, Netherlands: Kluwer Law and Taxation Publishers.
Bohannan, P. (1968). Stateless societies. In: Collins, R. (ed.), Problems in African history. Englewood Cliffs, NJ: Prentice-Hall.
Buchanan, J. (1975). The Limits of Liberty: Between Anarchy and Leviathan. Chicago: University of Chicago Press.
Buchanan, J., & Brennan, G. (1980). The Power to Tax. New York: Cambridge University Press.
Buchanan, J., & Tullock, G. (1962). The Calculus of Consent: Logical Foundations of Constitutional Democracy. Ann Arbor: University of Michigan Press.
Casella, A. (1996). On Market Integration and the Development of Institutions: the Case of International Commercial Arbitration. European Economic Review, 155–186.
Clay, K. (1997). Trade Without Law: Private-order institutions in Mexican California. Journal of Law, Economics, and Organization, 202–231.
Craig, W.L., Park, W., & Paulsson, I. (2000). International Chamber of Commerce Arbitration. New York: Oceana Publications.
David, R. (1985). Arbitration in International Trade. Deventer, The Netherlands: Kluwer Law and Taxation Publishers.
De Soto, H. (1989). The Other Path: The Invisible Revolution in the Third World. NY: Harper and Row.
Dixit, A. (2004). Lawlessness and economics: Alternative Modes of Governance. Princeton: Princeton University Press.
Dixit, A. (2003). Trade Expansion and Contract Enforcement. Journal of Political Economy, 1293–1317.
Dole, G. (1966). Anarchy without chaos: Alternatives to Political Authority Among the Kuikuru. In Swartz, M. Turner, V., & Tuden, A. (eds.), Political Anthropology. Chicago: Aldine.
Ellickson, R. (1991). Order without Law: How Neighbors Settle Disputes. Cambridge, MA: Harvard University Press.
Evans-Pritchard, E.E. (1940). The Nuer. Oxford: Oxford University Press.
Friedman, D. (1973). The Machinery of Freedom. Chicago: Open Court Publishing.
Greif, A. (1989). Reputation and Coalitions in Medieval Trade: evidence on the Maghribi traders. Journal of Economic History, 857–882.
Greif, A. (1993). Contract Enforceability and Economic Institutions in Early Trade: The Maghribi traders' Coalition. American Economic Review, 525–548.
Greif, A. (2002). Institutions and Impersonal Exchange: From Communal to Individual Responsibility. Journal of Institutional and Theoretical Economics, 168–204.
Greif, A., Milgrom, P., & Weingast, B. (1994). Coordination, Commitment and enforcement: The Case of the Merchant Guild. Journal of Political Economy, 745–776.
Haddock, D. (2003). Force, threat, negotiation: The Private Enforcement of Rights. In: Anderson, T., & McChesney, F. (eds.), Property Rights: Cooperation, Conflict, and Law. Princeton: Princeton University Press.
Hirshleifer, J. (1994). The Dark Side of the Force. Economic Inquiry, 1–10.
Hoebel, E.A. (1954). The Law of Primitive Man. MA: Harvard University Press.
Holcombe, R. (2004). Government: Unnecessary but inevitable. Independent Review, 325–342.
ICC (2002). International Court of Arbitration Bulletin. Spring 13(1).
ICC (2001). International Court of Arbitration Bulletin. Spring 12(1).
ICDR (2002). Press Release.
Klein, D. (1992). Promise Keeping in the Great Society: A Model of Credit Information Sharing. Economics and Politics, 117–136.
Landa, J. (1994). Trust, Ethnicity, and Identity. Ann Arbor: University of Michigan Press.
Leeson, P.T. (2004). Cooperation and conflict: Evidence on self-enforcing Arrangements and Heterogeneous Groups. American Journal of Economics and Sociology, forthcoming.
Leeson, P.T. (2005). Endogenizing fractionalization. Journal of Institutional Economics, 75–98.
Leeson, P.T. (2006). Trading with bandits. Journal of Law and Economics, forthcoming.
Levi, M. (1988). Of Rule and Revenue. Berkeley: University of California Press.
Libecap, G. (2003). Contracting for Property Rights. In: Anderson, T., & McChesney, F (eds.), Property Rights: Cooperation, Conflict, and Law. Princeton: Princeton University Press.
Mattli, W. (2001). Private Justice in a Global Economy: From Litigation to Arbitration. International Organization, 919–947.
McGuire, M., & Olson, M. (1996). The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force. Journal of Economic Literature, 72–96.
Milgrom, P., North, D., & Weingast, B. (1990). The Role of Institutions in the Revival of Trade: The Medieval Law Merchant, Private Judges, and the Champagne Fairs. Economics and Politics, 1–23.
North, D. (1981). Structure and Change in Economic History. New York: WW & Norton Co.
North, D. (1990). Institutions, Institutional Change, and Economic Performance. New York: Cambridge University Press.
North, D., & Thomas, R. (1973). The Rise of the Western World: A New Economic History. New York: Cambridge University Press.
Olson, M. (1993). Dictatorship, Democracy, and Development. American Political Science Review, 567–576.
Pospisil, L. (1963). The Kapauku Papuans of West New Guinea. New York: Holt, Rinehart, and Winston.
Rothbard, M. (1977). Power and Market: Government and the Economy. New York: Columbia University Press.
Trakman, L.E. (1983). The Law Merchant: The Evolution of Commercial Law. Littleton, CO: Fred B. Rothman & Co.
Turnbull, C. (1961). The Forest People. NY: Simon and Schuster.
Volckart, O., & Mangles, A. (1999). Are the Roots of the Modern Lex Mercatoria Really Medieval? Southern Economic Journal, 427–450.
World Trade Organization (2004). Recent Trends in International Trade Policy Developments. Geneva: World Trade Organization.
Zerbe, R., & Anderson, L. (2001). Culture and Fairness in the Development of Institutions in the California Gold Fields. Journal of Economic History, 114–143.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Leeson, P.T. Efficient anarchy. Public Choice 130, 41–53 (2007). https://doi.org/10.1007/s11127-006-9071-7
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11127-006-9071-7