Wendy McElroy: Crypto as Propriety Justice and a Solution to Private Violence

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Crypto As Propriety Justice And A Solution To Private Violence

by Wendy McElroy

The libertarian view is that human actors are self-owners and these self-owners are capable of appropriating unowned scarce resources by Lockean homesteading − some type of first use or embordering activity. Obviously, an actor must already own his body if he is to be a homesteader; self-ownership is not acquired by homesteading but rather is presupposed in any act or defense of homesteading.

–Stephan Kinsella

Self-ownership is the foundation of free-market justice. There are three ways to answer the question “Who owns you?”: you own yourself, which is self-ownership; someone else owns you, which is slavery; or, you are unclaimed goods, like luggage in the lost and found. Anarchism is the belief that everyone owns his body, his property, and the right to peacefully use both.

But what happens if others prefer aggression? Free-market anarchism wrestles with how to provide private justice; that is, how can a peaceful society prevent or remedy the violence individuals commit against each other? To many, free-market solutions sound hypothetical because they have generally been forced to operate in that realm. The state refuses to allow rival systems of justice to compete in parallel with it; the closest it allows to competing systems are religious authorities that exercise limited jurisdiction over consenting members.

Crypto anarchism changes the modus operandi. Just as crypto and the blockchain revolutionized economic exchanges, it has the potential to do the same for other interactions, such as justice. A blast of fresh air is sweeping through old political theories and issues; the experience and insights of past anarchism do not need to blow away. Those blueprints of justice can be held up and compared against the solutions made possible by crypto anarchism. Let the best anarchism win. Let the best aspects of anarchisms merge. Solutions should evolve in parallel on the free market so that individuals can choose.

First, The Specific Principles of Crypto Anarchist Justice

The simplest way of understanding justice is giving people what they deserve. This idea goes back to Aristotle. The real difficulty begins with figuring out who deserves what and why.

– Michael Sandel, American political philosopher

The who of justice is any individual who is deprived of what is rightfully his. This definition eliminates victimless crimes and crimes against the state. Only individuals can be victimized by the denial of their property. The legal realm is reduced to contractual disputes and to torts—that is, to acts that cause loss or harm to others.

The what of justice—its focus-is the specific use of body or other property that is wrongfully taken. With crypto, the denial almost always consists of wealth that is taken by direct violence, threats, or fraud. Justice lies in restoring the status quo to the victim in the form of returning stolen property or its equivalent, along with reasonable compensation for associated losses, such as time, suffering, inconvenience, and the period of denied use. The aggressor may or may not be punished through further social sanctions. The offender’s bad acts could be published on a database that pays for valid information and charges for the use of its service, for example.

The why: Peaceful exchange enriches individuals and creates a free society. By contrast, aggression or violence returns individuals to a Hobbesian state of nature—a war of all against all. That is savagery, not society. Using the institutionalized violence of the state to rein it in is slavery, not freedom.


The How of Justice

The how of justice is the missing piece.

In general terms, self-defense is the how. Self-defense decentralizes justice down to the level of the individual. That’s what the right of gun ownership provides: a decentralized peer-to-peer way for individuals to defend themselves.

Self-defense falls into three rough categories or stages: prevention, direct action, and remedy. (Prevention is discussed in Chapter 9, Part 6.) There is a key difference between direct self-defense and acting to remedy an aggression. Direct defense occurs in real time when a person is confronted by violence, such as a break-in; the use of defensive force on the spot is obviously appropriate. But remedy occurs after the fact, when the aggression is a fait accompli.

Prevention and direct self-defense are not great challenges for anarchism. Both can be addressed through individual action or through a service provider that is hired or fired at will. For most people, it is the remedy stage where anarchism stumbles. That’s where they relegate their self-defense to the centralized monopoly of a trusted third party that cannot be fired: again, the state.

In his article, “Why the Elites Prefer a Centralized Legal System,” historian Chris Calton observes that “the motivation to centralize legal authority was entirely political.” A vital service fell under the control of those in power who imposed an increasingly arcane legal system upon an entire population in the name of consistency. In obscene perversity, “justice” came to be identified with the institutionalized violence of police, courts and prison systems. The situation is similar to believing that the vital service of commerce requires the monopolies of central banking and state-issued money.

Calton continues, “But in the early nineteenth century, consistency was valued less than flexibility in the legal system. When the courts were local, the people of a given community had a vested interest in seeing justice carried out according to the particularities of each individual case….And for those who were not fortunate enough to find themselves at the top of the legal hierarchy – the uneducated, the poor, women, children, and blacks – this flexibility upheld even modern notions of justice – if imperfectly – more effectively than did the centralized and legally consistent courts that followed.”

Most Western systems of justice were built on common law, which has been widely displaced by civil law. Chapter 8, Part 1 of The Satoshi Revolution—“Crypto: Civil Law Versus Common Law”–explains that “common law offers an alternative legal blueprint. Rooted deeply in the English tradition, it is a body of law that develops from the grassroots upward. It involves no presence of Parliament. It comes from the decentralized judicial decisions that arise from real legal disputes…” The answers presented by common law may be right or wrong in any particular case, but they are not codified to benefit the privileged. Common law is so named because it benefits the common person. And it is a giant step toward decentralization. The exercise of every individual’s power over his own life is the ultimate goal.

Why Have Any Trusted Third Party?

When self-defense is decentralized, why shouldn’t people simply administer their own remedies for past aggressions? Certainly, they have a right to do so. They can rightfully reclaim stolen crypto by accessing the digital account of a thief, for example, and hacking back the coins. But there are good reasons why doing so is unwise. The victim may be mistaken about the identity of the criminal, which converts a so-called remedy into an act of violence; achieving restitution can be dangerous, or beyond the victim’s ability; the retrieval can fail; it can also harm innocent third parties, leaving the remedy-seeker with liabilities.

The innocent third party problem is the main argument in favor of hiring a third party to remedy an aggression. To bystanders and to the rest of society, it is usually not clear who is the victim and who is the aggressor. In direct self-defense, bystanders who witness a person being attacked know who the victim is; if he pulls out a gun, the act is obviously one of self-protection and not of aggression. When a woman grabs back a purse that has just been snatched, third parties do not think she is stealing it; she is reclaiming property. The same is not true of personally retrieving stolen coins from the account of a thief. To third parties, such as the company handling the thief’s deposits, the retrieval is an act of theft.

In the preceding examples, the acts of victims and aggressors are basically the same. Both may be pointing guns; a purse is being snatched back and forth. Accounts are being hacked. Unless he sees the violence from its beginning, a bystander cannot know who the aggressor is. This makes personal remedies very risky. Consider: a necklace is stolen and the owner recognizes it around the neck of a person on the street. However, yanking the necklace off of the wearer looks like violence to all of society. A good Samaritan may well intercede to prevent what he believes is an attack on an innocent person. Meanwhile, the real aggressor may yell “Police!” and claim that the victim is the thief. How can people distinguish self-defense from aggression?

There is a simple litmus test: Who owns the property? The answer makes clear which is an act of violence and which is self-defense. To be effective, therefore, a remedy should allow third parties to identify who owns the property involved.


Crypto As Proprietary Justice

In his essay “The Proprietary Theory of Justice in the Libertarian Tradition,” Carl Watner writes, “The proprietary theory of justice is concerned with just one thing: the crucial determination of just versus unjust property titles of individuals in their own bodies and in the material objects around them.”

By far, the best way for individuals to use proprietary justice is by contracting with a trusted third party whose reputation and business depends upon the accuracy of its business practices. In this case, the “trust” is based on merit and performance; the relationship of trust lasts only as long as the victim values the service. The third party’s purpose is to return stolen property, but it also acts as a protection for bystanders, innocent parties who may have involvement, and even the aggressor himself. As a business in a competitive market, the trusted third party has a strong incentive to reduce the expense and complications of injuring anyone.

The most commonly proposed mechanism of proprietary justice is the private defense agency (PDA). This may function in much the same manner as private fire departments with which home-owners contract. The details of how PDAs would operate are mostly speculative because of the state’s monopoly on justice and because predicting how free-market solutions would evolve without the state is not possible. Nevertheless, anarchists have attempted to do so for many years.

David Friedman sketches one vision in his book Machinery of Freedom. Friedman begins by considering “the easiest case, the resolution of disputes involving contracts between well-established firms.” Resolution between well-established crypto exchanges would likely be similar. Many such disputes are settled by arbitration that is specified within the contracts themselves as a way to avoid the expense and unpleasantness of court. “Currently, arbitrated decisions are usually enforceable in the government courts,” Friedman admits, “but that is a recent development; historically, enforcement came from a firm’s desire to maintain its reputation.”

But what of violent disputes? “Protection from coercion is an economic good,” Friedman explains. “It is presently sold in a variety of forms-Brinks guards, locks, burglar alarms. As the effectiveness of government police declines, these market substitutes for the police, like market substitutes for the courts, become more popular. Suppose, then, that at some future time there are no government police, but instead private protection agencies. These agencies sell the service of protecting their clients against crime. Perhaps they also guarantee performance by insuring their clients against losses resulting from criminal acts.” Insurance purchased from PDA becomes the immediate remedy to the victim. Then the PDA proceeds to retrieve the property and the cost of its services from the aggressor, assuming the risk of failure.

Friedman concludes, “What I have described is a very makeshift arrangement. In practice, once anarcho-capitalist institutions were well established, protection agencies would anticipate such difficulties and arrange contracts in advance, before specific conflicts occurred…”

Until proofs of principle are allowed to exist, however, the anarchist system of proprietary justice remains just a discussion. Happily, crypto may provide the elusive proof of principle in the area of theft. For one thing, it solves the pivotal problem posed by Watner: how to establish the property claim that defines whether the use of force is defensive or aggressive. The blockchain does this automatically. Its structure inherently answers the key question of proprietary justice.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

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