Voluntaryism, Statism and the Free Rider Problem:

An Examination of Free Riders Within a Voluntaryist Society

by Christopher Awuku

July 10, 2007

One salient rebuke which arises in opposition to voluntaryism, especially from minarchists and other statists, is the free rider problem.  Statists generally fear that within a stateless society, consumers may be able to receive goods and services without any payment for them.  The Penguin Dictionary of Economics 1998 defines the free rider problem as:  

"The problem, arising in many situations, that no individual is willing to contribute to the cost of something when he hopes that someone else will bear the cost instead."  

The minarchist/statist may argue that under the power of a government, all who receive goods and services would face no option but to donate money to fund such goods and services.  Nevertheless, like all actions involving human motivation, the theory that consumers within a stateless society may individually refuse to finance goods and services can be subject to logical examination.  

Such a premise is based upon the notion that human beings are overly selfish and self-interested to a hyper degree.  Of course, no rational person would state that humans are never self-interested or selfish.  Nonetheless, I'd to examine whether human beings are indeed hyper self-interested and how (if true) this would relate inside a voluntaryist/stateless society.   

People dodging payment  

Imagine two families who live in a street within a stateless society.  The Williams family lives in one house and the Masters family lives in the other.  Both the Williams and the Masters have agreed with the other tenants in the street to install a new water pipe system that would serve all of the houses.  The Williams family accepts the deal and intends to pay for it in good faith.  However, the Masters hold no real intention of contributing to this system, hoping that they can receive water for free without any payment.  A number of situations could arise from this scenario:  

1 - Ostracism.  

The Williams, in collaboration with the other families in the street, could cease associating with the Masters.  This could include refusing to mix with, buy from or even speak to them.  Social ostracism could be a powerful tool in a voluntaryist society against those who are anti-social or are violating the person and/or property of another human being.  Since no man is an island, and needs to interact with others to survive, the prospect of being ostracised may deter people from committing coercive acts.  In this instance, the Masters would find themselves in a difficult position, since maintaining peaceful relations with your neighbours is important to virtually all homeowners.  The Masters may have no other option but to move away to another community.  

2 - Withholding services and contracts  

The other tenants of the street could decide to withhold water from the Masters.  A simple solution would be to ensure that all parties of the agreement sign the contract with the water company, ensuring payment for the service.  Any party that was refusing to finance the service could have their supply ceased or temporarily terminated.    

In reference to collective agreements like the aforementioned in this piece, all that is necessary is a strict enforcement of contract.  Nothing more!  In relation to my earlier point of ostracism, a person within a voluntaryist society who didn't adhere to contracts would be considered untrustworthy.  Naturally few, if any individuals, would like to do business with such people.  

Dealing with the market  

Of course individuals may seek to acquire goods and services on their own accord, without any collective agreement with others.  Let's take the Williams and the Masters again.  Say both families desired extra home insurance.  The Williams went to a private defence agency/dispute resolution organisation in town and secured a comprehensive home insurance deal with them.  The Masters, who were poorer than the Williams, decided that they couldn't afford it and opted not to attain any insurance.  Later that month, both the Williams' and Masters' houses were burgled.  Naturally, the Williams could claim insurance from the PDA /DRO and be reimbursed for their losses.  The Masters suffered hard luck, since they opted not to gain insurance from a PDA /DRO.  

Some may consider this occurrence as immoral and unethical, since the Masters held no recourse for their stolen goods.  Nevertheless, the point is that a free rider problem is diminished in a totally free market.  Under the domain of the state, state services are collectively shared.  All taxpayers contribute to the funding of the police, fire services, state hospitals, armed forces, etc.  However, in a free market only individual consumers are liable.  You are not liable for your neighbour's car insurance, I would imagine.  I'd also imagine that your neighbour is not responsible for your credit card bills.   

The fact remains that goods and services in a free market aren't necessarily paid for in a collective or common fashion.  In relation to the poorer elements of society, there is nothing stopping PDA 's/DRO's from offering concessionary rates to the less well off, or specialist agencies emerging which catered for the poor.  Numerous providers of services offer lower rates to senior citizens and students, for example, since both groups tend to possess lower amounts of disposable income.  As always in the free market, it would be a case of supply and demand.  If the demand for services for the poor was apparent, then someone would seek to meet it.   

   Beware of the statist paradigm    

Arguments against free riders within a stateless and voluntaryist society is just another method that the statist uses to justify his faulty and erroneous paradigm.  The statist is too quick to seek out government as a solution for problems, even though governments continually fail in all they do.  In a voluntaryist society, all that is necessary to deter free riders is a strong protection of property rights, plus extending base aspects of free association.  The statist fails to recognise that the free market can solve dilemmas without using force.  Only the free market can provide goods and services on a voluntary basis.