Fellow Ümlauteer Eli Dourado is not just your garden variety GMU-trained, public-choice-heavy, anarcho-curious libertarian. He also comes to any discussion with an interesting, deeply structuralist view of human social systems. As The Ümlaut closes out its first calendar year, I thought it might be fun to dig into the larger story that emerges from across Eli’s writings on the web.

Anarcho-Curious

Eli is an affirmed philosophical anarchist, and from what he has written publicly and from our overlapping GMU education, I can surmise where he stands on anarchy as an ideal. I think Eli’s ideal governance arrangements look like the “ordered anarchy” revealed in the work of people like Bruce Benson; both in the private law in places like pre-Battle of Hastings England, and the private international law such as the Lex Mercatoria.

 These systems have the benefit of removing outright coercion while also providing mechanisms to defend against violent crime, theft, and all the other things we tend to believe a government should protect its citizenry from. He does not believe these systems as they existed historically were without their serious flaws, but no system is perfect.

His main reason for being merely “anarcho-curious”, as far as I can tell, is that there doesn’t appear to be any practical path to old school ordered anarchy in any countries currently existing on the planet. We’re certainly not going to get there through the democratic process. And even if by some fluke some small enclave of ordered anarchy sprung up on some corner of the Earth, the current underlying structure of human affairs would probably doom it before long.

The Industrial Revolution is a History of the Technologies of Control

The post of Eli’s that had the greatest impact on my own thinking was written two years ago. It is called Technologies of Control and Resistance. The piece is framed against the then-recently published Race Against the Machine by Erik Brynjolfsson and Andrew McAfee, and The Great Stagnation by Tyler Cowen. The former argues that technological innovation has been accelerating, the latter that it has been stuck in a rut. Eli makes a can’t-it-be-both argument by distinguishing between two types of technological innovation.

Let’s start with the first:

The first kind of innovation is geared toward brute maximization of production. It is typically centralized and makes use of economies of scale. Examples might include an assembly line factory or a big, coal-fired power plant. Because these innovations tend to be centralized, they introduce points of control. The capital is typically fixed and therefore easy to tax and regulate. It’s well known in the development literature that it’s really hard for governments to control rural peasants who live off the grid. Once they move to the cities and plug into centralized services, it is easier to require them to send their children to school, for instance. Because these innovations introduce points of control, I will call them technologies of control.

Eli’s story of the Industrial Revolution goes something like this: there was a sudden explosion in the development of technologies of control. This expanded pure output to a phenomenal degree; I will here refer you to Deirdre McCloskey’s conservative estimate that US standard of living has increased sixteen-fold since the onset of the Industrial Revolution. It is hard to understate how big a discontinuity this was from previous human history.

However, there are no free lunches, even in gigantic welfare improvements. Back to Eli:

What determines how invasive the state will be? Call me a cynic, but I think it correlates strongly with the availability of points of control. When factors of production are fixed, when demand for government supplied public goods is inelastic, when there are lots of points of control, the government will exercise more control.

So many explanations for the growth of government draw on the rise of specific ideologies or the specific history of a country like the US. But as GMU’s John Nye has put it, growth in government spending as a percentage of GDP was far too global, far too cross-cultural, for any of these explanations to make much sense.

Eli makes the more persuasive case that growth in government came on the heels of the Industrial Revolution as its impact was felt around the world. For it is intricately linked with technologies of control, which provide big fat high-population density, enormously wealth-producing targets.

Abandon Anarchy for the Utopia of Infinite Elasticity

Moving on to the second form of innovation that Eli describes:

On the other hand, not all innovations are about brute maximization of production. Some are about producing things that we already know how to produce in ways that have ancillary benefits. An important ancillary benefit is evading control. Examples of these innovations include 3D printers and solar power. The evasion of control that is possible with 3D printers is the subject of Cory Doctorow’s short story Printcrime. And portable solar power cells can make people harder to control by supplying electricity without the need to register an address, have a bank account, stay put, and so on. These are obvious examples, but control can be evaded through more subtle innovations as well. I will call innovations that circumvent points of control that can be used by governments or monopolies to exploit, tax, or regulate technologies of resistance.

In Eli’s view, Brynjolfsson and McAfee are correct that innovation has been accelerating, but Cowen is also correct because it has been accelerating in an area that does not produce much in the way of output, proportionately.

 The stagnation debate was in many ways just a set piece with which to present this dichotomy, which is far more important to Eli’s larger view of things. In another piece, Eli reveals his practical programme for promoting a more libertarian world:

Imagine a world in which all factors of production were as mobile and elastic as financial capital. If labor and physical capital could flea instantaneously and at low cost from bad policies, there would be little danger from either the predatory or incompetent state. In short, it would be a libertarian utopia.

This utopia seems hard to realize. It’s hard to believe that labor and physical capital could ever be as elastic as financial capital is today. Nevertheless, I think this framework provides a way forward for libertarians who have given up on political reform (and maybe even those who haven’t yet). Even if we can’t make the supply of most factors of production infinitely elastic, maybe we can make their supply more elastic. To the extent we succeed, we reduce the power of governments around the world.

Bold added by me.

In fact, Eli is all about giving up on political reform. The far ideal of infinite elasticity provides more concrete possibilities for an ideological minority like libertarians. In the previously quoted post, he lists a few examples of how we might move in that direction; everything from refining 3D printers and solar cells to promoting a global lingua franca.

He has returned to this theme several times. Back in July of this year, he asked Can We Engineer for Liberty?

If 3D chemical printers become commonplace, say goodbye to the War on Drugs. If Bitcoin succeeds, it will be more difficult to censor unpopular speech by prohibiting payments. If solar power becomes cheap and ubiquitous, it will be easier to literally live off the grid. If mesh networking gets good enough, the government won’t be able to deputize ISPs to enforce unjust laws or to spy on people. As robots improve, it will be harder to enforce labor regulations, because businesses will just switch from labor to capital as the implicit price of labor increases. And ubiquitous private drones equipped with cameras will place limits on police brutality and misconduct.

Nevertheless, Eli is fully aware that technology in the 21st century so far has hardly been entirely of the resistance variety.

While most of us have until now considered the Internet a great force for individual empowerment, it has also become history’s most effective government surveillance apparatus. Where the ultimate balance of power lies depends crucially on both political and technological choices going forward—on decisions about the Fourth Amendment and about the use of encryption and decentralization.

Plus, the people who have the know-how to actually build these technologies are not necessarily a predominantly libertarian sort—they have to be persuaded, and Eli is deeply skeptical of our ability to succeed by persuasion.

The successes we have had so far have been structural in nature, not persuasive. For instance, the Wikileaks and Snowden strategy:

The Snowden leaks are instructive for a couple of reasons. First, there is good evidence that they have made it harder for the United States intelligence apparatus to function. Congress may limit contractor access to highly classified material, and the NSA has implemented a buddy system for accessing sensitive documents.

Cheap storage and the Internet, plus the sheer number of people who have access to any government agency’s data, make those agencies fundamentally vulnerable to leaks. By leaking that data to the public, rather than using it privately for personal profit, Snowden and Wikileaks reveal the points at which these agencies are vulnerable. The measures that agencies must take to avoid such leaks in the future significantly reduce their operational effectiveness.

Institutions Matter, and So Do Incentives

The components of Eli’s point of view that we’ve looked at here can be boiled down, more or less, to two fairly straightforward assertions.

First, econ 101 is basically right—if you lower the cost of an activity by a lot, people are probably going to engage in that activity more than they had been, and vice versa. If the cost of raising tax revenue falls, governments will raise more money, and subsequently spend more. If it’s easier to impose regulations than it was before, you will get more regulations. If the costs of taking care of people in their last year of life explodes, people will find ways to shorten that year. If we have to obtain permission from slow-moving bureaucracies before we can engage in anything innovative, we will get less innovation.

Second, there an underlying structure of institutions, Hayekian dispersed knowledge, and economic interdependencies—to the extent that these things are even separable—that explain the lion’s share of why anything happens larger human affairs throughout history.

Though anarcho-curious, he does not seem to believe in some notion of rights that are embedded in the very fabric of the universe. Take his most recent piece of Property Rights versus Property Institutions:

[I]t is necessary to revise the shallow lesson of the Cold War—property rights are good—with a deeper lesson: good property institutions are important. The Soviet Union’s property institutions failed to assign rights where they were necessary. But it is an equal and opposite error when our property institutions assign rights that impede human flourishing. Taxi medallions are an indictment not of the idea of property but of the quality of the government that decided to limit taxi service. We have poor rules for spectrum allocation because the FCC is terrible at centrally planning a system of property for spectrum. We have generally efficient rules for property in land because the common law has refined a large series of cases and controversies into an effective body of property law. In every case, what matters is the quality of the institutions that defines the exact contours of property rights.

At the bottom of this is a belief that the best institutions are those that respond to the ever-changing states of technology, individual preferences, and anything relevant to human affairs. As he said recently of the Lex Mercatoria:

In our most successful legal and governance structures, principles are discovered, not stated from the outset.

Sadly, the modern administrative state does no such thing and is, in fact, quite popular. Since it is also usually tied to some form of democracy, this means it is unlikely to be departing any time soon—hence Eli’s yearning for technological solutions to constrain its ability to raise revenue and tell us what to do generally.

If we could half the distance between our present state and the utopia of infinite elasticity, the result would not be chaos. No, as history has demonstrated, the result would undoubtedly be more institutions like the Lex Mercatoria.

And so Eli’s structuralism comes back around to his anarcho-curious side; it’s just that the only sustainable path to get us there is if we manage to reliably win the arms race between those investing in technologies of resistance and those attempting to adapt the infrastructure of control.