How to Outsmart the Free Market
How to Outsmart the Free Market

Every so often when discussing the ideas of Liberty, someone will respond with a concern that is so bizarre, so totally freakish, that one wonders about the condition of the sanity of the person. These responses are so illogical and ill-conceived that they immediately bring to the forefront of the conversation the wholly emotional, rather than rational, attachment the respondent has to their rulers in the State. You will no doubt be familiar with these responses.

Without a State, what will keep the Canadians from invading?

Without a State, how will children be adopted?

And on and on.

One such concern that I have heard more times than I can recall from many people totally independent of each other, and which is so fundamentally alien to my concept of the nature of the world that I literally cannot understand how someone’s mind could come up with it, is the rather clownish scenario which is usually described as follows:

“But in a totally free market, what is to stop someone from buying up all the land in a circle around someone’s house, building a circular road, and then charging the victim $1 million to cross the road?”
dr-evil You’re laughing. But I’m serious. I really have heard people ask this. So give yourself a minute to catch your breath. The first time I heard someone say this, I was speechless. Not because I couldn’t think of a response, but because I couldn’t believe what I had heard, and I wasn’t sure if I should run away and never return, commit suicide, or just board myself up in my own home and never face society again.

So to put this concern to rest, here are some potential responses.

First, no doubt in a free society, the purchase of real estate would come with access rights – just as many property purchases do now. The poor victim would have, as a condition of purchase of the home, guaranteed access to whatever arterial road was nearest his home. These kinds of contracts are already in common use. Water rights, abatements, beach access, etc, are already guaranteed by contract to property owners. If a scheming capitalist villain attempted to block access to someone who had such a contract, the victim would have grounds to sue. And no doubt any reputable arbitration agency would not look kindly on someone who had attempted such a cruel violation of contract.

In order to purchase all the land, the scheming capitalist villain would have to go to each of the victim’s neighbors and independently convince them to sell their property. This is no small feat. Many people simply would not sell their property at anything near what might be considered “market value,” and would instead demand several times more. The capitalist villain would be at a disadvantage because many people have sentimental value in their homes that he simply would not be able to capitalize on as part of the purchase. He would have to bear the expense of the sentimental value of the sellers, but would have no means to profit from that expense. His value would be derived solely from the capital value of the land, so purchasing the properties surrounding his victim would cut deeply into the expected profits from his extortion scheme.

As it is now, such a scheming capitalist could simply go to the State and convince them that his project was in the interest of the public and then the State would use the legal doctrine of eminent domain to evict the neighbors, assigning unilaterally a value to their property (less than that which they would have otherwise accepted, otherwise the use of eminent domain would not be necessary).

A 'nail house' whose owners refused to leave
A ‘nail house’ whose owners refused to leave

Thus, it would actually be more expensive to conduct this scheme in a free market society than in a State society.

“Ahh,” you might say, “the capitalist villain could simply increase the extortion demands from $1 million to $1 billion – or whatever price would be profitable.”

Maybe, but increasing the extortion demands makes it less likely that it would be paid, defeating the evil capitalist’s plan. Increasing the demand would make other options more appealing for the victim. The victim might not even be able to pay the smaller, million dollar extortion demand, no matter how much he might want to cross the evil capitalist’s property. He simply might not have the money, or might not have access to it.

Also, assuming that the victim was some wealthy businessman who could afford to pay, he might instead choose other options. For $1 million he might prefer to purchase another home and escape from his prison by helicopter – thus thwarting the plan of the capitalist villain. He might build a bridge from his property to the outside, or a tunnel. Or he might have goods brought to him via helicopter, or maybe by an unmanned delivery drone. He might not want to leave his house at all, and might find the capitalist villain’s plan to be a welcome respite from visitors. After all, nobody would be able to come to his home without paying the extortion demand, naturally.

Even if paying the extortion demand was the least expensive option for the victim, he might, out of spite, be willing to pay more to others rather than pay less to his oppressor. And no doubt, once the extortion racket became publically known, the capitalist villain would suddenly find himself with very few people willing to do business with him – or even worse – with very few people willing to do business with him at a reasonable price. He would suddenly find that the goods and services he desired would be in extremely short supply, and very expensive, for him only, of course (special price for villains, you know, especially villains who can afford the massive capital expense that this scheme requires).

In addition, he would have to hire security personnel to guard the exits, so to speak, to prevent the victim from escaping at night or out the rear gate. The longer the victim refused to comply with the extortion demand, the more expensive this security detail would become. Men with guns don’t stand around in the rain and cold for free.

This particular racket is so risky, and there are so many easily conceivable ways around it that the capitalist villain (if he was truly a capitalist) would be much better off putting his money elsewhere. He would almost certainly not get a return on his investment using this extortion scheme.

This is all fine, but there is one more thing – a devastating blow to this strange concern – that has thus far been ignored.

In a State society, there is nothing illegal about buying up all the property around a given home and trapping the resident on their own property. The State has no means of preventing this from happening. It is entirely possible to carry out this evil scheme in the framework of the State.

Why some people think this evil capitalist plan is an argument against a free society I have no idea. If it is truly an argument against a free society, it is also equally an argument against a State society, maybe even to an even greater extent because eminent domain allows the expense of carrying out the treachery to be much lower than it otherwise would be.

Finally, since we do not see this happening in our current State society even though it is entirely within the realm of legal possibility, we can be confident that it won’t happen in a free society either.

In the end, I suppose that providing these refutations won’t put the concern to rest. Someone who comes up with this convoluted and strange question may not be easy to convince by the use of reason.