Thursday, December 4, 2008

National Defense, On The Market

Wikipedia, mutual assured destruction:
The doctrine assumes that each side has enough nuclear weaponry to destroy the other side and that either side, if attacked for any reason by the other, would retaliate with equal or greater force. The expected result is an immediate escalation resulting in both combatants' total and assured destruction. It is now generally assumed that the nuclear fallout or nuclear winter resulting from a large scale nuclear war would bring about worldwide devastation, though this was not a critical assumption to the theory of MAD.

The doctrine further assumes that neither side will dare to launch a first strike because the other side will launch on warning (also called fail-deadly) or with secondary forces (second strike) resulting in the destruction of both parties. The payoff of this doctrine is expected to be a tense but stable peace.

National defense as commonly envisioned is not excludable. Armies, air forces, and so on aren't capable of selectively defending small areas -- they can either defend a large area or no area at all. This is a problem for libertarians. Without the ability to exclude non-customers, a market cannot form, and the libertarian society cannot protect itself. The resulting equilibrium is government-provided national defense.

Retaliatory approaches, like MAD, however, are easily excludable. If a customer doesn't pay, and if his land is invaded or destroyed by some opposing force, the retaliation business simply doesn't retaliate.

It is thus possible to privatize national defense. People contract with a retaliation company, and attackers avoid them for fear of annihilation. People not contracting may still be attacked, so they have an incentive to pay for the service, and national defense is provided efficiently, on the market.

Furthermore, this approach doesn't necessarily require nuclear weapons. Perhaps a company could retaliate with assassins who kill the person that gave the order to invade a customer's property (and maybe his family, too). There are plenty of creative possibilities waiting to be explored by a society allowing experimentation.


J. E. Ray said...

The point that always comes to my mind when arguing for free market defense is the ability of existing firms, notably software companies, to survive freeridership. Software and media piracy is rampant, yet quality products still make it to market.

___________________________ said...

How will rational defenders be separated from terrorists?

Both use the same tactics under your system, however, what will help the first but prevent the latter? Free-trade? Need for willing recruits? Lack of nations to be contrasted with?

Also, what will prevent an emergence of nationalistic movements? I know Somalia has had some issues with war due to a desire to reinstate a national government.

Skeptikos said...

____ (is there some better way to address you?), that's something retaliatory companies should be able to deal with.

Let's assume that you're a customer of a retaliation business, and terrorists get a hold of a nuke of their own, and try to use that to threaten people. Now the retaliatory agency has a choice-- mutual destruction (of customers and terrorists, that is, not necessarily the company itself), or give in to the terrorists. You'd think they'd give in to the terrorists.

But the people running these retaliatory agencies are probably going to be smarter than that (if they get any business). The game theorists behind MAD put a lot of emphasis on credibility, that is, the likelihood that the company will actually go through with mutual destruction if attacked.

In your thinking, the company didn't have any credibility, and thus the defense could be overcome. But an effective company is probably going to have some kind of mechanism in place that guarantees that any transgression will end in mutual destruction. If terrorists threaten customers, they are destroyed, guaranteed.

Maybe the source of a guarantee is a computer program that controls the nukes/whatever and can't be altered. Maybe the company agrees contractually to pay an outrageous sum if it doesn't follow through. There's room for experimentation here.

If the thread of MAD is credible, then a society using a defensive strategy can't be invaded by an agressive strategy. (I mean "invade" in the game-theoretic sense -- attackers always get a lower payoff than defenders. Attackers are guaranteed to die, while defenders have a good chance of coming out alive. The defensive strategy is an ESS.)

___________________________ said...

Depends on what you call better, ____ works.

Well, for one, I don't see how MAD can realistically work against decentralized opponents. You cannot realistically threaten to destroy the world if attacked, then you end up being a terrorist to everyone else. I mean, I understand that retaliation is excludable, but it seems decentralized opponents will have an advantage on attacking and defending.

Secondly, I don't see how the assumption that defenders are necessarily smarter than terrorists is warranted, so I think there is a hidden assumption there that I was trying to get at.

Finally, how do we actually know the value-structure of our opponents such that we can set up a layout that they would agree is bad for them? I mean, honestly, I think conventional war is pretty much dead amongst the powers, but terrorism does not seem like it would die so easily, and it would seem that attackers have the advantage. If this is the case, how do you stop the terrorists? It can be argued that methods used today are ineffective, it can also be argued that terrorism will unlikely be used in the long-run, but I still think it can pose some intellectual problem for stability(arguably less than that of a state). For example, what if we have a terrorist group somehow impersonate a defense agency representing a group disliked by the protected group? What prevents war? How about this: what prevents another group from profitably selling assassination? This might have more to do with police in your mind, however, I think international crime, terrorism, and modern technology have basically killed conventional war amongst the richer areas of the world, as we I don't think we've had a conventional war since WW2.

Skeptikos said...

Nukes aren't the only way to go about MAD. You may have assassins or the retaliatory company may have moles in terrorist organizations which will kill anyone who gives the order to attack, etc.

Again, there's a lot of room for experimentation. Lots of people smarter than you or I (when it comes to security) will have incentives to work on this, and I don't presume to know what they'll come up with.

For example, what if we have a terrorist group somehow impersonate a defense agency representing a group disliked by the protected group?

OK, we're dealing with reality here. No system is going to be able to prevent any imaginable mishap. At least in this case, you can stop doing business with the impostor company. (Imagine if the same thing happened to the CIA!)

What prevents war? How about this: what prevents another group from profitably selling assassination?

This goes back to the game theory stuff from my earlier comment. Basically, the guarantee of death/horrible torture/whatever deters it.

___________________________ said...

Well, it seems sort of ridiculous to think that there would be enough moles or knowledgeable assassins to destroy a clever, decentralized enemy. I can see retaliation, but not MAD. Not only that, but why would moles or assassins risk their lives if the company is about to crash? Some may do their jobs, but some could just defect from the mass-assassin job to something less risky.

True, but of course, people smarter than you or I might also be the ones undermining the system.

I am not sure that a cessation of trade would do much in a situation where both sides hate each other. The US is too powerful to stand up to.

Well, ok, but this partially relates to the previous question. I mean, if a group is under attack by another group that refuses to recompensate for losses, and there is a reputation to protect, what prevents retaliation, or some other collapse of the equilibrium state?

M. o' Bedlam said...

I wanted to say that I'm glad I was able to stumble upon this page =]
Now as for this article, it is entirely above my head when speaking of private defense. I enjoyed the debate though - it was rather educational for me without having to dig for resources. =]

Skeptikos said...

I was hoping to write an essay for on this and related ideas, and I would explain it more thoroughly in that. I'll definitely post the essay here when it's written.