Agorism, pt. 1: A Simple Model

Libertarians are in a dilemma when it comes to politics. On the one hand, most are very pessimistic about political action: markets work, politics doesn't. On the other hand, it seems that the only way to a libertarian society is politics.

To solve this, Samuel Konkin proposed a market solution (agora = market). In a long polemic, he claimed that by working on the black market, libertarians could spur a gradual economic secession from the state. More and more people decide to work on the black market, until the state either gives up or loses all relevance.

The Model

Like their legal counterparts, black market entrepreneurs respond to incentives. Thus, black market activity can be modeled economically.



A black market entrepreneur avoids taxation and regulation, and this acts as a subsidy for his business, relative to his legal counterparts. He also pays extra to escape government harassment, and this acts as a tax.

The main determinant of the existence of a black market is the relative sizes of the subsidy and the tax. If the subsidy is greater than the tax, the good is provided cheaper on the black market, and the black market thrives. If the reverse, it's provided legally.


Konkin isn't very clear about why he expects agorism to succeed, but the 28 years since the publication of his essay have not been kind to his thesis. Black markets have only been widespread for goods that have been outlawed — marijuana, illegal immigrant labor, and so on. (In cases where a good is banned, its legal price is infinity— it can't be bought legally— and this guarantees it will be sold on the black market, if at all.)


Later I will discuss network effects, more problems with agorism, possible solutions, and the potential of this strategy.

(pt. 2)

Is Government Still an ESS?

A few posts back, I proposed that MAD-based defense could substitute for national defense


Not only does this solve the public goods problem, it suggests a new libertarian strategy: nuclear revolution.

This is from my response to _____ (that's seriously his name)-

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.)

And in fact, the defensive strategy is the only ESS here. Because of this, the field is wide open for revolutionaries-- provided they stick to the defensive strategy. The governments of today, as far as I know, use no systematic nuclear strategies, and would have little credibility if they threatened to use a nuke offensively-- the risks wouldn't be worth the benefit.

So if a defense company got a hold of a nuclear weapon, or contracted with someone else who had one, they could conceivably hold the entire world at bay. Their customers could live lives unhampered by organized coercion.

Freedom is only one nuke away.