The False Hope of Anarcho-Capitalism


Many libertarians have begun to subscribe to the idea of Anarcho-Capitalism as a possible solution to their government woes. Unfortunately, this is a very dangerous idea. This one is the snake behind the couch. On the surface, it seems almost reasonable and something that can be tamed. Examination shows otherwise, and I need to ensure that we cover this due to the repeated attempts by some to try and prove its validity. Understand that reality simply would not allow it to exist in the way that it is often presented, and it would literally hand power to the very ones that should not have it.

Like socialists, most of the people who subscribe to Anarcho-Capitalism are idealists. However, I have difficulty understanding why some are so eager to believe in junk ideology despite how much evidence there is to refute its viability. There are some pretty substantial misconceptions about Anarcho-Capitalism and how it might work – or not, as it were. There are some massive holes in the theory that can ONLY be filled with caveats and qualifications about how, “in a perfect scenario,” it would hopefully work. Attempting to correct or demonstrate these holes has proven to be a challenge due to fundamental misunderstandings of Constitutionalism, which has exacerbated the problem in many regards.

I used to have a hard time believing that someone could or would refuse basic logic so eagerly. As it turns out, it is a bit more common than I would have guessed. It has been studied and demonstrated to be the norm. Norbert Schwarz has studied this phenomenon for years and released a study showing how difficult it was to correct common misconceptions, even when you present someone with factually correct information. In fact, when the factually accurate information is provided to these folks, the misconceptions or myths not only continue but often are reinforced by an attempt to correct them (Vedantam, 2016).

So imagine the struggle we are up against when we consider trying to correct the ideas of Anarcho-Capitalism, socialism, or even representative democracy. Regardless of how many holes I can identify and retort to, the problem might get worse because these people are already sold on the contortion. Perhaps this is a lesson in futility, and I am spinning my wheels. I guess we’ll see.  

A couple of years ago, I engaged in a debate with an Anarcho-Capitalist who stated that the Constitution was a fraud due in great part to the “Act of 1871“. Think about that for a moment. Did you find the flaw in that argument?

I tried to point out that the problem would have to be the Act of 1871, not the Constitution. Of course, he was undeterred. He went on to say that he believed that under Anarcho-Capitalism, the people would be able to dictate an Anarcho system with their purchasing power and that they would break monopolies as a result. I found this humorous because people can already do that, and it is not being done. Why would it be any different under that system?

So let us talk about that for a moment. I am going to address both points here. As usual, understand that it is usually not simple, and I must bring a few other points into play to understand the bigger picture better. Sorry for any confusion.

Anarcho-Capitalists want zero government and an unrestrained free market, corporate rule essentially. They hate the idea of a federal or even local government. Sounds good so far. But what if I told you that I could prove that what Anarcho-Capitalists advocate has existed for quite some time, right here in the United States, and has already proven itself to be a complete disaster? Would you be interested?

Imagine for a second that the term “Federal Government” was nothing more than a company name, something similar to Federal Express or Federal Reserve. Also, imagine that the “Federal Government” was a corporation that was set up like something similar to a power or utility company, where you are pretty much forced to pay for the services provided, and there just is not much competition for those services because of the corporate buddy system.

Now, understand that the image I am trying to paint is, in fact, a reality. Just like the Anarcho-Capitalist said, I concede to the fact that on February 21, 1871, the Forty-First Congress passed the “Act of 1871.” By passing the Act of 1871, Congress formed a corporation known as THE UNITED STATES. The United States of America is different from the “United States” [corporation]. Anyone can gain clarity on this by simply reviewing STOUTENBURGH v. HENNICK, 129 U.S. 141 (1889). However, this is merely one issue in a much bigger problem, a problem with many different spokes.

A review of the District of Columbia Organic Act of 1871 also demonstrates the ability to incorporate a local government (like Chicago or Seattle). This is (at least in part) why city “codes” (or by-laws) can somehow supersede the Bill of Rights. Obviously, this is a big problem for Constitutionalists and Anarcho-Capitalists and just confusing for everyone else.

People need to understand that the Supreme Court called that body of government “a corporation,” with the right to sue and be sued. Since 1801, the District of Columbia has been consistently recognized as a “municipal corporation” with its own government. The details are often debated, but the fact remains that the corporation began to generate debts via bonds which eventually came due in 1912. Soon after, a big central bank would deal with this, but I digress.

Does this corporate entity apply to all government entities? Again, this is debated, but governments can sue, be sued, and pass their own laws, so perhaps so. It is probably also important to note the power the District of Columbia has over everyone in this county, even though the law states that it has specific jurisdiction. Of course, unless people knew what that jurisdiction was and held the government to it, it would be free to do whatever it wanted until it was restrained. Probably another education issue, and yes, I am aware that I am being vague, but I do so to spark your interest – because what I am talking about is a rabbit hole worth exploring. It would help if you looked into that.

Anyway, the point is that if all this means that “government” is a corporate entity (which it does), playing the good ol’ boy system with their corporate friends such as the Federal Reserve, Halliburton, Lockheed Martin, Boeing, and so on, then the idea of Anarcho-Capitalism has already failed with devastating consequence. Why? Because basically, what has already happened, and what we are currently living, is the resulting “corporate rule “that Anarcho-Capitalism recommends. I’m sorry, but I’m not about to make it worse by handing corporations the keys to the kingdom.

The result of corporate rule is nothing more than a long list of problems such as “insider trading” and other forms of corporate manipulations that occur to the market, metal, or even dollar values, not to mention military conquest for profit. This is merely a glimpse at the future under pure Anarcho-Capitalism. And when you think about it, this divide between corporate government and elected government might also explain the rift between Police and Sheriff entities, as the private corporate police differ greatly in their mission from the Constitutional Sheriff (another bread-crumb).

Now, there is an excellent reason why I often associate the Corporate Federal Government with something similar to a utility company. This is because of a corporate phenomenon known as a “Natural Monopoly.” This is an aspect often ignored in this debate. The Anarcho-Capitalism side of the fence looks upon the perception of monopoly as a horrific thing, which it might very well be. However, several kinds of monopolies occur in economics very organically. These include: natural, geographic, technological, etc. Sometimes these occur due to circumstance, and I agree that sometimes it is due to corporate greed.

However, a natural monopoly is a monopoly in an industry that is most efficient (involving the lowest long-run average cost) for production to be concentrated with a single firm. Simply stated, sometimes, when we are dealing with certain services, it would be unwise for too many competing interests because, at some point, it actually hurts business. This is similar to how even trash companies do not over-saturate in a given area. Many of these companies have an agreement that allows them certain territories. They do this to keep prices a little HIGHER.

Various corporate agreements like this exist within a few different industries – but also governments. So the idea of not having a monopoly to force a corporation’s will down the people’s throats is null and void because repeated precedent proves this will not be the case when and if corporations rule. They already do this on their own accord because they profit more from it. Think about it! This typically happens with utility providers EG: water, electricity, gas, etc.


Since the Federal and Local Governments are, in fact, corporate entities, then Anarcho-Capitalists are advocating something they don’t realize they already hate and despise. Their grand experiment has already occurred and proved to be a long-term failure. Of course, the argument of taxes then comes into play. They want to argue that taxes are being forced and would only be voluntary under Anarcho-Capitalism. Sure… at first, anyway.

If schools were doing their jobs, we would have learned that taxes used to be voluntary at the beginning of this little corporate experiment we find ourselves in. It was not until after incorporation that the government began to demand payment. Remember that the Supreme Court ruled income taxes unconstitutional and that a shady law later overturned that ruling. Eventually, those voluntary taxes became a permanent fixture in our lives. Of course, some people wised up and fought such ideas because forced servitude was made illegal. Not a bad tactic but not thought out.

According to contract law, the 13th amendment only prohibits involuntary servitude; it does not prohibit “voluntary” servitude. What is considered “voluntary” seems to be debatable. Coercion aside for a moment, we should note here that we could literally replace the words tax or government with terms often used in the utility industry, and the result is the same. This should be an eye-opener for many.

So exactly, why does this corporation have so much power? How can they force their will like this? Well, it is actually quite simple. This corporation provides services that the people have demanded and that others receive regardless of whether they like it or not. Laws have been passed to enforce this, and people ignored the laws being passed and the mandates that followed.

Think about it like this (simplifying it for effect): the Act of 1871 incorporated the Federal and Local Governments. Things went pretty well until people wanted more services and protection. Then, 1913 came around, and people allowed the demise of the Republic and the Constitution altogether by allowing a privately owned bank to take the reins. This bank, of course, provided services to the corporation of the Federal Government, which passed the “cost of benefits” onto the people. This is very similar to how any other business operates.

These “services” needed to be paid for, but people were not voluntarily handing in enough money when times got tough. So on March 15, 1913, the 16th amendment was passed. Few people took notice of the ramifications, though. Not long after, people started receiving a share of the forced redistribution of wealth (either money or service), which was again demanded by the people and needed by the corporation to retain their power. Again, I am simplifying, of course, but the point remains.

After a while, revenue started getting a little tight, especially in light of the corporation’s growth. More money was printed, and prices were raised. The voluntary part was becoming an issue. The government needed people to pay their bills, so the corporation hired a collection agency. On July 9, 1953, the Internal Revenue Service was founded. Understand that these are just corporate formalities and company branches under the same name everyone knew and trusted; The Federal Government of the United States.

All jests aside, the truth is that you simply cannot have it both ways. Government is either “Government” or it is a corporate entity. Try to understand that a corporation’s sole purpose is to rake in lots of money. Sometimes in the quest for profit, unethical decisions are made by corporations. I am hoping I do not have to provide that list here. The point is that if the government is a corporation, then why would any of us be shocked that it is sometimes unethical or working for the interests of their corporate partners? Think – big-pharma/pandemic.

Time and time again, we hear about the corporate enforcers and their tyranny; we hear about the Act of 1871 and what it did to the Constitution and how it has not protected us from any of it. In the same breath, we are told by Anarcho-Capitalism advocates that a world without government oversight would be best. While I appreciate the sentiment, the reality is being lived every day because we have not seen the Constitutional Republic in this area for a long time. I am sure that most could agree that the result has been a negative one.

We must remember that education was competitive during the initial period of this corporate rule, taxes were voluntary, and so on. Only over time was it made to be tyrannical. Again, power corrupts over time. Today we can all agree that our current position is pretty bad. However, I am saying that 1871 was the beginning of this Anarcho-Capitalism experiment; only now are we watching its failure.

Another caveat of the Anarcho-Capitalism position is that people need to unify and focus their purchasing power to ensure that businesses comply with the people’s wishes. So unification, principle, and discipline are necessary for Anarcho-Capitalism to work. Look around. Where can any of this be found? Are you starting to see why I believe it would be a failure?

Today, people cannot unify to save their own lives, and people step on their own principles for the sake of convenience or party loyalty. For example, we have conceal-and-carry holders who still visit anti-gun establishments such as Buffalo Wild Wings. We have people who hate Wal-Mart but still shop there weekly. We have pro-choice people screaming at anti-vaccine people demanding compliance. These examples are endless.

Here’s the kicker. Anarcho-Capitalists suggest that they are unified in their beliefs. I find that to be curious. How could you possibly know that? A unification of ideas suggests an organized listing of such ideas in the first place. However, Anarcho-Capitalists suggest that such a list is a bad idea and evidently goes against the entire idea of Anarcho-Capitalism. This is evidenced by their unwillingness to agree upon the existing rules that restrain the government that they believe is out of control. So, I ponder how an idea gets distributed, agreed upon, or enforced without its listing.

Anarcho-Capitalism is nothing but a caveat and qualification. Or perhaps it will be different under a different name or different corporate environment. Or maybe this next time, people will be able to spend their money more wisely. Perhaps there will be fewer people asking for handouts. Maybe people will be more self-reliant. Maybe people will all of a sudden change their nature and become principled. Or perhaps, Anarcho-Capitalism, much like socialism in this regard, is a dream.

The truth is that most people do not have the principles necessary; they sure as heck do not have the discipline, and for the life of everyone, they definitely cannot unite on the level necessary without a detailed statement, listing, or Constitution. As I have stated, we should all be huge critics of the monopolizing of economic power by banks and corporations – like the Federal Reserve and the corporate entity known as the “Federal Government.” I should also restate that I believe and agree that power belongs in the hands of the people. I do not trust (as Jefferson said) “the selfish spirit of commerce (that) knows no country and feels no passion or principle but that of gain” (Jefferson, 2016). That is not to say that some form of government is useless, though.

Like Jefferson or even Paine, I do not trust or want big government, but I do not trust the large corporations that influence big government either – which, again, is precisely what our problem is today. I like the idea of asserting citizens’ sovereignty over corporations or governments. There are not many ways to go about this without the Constitutional Republic and foundational agreement to which the government is held.

What Anarcho-Capitalists forget (or perhaps do not know) is that the Constitution is not an agreement against the people but rather an agreement against the government. I want the agreement and the power to enforce it, and I want to be able to apply pressure or counter any massive corporation when the need arises. Again, Anarcho-Capitalism does not provide this without caveat or qualification.

For some reason, Anarcho-Capitalists will not recognize these fundamental truths regarding their position. Of course, as Norbert Schwarz has proven – it does not matter because those who hear warnings or logic to the contrary of their misconception will simply continue to believe their misconceptions despite the plethora of evidence to suggest otherwise. When you start with your conclusion, logic and proof are pointless, and confirmation bias becomes the rule. That is called circular reasoning, the very reason I tell everyone to question with boldness – everything – including your conclusions.

Note the steady progression of tyranny since the last Founder died. As demonstrated throughout this article, sometimes simply telling someone the truth or attempting to warn them makes them more resilient regarding doing the opposite. The sad part is that the warnings I provided throughout my work were offered initially over 235 years ago, and people still do not want to hear them. The evidence shows the warnings are more than accurate, and people are hurt by not listening. Time is running short before that lesson comes to our doors.

Now, I have brought up the Federal Reserve and private banks alongside the idea of corporations several times thus far. This is done for a great reason. Read the words of those who saw it coming…  

The power of all corporations ought to be limited, […] the growing wealth acquired by them never fails to be a source of abuses.” — James Madison Detached Memoranda ca. 1817W. & M. Q., 3d ser., 3:554–60 1946

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” – Jefferson to John Taylor, May 28, 1816, in Ford, 10:31.

Bank-paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs.” – Jefferson to Eppes, September 11, 1813, in PTJ:RS, 6:494. Transcription available at Founders Online.