Anarchists and libertarians fail to acknowledge the nature of collective action problems, and the ways in which various modalities (including hierarchical organization, of which government is one example) are used to address it. The trick is to most effectively blend these different modalities, not to reduce reality to a caricature that allows us to pretend that that challenge doesn’t really exist.

(There’s a famous example used in economic literature, of a barge-pullers guild in 19th century China, that hired overseers to whip slackers in order to eliminate the free-rider problem. In other words, the barge-pullers themselves chose to impose on themselves an overseer in their own collective interest. It’s a strange and complex world in which we live; we need first and foremost to face up to that fact before rendering judgment in broad brushstrokes that fails to acknowledge fundamental aspects of reality.)

The “problem” with government isn’t its existence or the fact that people rely on it for certain purposes, but what in economic, legal and managerial theory is called “the agency problem.” In a popular sovereignty, government is constituted as an agent of the people, its principal. This is in many ways a reversal of most ancient notions of sovereignty, which saw the people as “subjects” of the sovereign. The problem, or challenge, is the degree to which reality can be made to correspond to theory.

In one view, this reversal of theoretical roles occurred organically, because in the crucible of European internecine warfare the crown’s (particularly the English crown’s) need for revenue to finance such wars drove an ongoing liberalization of the political economy to generate such revenue, In other words, international competition drove sovereigns to empower ever-more ever-broadening swathes of their citizenry, since those that did so fared better in the wars among relatively small and easily swallowed states.

In the Glorious Revolution in England in 1688, this reversal was institutionally recognized, laying the groundwork for the American revolution’s clearer codification of that institutional shift in its break from Great Britain. The challenge then became aligning the agent’s action’s to the principal’s interests, a challenge compounded by the size and diffuseness of the principal in comparison to the agent. This is the ongoing challenge we face.

A centralized agent ostensibly working on behalf of a diffuse principal can always exploit the transaction costs facing the principal in its translation of some hypothetical “popular will” into a mandate to the agent in order to serve the agent’s interests at the expense of the principal’s. This is the challenge we must continually face. But to then leap from the reality of that challenge to the conclusion that the existence of the agent is a sign of our own self-enslavement neglects the real need we have for such an agent, the real function it performs, and the costs of choosing to “liberate” ourselves from any centralized agency through which to address the collective action problems that face us.

The bottom line is that we live in a complex and subtle world, and that our neat reductions of it, our caricatures of reality, do not serve us well. While it’s true that, historically, governments of large political states were established through military conquest and exploitation, it is also true that the benefits of civilization are a derivative of that brutality, and that there are indeed benefits (as well as costs) of civilization, of a large-scale division of labor which freed up some to do things other than produce food. Our challenge now is not to feed our emotionally gratifying sense of superiority to “the Sheeple” for “knowing” that government is our oppressor, but rather to face, intelligently and effectively, the real challenges and real enterprise of aligning the actions of our agent with the interests of its principal, of making government ever more something that serves the interests of the people in general and ever less something that serves the interests of the few who capture it for their own benefit.

And that is a complex challenge, a complex enterprise, best framed in precise, analytical ways. It is our task to work to maximize the robustness, fairness and sustainability of our political economy, by applying disciplined reason and imagination to methodically gathered and verified information in service to our shared humanity. Unfortunately, caricatures of reality like those popular among ideologues of all stripes do nothing to help us accomplish that, and do much to interfere with our ability to do so effectively.

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