Oilsands Anarchy: A Thought Experiment

I recently came across an online discussion on a libertarian site about what the libertarian view should be of a big Chinese state-owned corporation (CNOOC) owning a piece of the oil sands. For those that don’t know a libertarian is generally someone with a political position that revolves around the non-aggression principle (NAP) which says that no person has the right to initiate force against another person. It got me thinking about what development of the oil sands might look like if the NAP was adhered to strictly by a tipping point of people living in the oil sands region so here is my thought experiment. Please feel free to leave comments, suggestions or how you think things might work in an environment of adherence to the NAP.

First of all strict adherence to the NAP means that government goes away and interactions are regulated by individuals engaged in voluntary relationships. Note this is slightly different than the typical libertarian position that concedes a certain amount of NAP violation is necessary and advocates small government (minarchism), what I'm talking about would be more accurately described as anarchy. Government is a group of people who claim a monopoly right to initiate force in a defined area and so if the NAP is adhered to strictly government cannot exist. All government laws are essentially threats of violence for non-compliance with a particular groups opinion. Threats of being locked in a cage, or threats of having money/property taken from you are how government laws are enforced. Radical disobedience of even the most trivial of laws, like say a ban on plastic bags, results in death if the government enforces the law: You disobey, receive a warning, continue to disobey, receive a fine, refuse to hand over money, continue to disobey, eventually enforcers try and shut you down, use defensive force to match the enforcers aggressing against you, guns get drawn, death ensues. All statist law is backed by murder.

Anarchy is a word most people use as a euphemism for chaos, lawlessness, and hooded hooligans. Here I am using it by its proper definition – no rulers. A huge body of scholarly work exists about the subject that delves into how a population would function if we did not have people initiating force and have every reason to believe (I’ll save this for another blog) that it would be a highly ordered, socially just world…the opposite of the chaos, lawlessness, and social injustice that exists today. Violation of the NAP would be viewed as criminal activity and so all governmental activity would be viewed as criminal enterprise.

The Regional Municipality of Woodbuffalo (RMWB) is one of the largest municipalities in North America and encompasses the Athabasca Oilsands where the majority of oil sands operations are located. Lets imagine that the majority of people in this region suddenly awaken one morning to the fact that the NAP is constantly being violated in the name of ‘the greater good’ and can see exactly how coercion is used being used and stop supporting it. What would the result be?

Power Structures Change to Empower Structures

People in positions of power would suddenly realize that they no longer want or would be legitimately recognized as having power (access to the use of violence) over others. So for example Mayor and Council would no longer be in power, however it is likely that most of them would still be recognized as community leaders and would start to exhibit what I would call legitimate leadership. Legitimate leadership is what happens when people strive to serve the needs of others and strive to eliminate the need for their leadership. So they would immediately start looking for ways to create private ownership of the RMWB’s assets and services which would immediately be open to entrepreneurs competing to serve the needs of customers.

Dispute Resolution and The Law

Since the only type of force permissible in a group of people following the NAP is protective force against aggression, dispute resolution and the practice of law would change dramatically. No longer could you threaten people with violence (or have some elected official do it for you) for non-compliance with your opinion. Entrepreneurs would recognize a market opportunity and would like start providing the type of services Molyneux1 describes with Dispute Resolution Organizations (DRO's) competing to meet the legal needs of people within the region. In fact because disputes are foreseeable it would be unlikely that anybody would lack DRO coverage, it would be too risky to engage in economic transactions with them. They would focus primarily on prevention, like a good insurance company, and justice would be restorative focusing on the restoration of the victim instead of punishment of the criminal. Criminals that failed to comply with their contracts or to abide by their DRO's ruling would be ostracized from all sorts of economic transactions as their social credit/reputation rating would make them very unappealing people to do business with and they would be unable to rent or buy homes, conduct business, buy groceries etc. For far more detailed info about how this might work see the references provided.

Geographical Defense (Defending off the Statist Hordes)

It is conceivable and even likely that people in the federal and provincial governments would take umbrage with over 100,000 individuals suddenly seceding and no longer recognizing them as rulers or property owners within the RMWB. There would likely be a need and a market demand for geographical defense of the RMWB from foreign states like Canada that could send in an invading force. Owners of security firms and DRO's would likely be called upon to negotiate on their clients behalf with elements that would invade and use violence. Every incentive would be to establish their clients sovereignty peacefully.

There is reason to believe that sovereignty can be achieved. We have numerous nations within the geographical boundaries of Canada called First Nations. For example the Kahnawake Nation2 in Quebec is probably considered by most politicians to be a reserve, however to the residents it is considered a sovereign nation apart from Canada. It flagrantly disregards Canadian law and houses a majority of the worlds on-line gambling servers and politicians leave it alone, possibly because they don't want another Oka Crisis3.

Crown Land and Waterways

Property from a libertarian perspective is based in the idea that you own yourself, the product of your labour, that which you homestead and that which you freely trade your property for4. This means that RMWB residents would suddenly realize that Crown Land is not owned and no permission is needed from the Queen to develop it and own it. The rivers and waterways in the region would be available for individual ownership as well5. This would bode well for individuals living downstream from the oil sands plants as they would now have a real legal mechanism for getting serious restitution and restoration if their property (the water) gets polluted.

The Oil Sands

Corporations are byproducts of the government. The idea that a non-material concept should be treated as a biological person is preposterous and problematic. Since only real people are responsible for the consequences of their actions it is real people that must bear the accountability for their actions not imaginary people called corporations. In todays world the state largely protects the heads of corporations from liability, you do not see corporate leaders losing their house and personal assets when poor decisions are made that they are responsible for, rather the imaginary person is punished and maybe even killed leaving real victims damaged and real criminals off the hook. This privatization of profit and socialization of risk obviously leads to a huge amount of moral hazard. In a newly awakened RMWB organizational behaviour would change drastically.

Oil sands operations like Syncrude and Suncor would no longer be recognized as legal entities. Rather they would be viewed as a group of individuals (each legally accountable) working and cooperating for a shared goal...the extraction, refinement and sale of oil products. Individuals who understand that they are now 100% accountable for their own actions and may have to pay for restoration if they cause damages, would become much more sensitive to other people and property owners that might be damaged by their operations. So for example property owners downstream in Fort Chipewyan would no doubt be constantly monitoring water levels and quality and would be entitled to restoration of any damages caused by individuals engaged in operations upstream. DRO's would be monitoring safety and environmental factors extremely closely to mitigate the risk of having to pay out massive amounts of insurance in the way of damages. 

Right now if an employee makes a mistake the owner of a company isn't likely to have to pay personally for that mistake, however in this new climate they will. Company owners (individuals that raise the capital and own the means of production) in this new environment would have a difficult time maintaining their personal span of control, so development of any mega-corporations is highly unlikely. It is likely that with an open market of competitors raising the capital and equipment necessary to develop the oil sands, all with an increased sensitivity to environmental and safety factors because of personal liability, that large operations like Syncrude and Suncor would split into smaller companies and sell off capital equipment and land to start-ups and that these operations with tighter spans of control would result in more efficient production of product.

What about state owned entities like CNOOC and other state monsters like LLC's and mega-corporations?

A prerequisite to engaging in economic activity in an anarchic region like this would be representation by a DRO. It would just be too risky to engage in transactions with strangers without insurance like this. That means you would need a DRO subscription to drive on roads and highways, purchase any items, rent any property etc. Selling to a known criminal would put your social credit rating at risk and it is unlikely that an existing operation would sell to what would be recognized as a mafia owned organization. If CNOOC or some other criminal organization did manage to either homestead or buy an oil sands operation they would find it extremely difficult to operate without being able to drive on roads, buy building supplies, pay their staff etc. They'd need to bring an army and military invasion by a state other than Canada would be highly unlikely.

Dealing with criminal customers outside the anarchic RMWB zone, in places like Canada, the U.S. and China will be unavoidable if one wants to sell oil. If I owned a DRO I would give discounts to my oil sands clients (who in turn would be able to sell cheaper oil) who found customers that were either peaceful private citizens willing to sign an NAP agreement and possibly even move to RMWB, or were willing to sign on to our NAP outreach program, or were willing to provide guarantees that they would not invade. Guarantees might include things like a large sum of money put up as invasion collateral paid by the customer in a trust account administered by a trusted 3rd pary that gets paid out to the DRO in the event of aggressive actions. These are just some ideas off the top of my head, but you can see that keen entrepreneurial minds competing to provide the best service can find millions of ways to incentivize good behaviour.

In this type of society you have much higher incentive to behave well. Oil sands would be developed in a much more environmentally conscientious and cost effective way. In fact, given that the rest of the world needs the oil in this anarchic zone, the rest of the world would be incentivized to be on its best behaviour moving towards a new enlightenment.

Conclusion

If you aren't steeped in libertarian or anarchic philosophy, this post will likely have confused or irritated you profoundly and if your curiosity has been tickled then I would suggest delving into some of the references below starting with the first one. If you're a fellow freedom lover then I hope I've given you some food for thought. I believe these thought experiments are useful because they make us think about how to apply the NAP to our own lives and create and expand our own zones of anarchy, even if its just ourselves and our family and friends to start, and incentivize and spread enlightenment values and virtue to those that are within our sphere of influence. I'd love to hear you thoughts :)

References

Philosophy of Liberty

http://www.youtube.com/watch?v=muHg86Mys7I

Dispute Resolution and Private Law

1 - http://www.freedomainradio.com/free/books/FDR_5_PDF_Practical_Anarchy_Audiobook.pdf
http://www.youtube.com/watch?v=S4CcannofnY&list=FL_tt6Italqaq5AQUegSNnTA&index=1

https://mises.org/store/Product2.aspx?ProductId=190&CategoryId=0

http://mises.org/rothbard/lawproperty.pdf

Geographical Defense

http://mises.org/books/private_production_of_defense.pdf

http://www.cbsnews.com/video/watch/?id=4639016n (Kahnawake nation is featured starting about 7.5 minutes)

2 - http://en.wikipedia.org/wiki/Kahnawake

3 - http://en.wikipedia.org/wiki/Oka_Crisis

Property Rights

4 - http://f4fs.org/murray-rothbard-on-the-fundamentals-of-property/

http://people.cohums.ohio-state.edu/hubin1/ho/Locke%20Theory%20of%20Property.pdf

Privatizing Water

5 - http://mises.org/journals/scholar/waterprivate.pdf

http://www.youtube.com/watch?v=YeJhVtJKJU8&list=FL_tt6Italqaq5AQUegSNnTA&index=105