One very anti-socialist (but useful) definition of socialism might be the organized externalization of all costs. By that definition, anarcho-capitalism would be the opposite: the internalization of all costs.
I’m guessing most readers of this blog already know what the Tragedy of the Commons is. It’s hard to believe that anyone can know what that term refers to and still support any degree of socialism, but the strange truth is that the man who coined the term (as recently as 1968, believe it or not) was anything but libertarian: Garrett Hardin found privatizing "objectionable," considered talk of rights and freedom meaningless, declared ethics to be situational at best, and advocated "mutual coercion mutually agreed upon" (a new phrasing for an old appeal to democratic social-contract theory, since by "mutual" he really means "majority"). The solution to the tragedy of the commons, apparently, is far fewer individual rights and far greater social power. Specifically, he advocated a sort of environmentalist eugenics: "The only way we can preserve and nurture other and more precious freedoms is by relinquishing the freedom to breed, and that very soon."
(Is it unfair to accuse him of eugenics? Am I just misapplying a loaded word to a straightforward concern about overpopulation? "At the moment, to avoid hard decisions many of us are tempted to propagandize for conscience and responsible parenthood. The temptation must be resisted, because an appeal to independently acting consciences selects for the disappearance of all conscience in the long run…." In other words, any appeal to voluntary action means a natural deselection of the best individuals. Therefore some overarching authority needs to control who gets to breed and when. I didn’t make any of this up!)
For a radically different take on the tragedy of the commons, applied in a radically different field of study, here is Bruce Benson on the government court system:
Economists often suggest that the solution for a commons problem is allocation by willingness to pay — that is, price allocation. This would reduce litigation by discouraging the frivolous, low-valued use of the justice system. But several justice groups would vehemently resist such a change. For example, "lawyers are reluctant to accept any rules that discourage litigation, since litigation is their bread and butter. While the tragedy of the common may have a disastrous effect on litigants, it is a bonanza for tens of thousands of lawyers who graduate from law school each year."[62] Actually, not all litigants view the consequences of the allocation system as disastrous. There are special interest groups who benefit substantially because they can use the judicial system with its current rationing mechanism. Neely cited some of the "endless" number of examples of such "frivolous disputes" or "non-disputes."[63] For instance, in most landlord and tenant disputes the only issue is back rent, and the court will ultimately decide that the landlord is right and the tenant wrong.[64] The tenant can refuse to pay and threaten to go to court, however, forcing the landlord to bear court costs, which may be greater than the benefit of gaining the back rent. So the landlord simply gives up. If the loser of such cases had to pay the court costs of the winners, fewer cases would be threatened or brought.
In the insurance industry, if a company wants to reduce its settlement when a house and its contents have been destroyed by fire, then the company can demand proof of the fair market value of the house’s contents, forcing litigation for full recovery.[65] In order to avoid the court costs, the policyholder may be forced to settle for less than he is legally owed. One of the most significant court costs arises directly from the commons problem, as rationing by waiting leads to court delay. Sufficient delay substantially reduces the value of the ultimate award and benefits some groups.
The longer a loser can delay a decision in a civil case, the longer he can use the money he will have to pay. Given that judgments do not include the full cost of litigation, many litigants who expect to lose have incentives to litigate. This can be a substantial benefit for insurance companies, but it can also be significant for other political interests. For example, slightly over one-fifth of the civil cases concluded in New York City in the 1979–1980 fiscal year were brought against the city government.[66] Neely reported: "New York City cannot afford an efficient court system because it would be bankrupt beyond bail-out if all the suits go to trial in one or two years."[67] When faced with several years in delay, a plaintiff may also have strong incentives to settle out of court for much less than he might otherwise receive. This benefits insurance companies, New York City, and many others who face large liabilities. Delay may also benefit guilty criminals, because prosecutors have incentives to settle and reach an agreeable plea bargain. The longer the court delays, the strong is a criminal’s bargaining position.
Political pressure to maintain the common pool character of the courts and, more generally, the entire justice system comes from many sources, ranging from business interests to governments to those involved in the legal process to those outside the law. In fact, there are many "special interests that actively seek mediocre, if not downright incompetent, court performance."[68] Any change in the current system makes the transfer of wealth from some group to another more (or perhaps less) efficient, and someone’s interests suffer. The public sector justice system will continue to be inefficient because it will continue to be part of the political battleground over the allocation of property rights and wealth. (pp. 118f)
[62] Richard Neely, Why Courts Don’t Work, p. 61
[63] Ibid., pp. 168–170.
[64] Ibid., p. 169.
[65] Ibid., p. 108.
[66] Ibid., p. 16.
[67] Ibid., p. 17.
[68] Ibid., p. 241.
Prices provide suppliers of goods and services with clear signals of what consumers want, and relative prices are an important source of information that markets use to represent the relative value of alternative uses of resources. Willingness to pay a high price to a supplier typically means that the producer is doing a very good job of providing for consumers. If that high price generates high profits, then the producer is able to employ more resources and produce more of the desired commodity. [Profits also draw competition, which will ultimately lower the prices of the most-desired commodities. -bk]
