The Parable of the Pawnbroker: A Libertarian Twist
By: Barry Belmont

I believe this story was originally related to the internet via a person called “wiploc” over at talkrational. I liked it so much that I’ve decided to present it here in modified form. Please do enjoy

The Parable of the Pawnbroker

I was a pawnbroker… This guy came into my store, drew a chain out of his right-side pocket, and said, “How much will you give me for this fine gold necklace?”

…I politely looked at his necklace. It was fake. I pointed out to him the chintzy clasp, totally unlike what would be on a necklace of value. But he still insisted that it was real; so I cut the chain with a file, ready to test it with acid. But I didn’t need the acid: the inside was brown, not even gold in color.

The guy dropped the chain in his left pocket. He drew another chain out of his right pocket, and said, “This one’s the real thing.” This one’s the real thing? That was like admitting he’d known all along that the first one was fake.

I showed him that this one didn’t say, “14K,” like real gold would. It said, “14KEP,” meaning it was electroplate. It wasn’t even pretending to be real. But the guy still insisted it was real. So I cut it with my file, and showed him it was another fake.

Can you guess what he did then? He dropped it into his left pocket, pulled a third chain from his right, and told me that this one was real. I was happy to file this one too, ruin it, so he couldn’t try to fool anyone else.

He pulled out a fourth chain. He said it was real. I showed him that it wasn’t.

…First pattern: When this guy said a chain was real, that didn’t carry any weight. His apparent sincerity was an act or a pathology, not an indication of actual truthfulness. His saying something was legitimate didn’t make it legitimate, didn’t even increase the likelihood that it was legitimate.

Second pattern: This guy’s chains were fake. I had yet to examine his [next] chain, but I already believed it was fake.

I was willing to be surprised; if the chain turned out to be real, I would have accepted that. But I believed it was fake. And that was a justified belief, reasonable in the circumstances.

This story is analogous with my experience with political beliefs. Somebody will tell me that the human greed is a solid gold proof for the necessity of a State. I point out that it is patently absurd, and he pulls out another argument.

He doesn’t blush or backpedal. He makes no apology for having indiscriminately swallowed a lie and repeated it as a truth. He doesn’t tell his friends, “Hey, don’t be using thiss argument anymore.” No, he just tells me that the free trade is exploitative and thus this is an absolute proof for the State to exist. When I point out that this argument is no stronger than its opposite, forced labor and taxes, what does he do? Is he taken aback? No, he goes on to speak of defense services and laws and order and militaries and roads and airports and claims that none of this could have come about without the guiding hand of an intelligent designer. When I show that there is a grandeur to this view of life, that each and every one of those things can be provided freely through a market systems just as good or even better without the need of coercion, does he say he’d better rethink whether his government should really exist? Of course not. He pulls out another argument, and says, with all the sincerity of a seller of fake chains, “This one’s the real thing.”

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View Comments Posted in The State
  • Keabag

    Wait why is human greed not evidence of the necessity of the State? And don't say that it makes the State corrupt because that only creates the necessity for a certain kind of State, where the greed of some is balanced by the greed of others. Why is “we need something to protect our freedoms” not a good enough reason?

    And I also feel that the analogy is screwy. In order for a belief to be true, it can't be wrong anywhere.

    Take global warming for example. I didn't used to believe it was happening, but I was shown to be wrong. I still didn't believe it was human caused, but I was shown to be wrong (at least to a degree). I still didn't believe it was due mainly to CO2, but I was shown to be wrong. But even now when I do accept that CO2 is a pretty large factor to global warming, I still don't think its bad or dangerous. Basically, while I have been wrong on many aspects, that is no reason to stop thinking, or to delegate that responsibility to others.

    I mean just look at Keynes, he was right on the depression when most people doubted, but that doesn't mean his bullshit should pass for gold.

    Everyone is right on some things, but wrong on others.

  • Barry Belmont

    I'll make you a deal. If you read everything I have written on this site and watch the anarcho-lectures, and still see “human greed” as evidence for the necesity of the State and still see the necessity of the State for such things as “defense” and “law” and what not…then…then I will answer you with earnestness.

    Right now, it just sort of seems like you have never heard me talk about this at all ever. And it's frustrating. Because I've already given my reasons. I shouldn't have to repeat myself so often.

    So…the answers to your questions are on this site (check Anarchocapitalism II)…

  • Keabag

    I'm not going to read everything you've written on this site, but I will check out the anarcho-lectures and “human greed”. How do I find these?

    And no I haven't really heard you talk about this (at least not in relation to these points). The only time I've ever talked to you in any sort of length is ten days ago, and I don't think we covered the topic.

    But I will check out anarchocapitalism II.

  • Keabag

    Alright, I watched your presentation-Anarchocapitalism II (very nice by the way).

    There are a few problems though (I didn't see the Q and A section posted, so if these are repeats, I apologize).

    1. You compare an ideal system to a real system throughout the lecture. This is patently unfair. You should only be able to compare an ideal system to an ideal system. To say that the system of government is not working as it should is different from saying that there is no possible system of government that could function well.

    2. In discussing human nature, you fail to recognize the inherent in-group out-group mentality intrinsic in us through evolution.

    3. You assume that the natural world is zero sum. This is patently false. If I kill a deer or make a tool, it raises the amount of goods, hence not zero sum-this is unrelated to the overall structure of the argument so it doesn't much matter either way.

    4. You address how private courts may be offered to the poor, but not private police.

    5. The best parts of the court system you propose are intrinsic to the state court system we have-trial by jury of peers, elected judges, etc.

    6. The prison system you propose is incentivized to hold people for longer than they deserve, thus leading to slavery.

    7. Private arbitrators are beholden to those that pay their bills. If A sues B under A's system, the courts are likely obligated to him (otherwise he will feel slighted and switch systems). A similar situation results from private protection.

    8. You tacitly assume that people will follow the direction of the courts because it is in their best interest, as with Merchant Courts. This is not the case, as if you were to be sentenced to death or if you have little to lose (i.e. you don't own a business) you likely will gain more by rejecting the system. A thief has nothing to gain from the courts, but everything to lose. Thus coercion is necessary.

    9. The Free Rider problem is most likely to be solved by resorting to coercion.

    10. You suggested that gang wars between police are unlikely to occur, but yet they do with gangs already. Nevermind that they are more costly than they are worth, it happens.

    11. You claim that cartels between police will fall apart, yet this argument could be used for cartels in general, but cartels do exist.

    12. Again, this is a point unrelated to the argument, but the stealing-a-radio-to-play-at-YMCA example goes against your current beliefs, where you claim that well-being is more valuable than freedom, so if stealing that radio makes more people better off than it hurts the owner, you should support it.

    Now, in light of these differences in opinions (there were others, but I forgot to write them down), let me tell you what I think will happen in anarchocapitalism. People will group together, most likely along geographic regions, but a wide variety of criteria will cause this to happen. Most will develop a coercive system where you either contribute to the central authority or you are forced out. But those that don't will have problems of who the police are to protect and who the courts are to support. Most of them will decide that whoever pays the most gets the most benefit. This will leave that rich figure (or rich group) with an inability to be held accountable for their actions. In some cases people will rise up against said person(s), but in other systems they will go along with it. In some of these cases he will enforce his will upon the people thus resulting in a dictatorship (or oligarchy). In those where anarchocapitalism holds to the ideal, outlaws will have no reason to obey the system, thus resulting in either coercion or chaos. Inevitably one group will take the goods of another group, and often enslave them. You only need to read the first five books of the Bible to see what happens early in the switch from tribalism to capitalism, and its not pretty.

    All the important steps of this result from only two assumptions. People naturally form in-group and out-group relations. And morality only applies to those considered in the in-group.

    I even have case studies to show that I am right. All cultures started out tribal. In nearly every case there was no coercion to start off with, the main enforcement was exile. As soon as a way to accumulate wealth came about (usually, but not always, resulting from agriculture), all of what I said came to pass. This has occurred in the Middle East, China, Africa, and South America. There is only one example where this is not the case, and that is the Northwest coastal Indians (and that is only because they have a culture where you can only increase in social standing by throwing parties and giving things away).

    The better way to accomplish an ideal form is to realize that government is inevitable. Then begin to figure out what structure is necessary to maintain maximum freedom and fairness.

    Perhaps as with the Northwest Coastal Indians it may be possible to engineer a culture that will not inevitably fall into coercion or extinction, if so this is the only way to promote anarchy. And indeed much preferable to any form of government I can conceive of.

    But since, I have not read everything you have written on this site nor have I watched the other lectures, nor have I seen the “human greed” lecture, I can understand if you do not respond.

  • Travis Hagen

    You can just use the search to try and find articles, or the look through the tags. It shouldn't be too cumbersome to find what you're looking for.

  • Barry Belmont

    I suppose you gave it a try (though a ~1000 word response forty minutes after a seventy minute lecture seems a bit suspect). I believe we could have a long and fruitful discussion about these issues, unfortunately as this is the end of the semester I am finding myself swamped with homework and studying and lack the time to answer 12(?) distinct points.

    But I do not want to brush you off, so here are two things that I suggest you do so that we may engage in this debate.

    1) Shoot me an email at [email protected] with the specific question you have in mind. What exactly is your biggest objection to anarchocapitalism? What are the conditions that I need to meet to convince you that anarchocapitalism is a good idea? Like I said, school is my focus right now, but hopefully our email exchange will not pressure either of us to respond in haste and rather enhance our conversation.

    2) If you're actually interested (and not just in a critical mood), then many of your points can be answered in the work of others. Consider checking out Rothbard's “For a New Liberty,” “Power and the Market,” and “Man, Economy, and State”; Michael Shermer's “The Science of Good and Evil” and “The Mind of the Market”; Walter Block's lecture series “Radical Austrianism, Radical Libertarianism”; maybe even some of David Friedman's works. Most of these can be found online.

    To address your original concerns, mostly about human nature and what not, try to check out Matt Ridley's “The Origins of Virtue,” Michael Shermer's “The Science of Good and Evil,” and Robert Wright's “The Moral Animal.” These books present the evidence upon which my entire philosophy rests.

    And if it's any incentive, if it can be shown that people are not significantly more “not-bad” than “bad” then I am completely wrong in my beliefs. So yea…that's all it would take to make me completely denounce anarcho-capitalism.

    Be sure to shoot me an email, I feel this could really go somewhere. I will try to respond to the best of my ability, time permitting.

  • David Zemens Ⓐ

    This is a really good parable - I've never heard it before, but thanks!

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