Rule of Market – The Next Leap Forward
History began with the Rule of Man, which is where those who make the law are not accountable to those under the law, and those who make the law are above the law. The law is thus likely to be inefficient, subjective, arbitrary, and applied unequally. Government under the Rule of Man is illegitimate because people only support it under duress, and no competing law is allowed. Government under the Rule of Man is also a monopoly on the right to initiate force or fraud within a geographical boundary.
A great leap forward from the Rule of Man was the Rule of Law, which is where those who make the law are accountable to those under the law, and no man is above the law. Unfortunately, government under the Rule of Law is still not legitimate because most people support it only under duress, and no competing law is allowed. Like under the Rule of Man, government under the Rule of Law has always been a monopoly on the right to initiate force or fraud within a given geographical boundary. These remaining drawbacks with the Rule of Law are harmful in their own right, but they are also the seeds of its inevitable regression back to the Rule of Man – unless we evolve further.
The next great leap forward will be the Rule of Market, which is where the law is a product like any other. An individual could produce his own law, or choose one of the products produced by others, or choose no such product at all. The market would be the judge. Government under the Rule of Market would allow competition, and few, if any, would purchase law that claimed the right to initiate force or fraud against them.
In the Rule of Market, the law is voluntary – just like any other product. In fact, everything is voluntary. Even money is just a product like any other.
How Rule of Market Works
It will be necessary to look at some everyday examples to understand the Rule of Market because, although it is quite simple, it is quite difficult to understand given a lifetime of conditioning by television and government schools and universities. Such conditioning promotes a single groupthink while squashing the imagination, independent thought, and critical thinking skills that would allow one to escape the groupthink.
We will look at two everyday examples. In the first example, you will have discovered that you entered into an unfair contract. In the second example, you will observe how the Rule of Market deals with gang violence and how tragedy is eventually overcome with hope and unlimited potential.
In both examples it should be clear that Rule of Market is simply individual freedom, which has always been more compatible with human nature, and which unlocks the healthy potential of self-interest, competition, and reputation, whose benefits are further magnified by today’s tools, such as the Internet, cameras, and guns.
Breaking an Unfair Contract
Eventually, under the Rule of Market one could be confident about entering into any kind of agreement without being cheated or tricked, but to see how such harmony would have evolved, it will be necessary to go back to an earlier point.
Suppose you voluntarily entered into a contract with another party because, although they had a mediocre reputation, they offered terms that were just too good to pass up, which they had to do to compete with those who had better reputations. Then you discovered you were tricked, and so you decided it was in your best interests to only fulfill the part of your contractual obligation you felt was fair. You would then be wise to make your case on the Internet for two reasons. The first reason is because in the future, other parties (the market) would look at your reputation and decide on what terms (if any) they would be willing to enter into any given type of contract with you. The other reason is because the other party will be making its case on the Internet as well, and the claims by the other party could hurt your reputation if you allow them to go unchallenged.
You would be wise to hire an advocate to help you produce your side of the story. The role of such an advocate would be similar to the purpose of a lawyer today.
You would want to maintain an online presentation that explains how your principles would guide you to react in certain scenarios and how you are defining your terms. You could think of your statement of principles as your law. One purpose of such a presentation would be to let potential partners know what kind of agreements you might find acceptable as well as what to expect once you entered an agreement. Another purpose would be to make it harder for anyone else to misrepresent you, and yet another purpose would be a guide for your children. Your statement of principles is another place where you could hire an advocate to help you produce it.
You would want to hire one or more reputation rating companies to publish an evaluation of your side of the story. Let’s refer to such companies as Reputation Bureaus. Such a role would be similar to the purpose of a credit rating agency. Each reputation bureau would decide whether your actions were consistent with the expectations you created with your statement of principles. They would decide the extent to which your actions were justified given the objective facts of the case, and they would decide the extent to which your actions were justified given the ambient culture. They would also be evaluating your side according to their well publicized rules, which could be thought of as their “law”. Then they would adjust your reputation score accordingly, and of course, the weight of their decision would depend on their own reputation. Every reputation bureau would have an independent rating for you.
You would want to pay more to choose a reputation bureau with the best reputation, which is one that understands it cannot afford to ever appear biased or to have cheated in any way. Otherwise, its rating would carry far less weight with others. Its reputation would also depend on its law being fair and unambiguous.
Note that if your statement of principles and your contract used common components found in other statements and other contracts, then evaluation would be easier and thus cheaper. On the other hand, if you are like me and insist on a custom statement of principles, then you should expect to pay more.
Suppose the reputation bureaus you hired decided that your actions were consistent with your stated values and were thus expected, and that overall your actions were mostly justified both objectively and given the ambient culture. Also, your actions were mostly acceptable under their law. Therefore, given a potential future contract, the other party would probably just look at your reputation score and decide that they would be willing to contract with you (in spite of your having broken a previous contract), but that party might for a slightly higher interest rate (or slightly more collateral) to reduce its risk.
We chose your case because it was a tipping point. Your reputation bureaus each decided that to some extent the other party had intentionally tried to trick you, and that their behavior was part of a pattern, and thus they dinged the other party’s reputation considerably. The other party knew this was the likely decision and thus hired their usual reputation bureau who they could depend on to give them a good rating. However, a few years of propping up the bad behavior of such companies had also cost their reputation bureau some of its reputation.
Just as the other party’s reputation had been propped up, their reputation bureau’s reputation had been propped up by other dishonest reputation bureaus. Over time the dishonest companies and reputation bureaus had learned they could only depend on each other to maintain their reputations, and thus they were vulnerable to sudden crash – like a stock market bubble that had gotten too out of sync with reality.
Your case precipitated a cascade over the next few months where the other party and all of its cronies lost most of their reputation with the honest reputation bureaus and thus lost most of their business so suddenly that they had to liquidate their assets, which were bought up and put to better use by their honest competitors.
The people called it creative destruction.
Given just the one example about breaking an unfair contract, it should be clear how one would finally be free to pursue one’s dreams while simultaneously choosing to act more responsibly – all because one would value one’s reputation even more than one values one’s credit rating today, but the full benefit of the Rule of Market goes so much deeper than that. It could apply in any conceivable day-to-day scenario, and thus one’s reputation would be more important in every conceivable scenario.
When every person in every scenario is finally free to pursue their dreams while having a powerful incentive to act more responsibly, then the result can only be more peace, safety, productivity, innovation, wealth, and happiness. The advent of the Rule of Market would be the dawn of a new renaissance like nothing we have ever seen before – a never ending Golden Age beyond anything in history.
Unfortunately, we are no longer moving forward. We are now moving backwards towards the Rule of Man. For example, Obama claims the power to spy on anyone, to indefinitely detain anyone, and even to assassinate anyone without due process, without accountability, and without transparency, and he has already exercised all of these powers.
We are moving back to the Rule of Man because governments are absolutely terrified of the Rule of Market because it is becoming clear to the people that the primary purpose of government is to force a majority to give their time, to give the fruits of their labor, and to even give their lives and their children for a goal they would not find worthy of such sacrifice … such as wars, pyramids, cronyism, propaganda, censorship, reeducation camps, false flags, genocide, slavery, redistribution of honest wealth, and disarming the people.
The End of Violence
Next, let’s explore how violence would be virtually nonexistent in a society built on the Rule of Market. First, we would have to go back to a point before the initiation of force and fraud had become almost non-existent to find out why such behavior had become so rare.
Suppose a society had adopted the Rule of Market not quite three years ago, and some people still did not value their reputation. In this case Leroy’s daughter Jada had dated a young thug, Jamal, who thought his gang membership protected him from the Rule of Market.
After Jada decided to end the relationship, Jamal decided to break into the family’s home at night and make her leave with him. He brought his four badest gangstas with him and they all had Glocks.
Before the advent of the Rule of Market, the gang’s strategy would have worked, but under the Rule of Market, families had changed. Most people understood that every family was responsible for its own safety and completely free to provide that safety. Most people also understood that everyone’s future had become unlimited, and perhaps most importantly, most people understood that everyone had become free to do the right thing.
Leroy and his neighborhood guardians always did the right thing, and their individual reputations reflected that; whereas, Jamal and his gang, the last gang in their neighborhood, often initiated force or fraud, and their reputations reflected that.
Jamal did not understand that under the Rule of Market, most people, including Jada, had developed hope and a sense of self-esteem. She would not come back to him like other girls had done before. She had thought she could change him, but she now understood that she could not.
Jamal shot the door several times and it would not budge. The gang then had to expended about 90 rounds before they were finally able to kick it in. This only took 50 seconds, but they were pretty mad at this point because they had first encountered a door like this just two weeks before, although in that case no one had been home and they had been in no particular hurry. The only thing Jamal and his gang had learned from that experience was to wear hearing protection when shooting a door. Jamal did not learn how lucky he was that no one had been home.
Leroy and his neighborhood guardians had known that Jamal and his gang were likely to try this. It was their MO. That is why Leroy, at great personal risk to himself, had tried one last time earlier that day to explain to Jamal and his gang why they should disband like the other gangs.
Leroy tried to convey the hope that had spread through the community, and through the whole damn country. He tried to explain how they were living the Reverend Dr. Martin Luther King’s dream. They were free at last! But the gang followed the Reverend Dr. Al Harpton Varakan Jackson, who preached how the country owed them and had abandoned them.
Leroy explained how Jada wasn’t like girls around there used to be and how Jada was proud and full of hope, but that just made Jamal more determined to take her.
Those 50 seconds bought by the reinforced door were sufficient for Leroy and his man inside and the two guardians nearby to take up their positions. One of them was so nervous that he suddenly laughed out loud when he remembered how they used to say, “When seconds count, the police are only minutes away.”
As they kicked the door in, Leroy had a chance to yell “stop or we’ll shoot”. Jamal and his gang took that as a challenge because they were wearing class II body armor that had stopped 9mm rounds before. They did not understand that their body armor would not stop a 5.56mm 62 grain round. Hence, they didn’t give Leroy time to say anything else.
Leroy had been very careful not to disrespect anyone in the gang earlier that day – even when they tested him, which they interpreted as a sign of weakness, but they let him go without harm. He didn’t dare tell them about the two snipers watching over him, or they would have reacted in a way that would have cost them their lives. When Leroy got home, he cried for a long time.
When Jamal heard Leroy release the charging handle on his AR-15 somewhere deep in the house, he did not understand that someone was truly willing, let alone able, to stand up to him. No one had done that before, and besides, he had his gang with him, and they had body armor.
The gang each had only two or three rounds left because they had never needed spare magazines before. They randomly fired all of their remaining rounds in about three seconds – hitting nothing. No one was within 30 feet of them.
Three seconds later they were all on the ground dying, and the guardians came to them at great personal risk, and tried to help. The adrenaline would not yet let them feel the emotional weight of the tragedy before them – the lost potential of these young men – what they could have been – until a dying gang member whispered, “I could have been a doctor.”
In just a few seconds, all of the guardians had begun sobbing uncontrollably, and the whole neighborhood came out and sobbed with them.
The guardians hired the best reputation bureau they could afford. They even sold some possessions and borrowed some money to do it. It was that important.
The company’s name was The Soul of Humanity because its law was based on The Soul of Humanity. It was physically based in Austin, Texas.
The guardians had not been able to afford the video surveillance that would have exonerated them more quickly and more thoroughly, but given the relative reputations of the survivors and the deceased, and given the testimony of witnesses and the reputations of those witnesses, the reputation of the guardians had actually increased. Nevertheless, they had killed, and there was no video, so they would be on a kind of probation for a about three years.
The story became a national story, and the The Soul Of Humanity gave them each a one year advertising contract worth fifty times the fee they had paid. That was more than the going rate, but that fact only added to the good will and new business received by the company.
One month later a sniper killed the Reverend Dr. Al Harpton Varakan Jackson, and no one cared enough to investigate. In his arrogance, the Reverend had refused to pay money to “the man” to buy insurance to investigate any initiations of force or fraud against him. Even his personal body guards lacked the will to do anything about it, nor did they have the skills to do anything about it.
Gang activity in that first year had skyrocketed before being fought down to its original level. Then it fell to 20% of its original level during the second and third year. but with the story of Leroy and his guardians, gang activity in the forth year dropped to 1% of its original level.
It would not be accurate to say that the gangs simply dissolved, instead, most transformed from thugs into guardians. Those who were once takers had become makers.
Who will build the ROADS!?
The advent of The Rule of Market was widely understood and anticipated, and yet, some people had still been apoplectic with shrieks of "Who will build the ROADS!?" In a nutshell, the answer was, "The same people who build them now." After all, how did we get the cars that drove on those roads, or computers or smart phones, and our houses, and the roads in front of our houses ... ? Of course, what such alarmists had really meant was, "For each new road, who would force dozens or even thousands of people to give up a piece of their land?" The alarmist minority needn't have been so apoplectic because it worked out exactly as most people expected.
The third such incident under the Rule of Market was the Springfield Bypass. It would raise the value of all property directly along its route, so everyone along the route wanted it and were thus willing to pay for it; whereas, some of those owning businesses along competing roads might lose some business and thus were not willing to pay for any of the bypass, so they didn't. However, there was one individual land owner along the ideal route, Mr. Schittstein, who would also benefit from the new road but who was holding out as a way of extorting the others to give him money.
In the first such incident, the holdout, Mr. Freeman, had good reason to believe that he would lose a small amount of business, so his neighbors compensated him. However, in the second such incident, the holdout, Ms. Princess, would have actually benefitted, but the people had decided to pay her anyway because she had not been excessively greedy. Furthermore, the reputation bureaus did not yet have sufficient precedent to ding the reputation of Ms. Princess. The example of Ms. Princess emboldened Mr. Schittstein to insist on too much money. He asked for 95% of the cost to route around his property safely, so his neighbors called his bluff and built the road around his property. They felt the 5% extra cost was, as one neighbor put it, "Totally worth it." The result was known locally as, "Schittstein's Curve," which, his neighbor’s learned, gave Schittstein an odd satisfaction.
Occasionally, the folks along the Springfield Bypass would offer to pay to replace the bypass with a route through Mr. Schittstein's property, but no matter what they offered, he always held out for more. He had understood that even with the best of safety precautions, this was to be the first such bypass, and thus someday, some oversight might cause someone to get hurt if the road were forced to go around his property, but he had been unmoved, and his reputation did not suffer for it given the early stages of the Rule of Market. Subsequent extortion was dampened, fortunately!, as the reputation bureaus rapidly adapted.
Although it would have been immoral to go back and judge Mr. Schittstein by rules that did not exist at the time, needless to say, Mr. Schittstein was the kind of person whose reputation would plummet in the future if he did not learn to treat others as he would like them to treat him, but whereas, most people learned such lessons very quickly under the Rule of Market, Mr. Schittstein did not. Eventually his wife left him as his reputation continued to plummet until, one day, tragedy struck ...
There had never been an injury on the Springfield bypass, but Schittstein's neighbors, the Goodmans, had relatives coming in from out of town to show off their new baby. They were tired and had let their teenage daughter drive the last little bit. Her inexperience combined with Schittstein's Curve had banged them up pretty good, and in an improbable confluence of events, it had cost them the life of their newborn infant ...
It was virtually impossible to get away with violence under the Rule of Market, but the Goodmans were not thinking clearly when they forced entry into Mr. Schittstein's house, where they proceeded to beat Mr. Schittstein to death as he continued to display a total lack of remorse to the end.
The reputation bureaus, had plenty of precedent by this time, and the relative reputations of the Goodmans vs. Schittstein combined with the video footage from multiple sources was such that the verdict from every bureau was, in the vernacular, "Schittstein had it coming."
Just three years later, the amazing golden age brought by the Rule of Market had produced the kind of wealth and innovation that would have saved the Goodman’s baby, but such wealth and technology was never needed in another such case because in the 75 years since, there has not been another Schittstein under the Rule of Market.
Next, read Rule of Market vs. The World.