In the course of my deployments to Iraq I learned a
great deal about economics, though I didn't realize it at the time. I hadn't
yet been introduced to the Austrian School or a Rothbardian view of
laissez-faire capitalism. Looking back, however, I can see quite clearly that
in several important areas voluntary systems not only existed in that country
but thrived.
My first deployment was to Baghdad, that ancient
Mesopotamian city positioned on the Tigris and Euphrates rivers. It was there I
discovered how, even during the most violent and unstable times, markets can
adapt to the needs of consumers and peacefully provide essential services to
humanity.
The focus of this article will be on economic provision, rather than the war itself. However, it's important to note that the following free-market solutions have blossomed in spite of being in the heart of a country ravaged by economic sanctions and all but total war. Not only was the US-led war destructive of the physical means to provide such services; it also destroyed the institutions that delivered them, adding to the difficulty in restoring them.
Utility Services
In the United States virtually all utilities are a
service provided by government. Whether they are directly controlled by
municipal governments or simply regulated to the point of being creatures of
those organizations, relatively few cases exist where the market provides
utilities unhindered. Baghdad, however, was not so tightly regulated.
Being the capital city, it is home to all of the major
government offices and thus has a priority for electrical power; this was true
before and after the invasion. However, after a decade of brutal sanctions,
followed by a relentless bombing campaign of "shock and awe," the
socialized infrastructure was entirely unfit to meet demand. The solution
arrived at by the Iraqi people was brilliant.
Taking advantage of economies of scale, residents
would pool their resources and either buy a large generator or contract with
someone who already owned one. Then a mechanic would be hired to maintain the
generator, guarding it against thieves and ensuring it was properly fueled. The
more clients a neighborhood had, the lower the consumer cost and higher the
profits for the owners.
The one flaw in this system was that fuel was supplied
by a centrally planned government agency. As might have been expected,
shortages were frequent, leading to power outages. Had fuel been freed from the
highly politicized and bureaucratic web of government, there's no doubt an
equally innovative and peaceful solution would have arisen to address this
need.
Money
Another pocket of freedom that many Iraqis enjoy is in
market-based currency, or something similar. After the collapse of Iraq's
government, the central bank no longer issued notes for the Iraqi dinar. At
this time the Coalition Provisional Authority (CPA), which was the US-lead
interim government, began a large-scale influx of the US dollar. Between large
shipments of currency from the CPA, and the widespread use of the dollar by
hundreds of thousands of troops, its supply quickly increased. And while many
thought the result would be large-scale abandonment of the dinar, quite the
opposite in fact occurred.
B.K. Marcus describes the result here, wherein the
dinar actually increased in value and was in many cases the preferred currency
by many in the country. One primary reason seems to be that the value of the
dinar remained fairly constant, due to its supply being more stable. But other
currencies existed, some fiat-based, others springing from the market.
In another account of the market in Iraq, Edward
Gonzales described how in the western region of the country, sheep and bottled water
acted as money. Their value floated based on the season and relative quantities
of one or the other. While I never witnessed trades made with livestock or
other commodities, I did see that not just dinars and dollars were used for
exchange.
My second deployment was to the Babel province, south
of Baghdad, and the Iranian rial was fairly common there. This was particularly
true in the Shia towns and neighborhoods, as might have been expected. I was
not familiar with the exchange ratios among the currencies, but all were used
in trade. It was not uncommon for a man's wallet to contain two or more of a
different states' moneys, even all three at times.
Defense Services
Perhaps the state's longest running and most
institutionalized monopoly is that of defense. Advocates of limited government
will quickly concede that most services ought to be provided in a free market.
This provides incentives for firms to compete for market share, thus raising
quality while driving down prices. One service that must be provided by the
state, according to everyone from socialists to minarchists, is defense of
persons and their property.
Even many who claim to believe steadfastly in free
enterprise will concede that defense is the sole purview of government. By
doing so they implicitly argue that the same economic laws that govern the
provision of trash collection are rendered impotent when applied to defending
property. This certainly does not hold water theoretically, nor is it true when
applied to the market in Iraq.
In most of the country there were multiple layers of
government police and military, and martial law had become the norm. Despite
(or perhaps because of) the saturation of the market by government defense
monopolists, private services were a valuable commodity. In Baghdad, circa
2005, there were 175,000 US troops engaging various guerilla forces. On top of
that, the government's police never bothered with the pretense of scruples and
corruption was standard fare. Private security quickly became a profitable
enterprise.
It is often suggested by advocates of a free society
that, theoretically, defense would be an individual endeavor. So long as
individuals are free to own property, goes the argument, they'll be able to arm
themselves for protection. This is largely how it played out in Iraq. Each
adult male was permitted to own one AK-47 rifle, for personal defense, and gun
ownership was nearly ubiquitous. (This allowance was expanded later to allow
shotguns for hunting).
As an added layer of protection, many neighborhoods
employed night watchmen. These were typically middle-aged men who were
contracted by their neighbors to patrol the streets and defend against thieves.
Their teenage sons would often assist, and we came to know the groups well.
Some took employment in the markets, hired by the business owners to protect
commercial interests. Others were posted near residential street corners,
keeping a watchful eye on their clients' homes through the night.
These were trusted men in the community, who had found
a way to earn a living in a ravaged economy by supplying a highly valued
service to their fellow man. They did as good or better a job than we did at
securing neighborhoods. Recognizing this, we equipped them with infrared
lights, indicating they were friendlies, to help protect them from our
helicopter gunships and other units passing through the area at night.
Conclusion
In each of these cases, where proponents of the state
argue we must have active government involvement, individuals found voluntary,
peaceful solutions to their problems. In spite of the failure by both the Iraqi
and US governments to provide essential services, such as adequate electrical
power and the defense of property, private solutions quickly sprang up among
the violence and disorder. Money too was not something that required a
government fiat to make trade possible. The market, unhindered by the state,
provided a currency by which individuals could exchange with one another.
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