...I was thinking about this in relation to BTC and decided to make a thread, since it has broader implications (e.g. re anarcho-capitalism).
I. The Costs Of Doing Business In The Black Market Are Extremely High.
(1) Since the state will not enforce contracts for illegal goods/services, black market actors either have to forgo contracts (severely limiting their activities) or take on the risks and costs of enforcing their own contracts (e.g. by hiring goons or putting themselves under the umbrella of a larger criminal organization).
(2) Since black market actors cannot make use of the police or courts, at least in matters related to their illegal activities, they are more vulnerable to violence from other black market participants (e.g. from competing producers), and have to bear the costs of their own defense (once again, by either hiring their own goons or putting themselves under the umbrella of a larger criminal organization).
II. The Black Market Is Not A Free Market.
As explained above, black market actors must rely on their own resources to both enforce contracts and defend themselves from violence by other black market participants, since they have no recourse in the state's law enforcement system (they are effectively ostracized). Those who cannot afford to hire their own goons end up under the aegis of larger criminal organizations (which formed precisely to meet the demand [their own] for enforcement). These criminal organizations heavily regulate their corners of the black market: e.g. by enforcing territorial monopolies ("turf") regarding the sale of illegal goods/services and by collecting de facto taxes ("protection money") from those operating under their aegis. The state is absent from the black market, but aggressive interference with the market remains.
III. Hence, No One Chooses To Operate In The Black Market, Unless...
(1) Their business is altogether illegal (e.g. drugs, certain types of guns, prostitution), such that they have no choice,
or, (2) The costs of doing business in the white market are even higher (e.g. Venezuela).
Site Information
About Us
- RonPaulForums.com is an independent grassroots outfit not officially connected to Ron Paul but dedicated to his mission. For more information see our Mission Statement.
Connect With Us