Somalia: It turns out that piracy isn't the only thriving industry

Originally published on campaignforliberty.com 01/23/11 01:15 AM

In my advocacy for limited government and free markets, I often explore the extreme reaches of capitalist theory, including the concept of voluntaryism (also known as anarcho-capitalism or market anarchy). Voluntaryism refers to a hypothetical economy in which all functions of government are provided by voluntary free-market institutions. This is sometimes referred to as a "stateless society". In writing about these concepts, my goal is to get the reader to seriously question his or her assumptions about those functions for which government is "necessary" and to consider possible free market solutions. I have no expectations that most readers will suddenly reject the necessity of all government. I do, however, hope that they will seriously rethink just how little government is too little government.

During a recent online debate, in which I was arguing the plausibility of a prosperous stateless society, my opponent brought up the example of Somalia. On the surface, it seemed like my adversary had raised a very good point. Then, I decided to do some research on Somalia.

The Somali civil war, in 1991, destroyed most of the country's major infrastructure and left it without effective formal government for the last 20 years. Telecommunication was completely destroyed and most of the industrial equipment was looted and sold for scrap. After the civil war, the country was starting over with next to nothing. With no government to speak of, conventional wisdom would hold that the country would experience a continuous spiral toward chaos.

I visited the online CIA World Fact Book, a source which certainly has no motive to promote the feasibility of market anarchy. Even as an eager student of voluntaryist theory, I have to admit that the CIA report on the Somali economy still surprised me:

"Despite the lack of effective national governance, Somalia has maintained a healthy informal economy, largely based on livestock, remittance/money transfer companies, and telecommunications. Agriculture is the most important sector with livestock normally accounting for about 40% of GDP and more than 50% of export earnings. Nomads and semi-pastoralists, who are dependent upon livestock for their livelihood, make up a large portion of the population. Livestock, hides, fish, charcoal, and bananas are Somalia's principal exports, while sugar, sorghum, corn, qat, and machined goods are the principal imports... Somalia's service sector also has grown. Telecommunication firms provide wireless services in most major cities and offer the lowest international call rates on the continent. In the absence of a formal banking sector, money transfer/remittance services have sprouted throughout the country, handling up to $1.6 billion in remittances annually. Mogadishu's main market offers a variety of goods from food to the newest electronic gadgets. Hotels continue to operate and are supported with private-security militias."

- CIA World Fact Book (https://www.cia.gov/library/publications/the-world-factbook/geos/so.html)

Although the progress is slow, everything described in the CIA report follows textbook theoretical anarcho-capitalism. The types of solutions that economists speculate might appear under such circumstances actually are appearing!  Other sources seemed to support the CIA's assessment. A 2007 report in the Journal of Comparative Economics, by Economics Professor, Peter Leeson, suggests that the country is largely better off since the fall of government:

"Indicators of Somali welfare remain low in absolute terms, but compared to their status under government show a marked advance. Under statelessness life expectancy in Somalia has grown, access to health facilities has increased, infant mortality has dropped, civil liberties have expanded, and extreme poverty (less than $1 PPP/day) has plummeted. In many parts of the country even security has improved. In these areas citizens are safer than they've been in three decades (UNDP 2001). Somalia is far from prosperous, but it has made considerable strides since its government collapsed 15 years ago."

-Professor of Economics Peter Leeson, 2007, Journal of Comparative Economics, "Better off Stateless: Somalia Before and After the Collapse"(http://www.peterleeson.com/Better_Off_Stateless.pdf)

With regard to education, Professor Leeson cites UNICEF data which shows that the number of primary schools has nearly doubled since the fall of government. Before the civil war, Somalia had only one university. Since that time, new universities have cropped up in four cities. Leeson also weighed in on the overall security situation for the average Somali.

"the widespread violence that ravaged Somalia in its first year without government vanished considerably by 1994. By the mid-1990s peace prevailed over most of the country"

-Professor of Economics Peter Leeson, 2007, Journal of Comparative Economics, "Better off Stateless: Somalia Before and After the Collapse"(http://www.peterleeson.com/Better_Off_Stateless.pdf)

This was echoed in a 2006 working paper for the Independent Institute:

"U.S. and UN humanitarian and military intervention from 1993 through 1995 failed to restore peace. In fact, the Somalis united against the foreign presence and eventually forced the U.S. to withdraw. Since the U.S. withdrawal episodes of criminal behavior and violence have occurred, but not at the levels seen when factions vied to control a single government. In fact, with the relative peace, there is evidence that Somalia has been able to increase its standard of living while remaining stateless."

-Benjamin Powell, Ryan Ford, and Alex Nowrasteh, 2006 "Somalia After State Collapse: Chaos or Improvement?" (http://www.independent.org/pdf/working_papers/64_somalia.pdf)

In a 2011 article in The African Executive, entitled "Somalia: the Resilience of a People", Muuse Yuusuf describes growth of the airline industry, going from a single carrier before the fall of government to fourteen different private airlines which are now providing international service. Yuusuf also writes that Somalia's percentage of paved/maintained roads meets or exceeds that of its neighbors with conventional governments. The gross national income per capita is actually higher than that of Kenya and Ethiopia (http://www.africanexecutive.com/modules/magazine/article_print.php?article=4693).

It's certainly not the kind of place to which most of us would like to retire, but Somalia was not a safe and prosperous nation when it had a government. I would assert that they have not built sufficient capital at this time, but there is no reason to believe that they could not do so in the continued absence of government. Consider that, in its infant stages, any economy will have a shortage of capital. One example is with regard to food. At the economy's outset, many people will live at the level of bare subsistence, while still others may starve. As capital is accumulated (i.e. machines, storage facilities, advanced agricultural techniques, and food processing methods), food will become more plentiful and will reach a wider range of consumers in greater quantities*. Eventually, obesity becomes a more widespread problem than starvation. There is absolutely no reason to assume that the same principle could not hold true for security. Right now, Somalia has a shortage of security. With time, the security agencies and independent militias can improve their efficiency and productivity, providing safety for a wider spectrum of consumers. The direction in which the country is moving seems to provide proof of concept for a stateless society. It demonstrates that economic growth and improved infrastructure are possible without government.

It should be noted that knowledge of the theoretical principles of a pure free market society would likely serve to improve Somalia's chances for becoming a prosperous nation without government. For example, a society which has never seen fire or the wheel will progress much more slowly than one which is already aware of these things (and a backward society may very well die out before ever reaching a high standard of living). While the experience of Somalia provides strong evidence to support free market theory, it's a pretty safe bet that the average Somali militia leader is not a regular reader of such anarcho-capitalist academics as Murray Rothbard and Hans Hermann Hoppe. Given this fact, there is the unfortunate possibility that the Somali people will gradually accept the familiar power structure of government and other coercive organizations, instead of looking toward voluntary commercial institutions to provide the infrastructure needed for a modern society.