Has there ever been a true instance of unregulated capitalism?

Question

Has there ever been any place that used unregulated capitalism?

No regulations. No restrictions. No government interference.

Answer 1

The word "True" in there gives this question all the hallmarks of a No True Scottsman question. I could say Somalia today (which has no effective government), but then I'm pretty certain some stipulation would be added to render that invalid (eg: "well...OK it has to actually have a government").

Fundamentally, if you don't have a government protecting people's stuff and keeping markets free, its honestly hard to have capitalism at all. Things just descend to warlord rule, like Somalia today, or post-Roman Europe, or the Zaibatsu monopolies of Imperial Japan whose heads effectively became their own industrial-age feudal warlords.

So, OK there has to be some government actions, but where's the line between "keeping a market free" and "interfering"? Like any situation with a referee, clearly its going to be between the person who benefits from the action and the person who doesn't. The helped side will say it was the right call, the thwarted side will say it was government interference in the free market.

The real answer here is that there's no such thing as "absolute" Laissez Faire Capitalism. That term is an adjective (like "warm"), not a noun.

Answer 2

To answer this whimsically: there was laissez faire (as you defined it), but there's no agreement that that was capitalism. The main issue revolves around the definition of capitalism. To elaborate on what James says, capitalism is usually understood to require guaranteed private property, markets, and possibly financial institutions as well. There's usually an implicit assumption that widespread outright slavery is not allowed. These three run counter to an absolute prohibition of "no government interference". Without more elaborate assumptions like these almost anything in human history qualifies as capitalism. A klojj says and historians easily confirm, trade and private property existed in some form for millenia (it's been debated how much trade did prehistoric hunter-gatherers engage in though.)

The issues surrounding the definition of capitalism have been discussed at length on economics.SE. Some pointers to those discussions:

• Did capitalism exist before the 18th century?
• Definition of capitalism

And I've asked over there (but there's no answer insofar)

• What are some historical examples of laissez-faire capitalism?

Answer 3

While relatively unrestricted capitalism was the norm in the early history of the US, it rose to a head in the late 1800's and early 1900's, with the Robber Barons, a group of industrialists in the US who used monopoly power in the absence of serious anti-trust laws to boost their wealth at the expense of the country in general.

The monopolies began with the railroads, which boosted commerce considerably by speeding up travel of both people and goods, but were by necessity monopolies, as only one company owned the tracks and the right of way.

Cornelius Vanderbilt used his wealth to build more railroads, but also used his monopoly on rail to jack prices up to whatever the market would bear. This extended to three other rapidly emerging technologies: oil/gas (Rockefeller), steel (Carnegie), and electricity and finance (Morgan). The result was unimaginable wealth for the barons (Morgan bailed the federal government out with a loan at one point), to where those four people controlled over 1/4 of the wealth of the entire country.

There weren't many regulations to keep them in check, because the barons were accumulating wealth using new technology that didn't exist before.

They also used this power to impose harsh working conditions on laborers, and even buy the presidency by financing the campaign of William McKinley.

What they didn't expect was for McKinley to get shot, and his second in command, Teddy Roosevelt, with no allegiance to them, to become an anti-trust crusader, culminating in the breakup of Standard Oil into several oil producing companies... just in time to fuel the new automobile, at a reasonable price. That was also when Henry Ford broke the monopoly on automobile production by ALAM with a court action.

After that, the rest of the barons (who were aging by then) backed off and became interested in philanthropy.

One more major breakup was enacted in 1982: AT&T who had a monopoly on telephone service.

There was an antitrust action against IBM when it dominated the computer industry and was jacking prices up, but a change in tech dethroned IBM before that action could be completed. A similar situation arose with Microsoft in the early 2000's... antitrust action was begun against them, but they were dethroned by mobile devices when they were slow to react... as most monopolies are. The current tech industry has been somewhat self regulating due to the speed at which tech changes can become popular... comfortable monopolies get caught flat footed. However, that is due to accident and not design.

So, yes, there has been unrestricted capitalism. A study of the robber barons will show the downside of no regulation at all.

Answer 4

You use the term 'laissez faire', but have tagged the question with 'anarcho-capitalism'. These are distinct concepts, and have different answers.

The general answer however regards both concepts. Capitalism requires the rule of law, and history shows that the easiest way of applying this consistently is with a state acting as mediator between parties in a dispute. Especially if the state has a monopoly on violence, which decreases the likelihood of parties escalating disputes to deadly violence or acting outside of judicial rulings.

It's important to keep in mind that anarcho-capitalism is a bit of an odd philosophy, as anarchism is usually defined by the split in the first international between Karl Marx and Mikhail Bakunin, the latter complaining that Marx's 'authoritarian socialism' would replace and not destroy the state-capitalist system. State and capitalism are widely regarded, not just by Marxists and Anarchists, as synonymous. So the Randian 'anarcho-capitalist' philosophy appears somewhat paradoxical.

Throughout world history there appears to be a mutually exclusive relationship between whether a culture is predominantly governed by legalism or honour. In the absence of legal avenues of mediation and enforcement, people resort to honour systems which demand immediate and often disproportionate violence as a means to settle disputes. For example, consider the honour based traditions which govern the Afghanistan-Pakistan borderlands, or the honour culture of gun ownership and duelling within America's Antebellum South.

Anarcho-capitalist ideas centre on the assumption that the private sector can handle disputes impartially through private insurance companies, private courts, and private security firms. But as Machiavelli notes in 'The Prince', Italy in the 1400s had been ruined by the region's dependence upon mercenary armies. Instead, Machiavelli suggests that any leader who wanted to do well must create his own army populated by local militias, and not mercenaries, who almost every time were worse than militias and professionals loyal to their homeland.

And it is in Italy where we find the closest thing to anarcho-capitalism. In the 1800s feudal power collapsed in Sicily. Italy annexed the island in 1860, and in 1861 reforms were implemented which distributed land from barons and church. This vastly increased the number of landowners and effectively democratised land ownership.

At the same time state power was at a minimal, and disputes throughout the island were usually left unresolved by the island's meagre police force. As commerce boomed and crime increased (from common land being privatised, forcing the poorest to steal), property owners were left to rely upon mercenary enforcers. These as it happened evolved into the first Mafia clans, and as years went by they consolidated their influence.

In conclusion: one of the best examples we have of a society most alike the anarcho-capitalist ideal, featuring democratised property ownership, free trade, and minimal government, was 1800s Sicily. And unfortunately, this society devolved fairly quickly into dynastic organised crime.

Answer 5

No, at least not how you are defining "laissez-faire"

All companies and people in functioning capitalist countries have to operate within a framework of law. Capitalism expects and requires a stable and lawful society. Which is why what you call "true laissez-faire" isn't the proper use of the term.

Answer 6

If a group of dairy farmers isn't allowed to hire soldiers to kill all other dairy farmers, that's regulation and thus not unregulated capitalism.

If a group of dairy farmers is allowed to hire soldiers to kill all other dairy farmers, they are now the authority regulating milk production. There's no longer a free market and thus you don't have capitalism.

By getting rid of regulation, you don't actually remove regulation, you remove capitalism.

In conclusion: No, there is no example of unregulated capitalism. Every human society in known history followed rules (murder=bad,stealing=bad,bearing false witness= bad, etc) and these rules will always influence the free trade of goods and services. That's regulation.

Answer 7

Government is a private entity. King Arthur was a landlord who collected rent and started calling it taxes. That was the British government. The other governments formed the same way or as extensions of European government.

So government is just a private landlord and everything is libertopia. Anarcho capitalism is a troll argument and just proves that there is no distinction.

Answer 8

Yes, any illegal transaction or illegal marketplace. One major example of this iw the Silk Road darknet website, which was central for drug dealing. Interestingly, according to Tom Wainright's Narconomics, the sellers on the site were reliable, cared about the quality of their product, and acted much like sellers on E-Bay.