Frequently in online debates I see Marxist’s or Market Socialist’s as they like to be known these days debating free market advocates on economics and wealth creation thinking that they have won the debate. With this post I hope to as accurately as possible layout the Anarcho Capitalist’s empirical, logical arguments. As someone who has spent at least the last decade familiarizing and educating myself on different theories, schools of thought and scientific principles I believe that by starting from nothing but first principles, and using those first principles as a foundation to build an argument from, that I am able to rationally assess argumentation.
When you ask an academic what they believe was responsible for the sudden spike, and subsequent exponential explosion of economic output in wealth created through the industrial revolution their answer is usually:
“The industrial revolution is responsible for the wealth created.”
Annoyingly most people seem to be happy with this or similar circular arguments or don’t even realise the none answer. Saying that the industrial revolution is responsible for the wealth creation is a tautological argument. It is no different than saying god created the universe. As you are then left with the infinite regression of well what created god? What created what created god? Etc. The name industrial revolution is a label given to the effect or occurrence of the significant sudden wealth generated not the cause.
Or they will say that wealth is created through labour. Such a ridiculous answer can easily be discounted by pointing out the fact that humans without doubt worked quite considerably harder in the preceding millennia to the point that in fact in some cases they irrevocably damaged their bodies. So, Labour alone is not responsible for the industrial revolution either. If you want to explain the source of human wealth, your answer cannot be a commonality of what occurred prior to the industrial revolution. Your theory must describe what has changed, in other words what had to happen for the industrial revolution to occur. The cause.

Why did the industrial revolution occur?
There are 4 key elements that were needed to change for the industrial revolution to be possible;
We needed a small government to allow the free market to flourish – which brought about a meritocracy, rule of law and rule of contract.
We needed mercantilism to end – a separation of the state and economy.
We needed the abolition of slavery.
We needed an excess of foods.
The underpinning of each is Ethics.
What is Mercantilism?
Definitions
Economics: Is the study of the production, distribution and consumption of goods and services.
Mercantilism: A system of political and economic policy, evolving with the modern national state and seeking to secure a nation’s political and economic supremacy in its rivalry with other states.
Mercantilism is the economic equivalent of absolutism; the market is completely controlled by a central authority who decide the wants and needs, how to produce and distribute goods and services for the entire country. Believing they know what you want better than you do, believing they could understand intimately the intricacies and inner workings of every business big or small. Every individual treated as a small part of a collective.
Historically, such policies frequently led to war and instigated and subsidised continual colonial expansion through the socialisation of the entire economy in the pursuit of supremacy over other states.
During the mercantilist era it was often believed that the principal benefit of foreign trade was the importation of gold and silver. It was believed that the benefits to one nation were matched by costs to the other nations that exported gold and silver, and there were no net gains from trade. For nations almost constantly on the verge of war, draining one another of valuable gold and silver was thought to be almost as desirable as the direct benefits of trade.
Adam Smith wrote The Wealth of Nations in 1776 to criticize mercantilism, which was the primary economic system at the time. Under mercantilism, it was believed that wealth was finite. Prosperity could be increased by keeping gold and silver whilst tariffing goods from other countries, similar to what goes on today.
Abolition of Slavery
Slavery is an ancient institution, common to all cultures throughout human history, from pre-history up until the 19th century. The British abolitionist movement successfully fought the British government and the aristocracy to end slavery as a moral crusade. Slavery was ended through the attacking of slaver ships, and agitating for the removal of government support for slavery.
In 1787, William Wilberforce wrote in his diary: “God Almighty has set before me two great objects, the suppression of the slave trade and the reformation of society.” For the rest of his life, William Wilberforce dedicated his life a a Member of Parliament to opposing the slave trade and working for the abolition of slavery throughout the British Empire.
On 22nd February 1807, twenty years after he first began his crusade, whilst in the middle of Britain’s war with France, Wilberforce and his team’s labors were rewarded with victory by an overwhelming 283 votes for to 16 votes against in the House of Commons. The motion was to abolish the slave trade. At the time the British Empire covered one third of the globe.
In 1815 an International Treaty was signed by all the European powers for the abolition of the slave trade. In 1825, Britain passed a bill making slave trading punishable by death. The Slavery Abolition Act, (1833) later came to pass. Following on from this slavery became universally known as unethical and demonstrable in the 20th and 21st century worldwide.
People became slaves by becoming insolvent through debt problems, sold into slavery by their parents or captured by slave raiders and pirates. The trade and enslavement of slaves was a fully accepted practice throughout all of human history, unopposed by religion and state, in fact always supported and maintained.
The ancient Greeks responsible for many aspects of Western culture, art, music and philosophy were themselves utterly dependent on slaves. Under Roman law if a slave owner was found to be killed under suspicious circumstances all of their slaves would be put to death. It is estimated that half of the population of the Roman Empire were slaves. Three quarters of the population of Athens were slaves. Up to half or more estimates suggest of the arrivals in the American colonies from Europe were in fact slaves.
Slavery is often portrayed as a free market phenomenon that had to be ended by governments. But the reality is that there were only two countries in the history of the world that found it necessary to end slavery through a civil war. The USA and Haiti. State patrol statutes socilaised the costs of policing slavery and recapturing runaway slaves by drafting non-slaveholders into slave patrols. State statutes also prohibited manumission (the release) of slaves. If you didn’t participate in the patrols or carry out organising responsibilities, this would result in a series of escalating fines.
There was no industrial revolution in the ancient would because slaves were the driving force of the economy, the cost of slaves was socialised and the continuation of the slave trade was controlled by the state through state force. This destroyed the incentives required for investment in automation processes, because that would have eroded the value of the slave labour and created massive uncertainty. The industrial revolution occurred in a post slavery society, it could not happen any other way. Slavery throughout human history kept us all from realising our full potential.
18th Century fiscal policy
In the 18th century, the structure of taxation was quite different to what we have today. An unusual feature of the tax was that it was administered not by government officials, but by unpaid local ‘commissioners’, gentry who were nominated by Parliament and whose names were included in the annual Land Tax Acts. Those who collected the tax were usually local men of modest means, such as farmers or tradesmen.
Tax was only paid by the owners of land or property according to the size of their landholdings. This tax was paid by the most affluent sections of society, from the wealthiest duke to the business owners. In the 1690’s the tax brought into the Exchequer some two million pounds was approximately 35% of the national revenue at the time. Because the quotas never went up, and the rate became fixed at four shillings in the pound, over time it became a smaller proportion of the revenue, some 17% in the 1790’s, and as low as 11% by the 1820’s.
Agricultural revolution
Definitions
Free Market: Voluntary trade and negotiation, the respect of property rights and the non-initiation of the use of force.
Without an excess of foods cities are simply not possible. Without the cities there are no urban factories for the proletariat to work for their wages. Because of this you would of course expect a free market to effect production levels from land prior to free market effect on capital goods, which is exactly what happened. The free market, through the respect for property rights allowed for the first time the most economically productive to take control of the land through voluntary competition and trade. This led to an increase in production of up to 20 times from the same land which was previously controlled by the state or monopolised through state intervention.
But the industrial revolution occurred everywhere uniformly
False.
In the period 1760 to 1830 the Industrial Revolution was largely confined to Britain. Aware of their head start, the British government forbade the export of machinery, skilled workers, and manufacturing techniques. The British monopoly could not last forever, especially since some Britons saw profitable industrial opportunities abroad, while continental European businessmen sought to lure British know-how to their countries. Two Englishmen, William and John Cockerill, brought the Industrial Revolution to Belgium by developing machine shops at Liège (c. 1807), and Belgium became the first country in continental Europe to be transformed economically. Like its British progenitor, the Belgian Industrial Revolution centred in iron, coal, and textiles.
Price’s Law
The square root of the number of people in a domain do 50% of the work.
Derek John de Solla Price provides a mathematical proof as to why a free market economy is so important, firstly to create an excess of wealth required for the modern world, but also to preserve the standard of living we have all become accustomed to. The reason for this essentially is that the square root of the sum total is responsible for half of all the production in a group. To give an example of this rule in practice if we look at Amazon for example. Amazon as of 2019 had 750,000 employees. According to Price’s Law the square root of 750,000 being 866; means that 866 people produce 50% of the total economic output of the entire company. Insane right! But it gets worse than that. As you can again apply the rule to the 866. Meaning that 29.427 people produce 25% of the economic output of a company of 750,000 people.
This is a universal law like gravity that applies to nature. It cannot be altered. It also explains how no matter what inequalities are inherent. Even if everyone had the exact same starting point i.e. an equal opportunity the square root of the number of people involved would eventually accumulate half of all the resources.
What has Ethics got to do with Economics?
There always seems to be an aversion to ethics in an intellectual discussion or debate on economics which is rather bizarre. They see it as a diversion tactic seemingly. But they are wrong, it has everything to do with ethics.
Without ethics you can’t own and maintain property. Without ethics there is no excess for the agricultural revolution, as land would be controlled by individuals most capable of aggression and theft. Ethics is foundational to property ownership being maintained, to contract law being maintained, stable property rights and a fair and just legal system.
Historically there are examples of countries which have been able to progress through unethical means. However they have only been able to progress lagging behind ethical free market countries through being able to steal from the more productive markets. They are parasites, which rely entirely on the markets they steal from.
To simplify this if Bob is able to successfully fish producing 500 fish per day, and John steals 50 fish from Bob, John hasn’t added anything to the economy.
For John to maintain his supply of fish he completely relies on the productivity of Bob. John’s potential of producing anything is zero’d through his lack of respect for Bobs property rights, he has no drive to produce anything for himself. He also likely will fear someone else stealing from him. So the market as a whole has lost output from both Bob and John. As Bob has less wealth through the theft his wealth is unfairly diminished and so the market will suffer further.
Additionally a larger percentage of the market will likely be focussed on the production of goods and services for security rather than other areas to combat and prevent potential theft going forward. This further reduces the efficiency of the market.
Thus you can see that historically ethics was foundational to the first agricultural and industrial revolution.
A rising tide raises all boats.
Conclusion
In the 18th century England’s economy had a strategic inflection point, followed by an exponential growth in the total economic output of the country. This was only achieved because of a Meritocracy, stable property rights, the rule of law, the rule of contract and a free market (Ethics) which led to a reduction in violence and a reduction in the initiation of the use of force. This allowed the productive scope of mankind to have full play to increase its value and demonstrate their true potential. When you get a bidding war for land or labour those best able to maximise its potential output, or that are more efficient get to maintain control of it.
No doubt theories of capital, theories of free markets and general liberal ideas in the enlightenment period contributed greatly, such as from John Locke or Adam Smith.
Getting the government out of the economy, a separation of the economy and state similar to the separation of church and state was integral for the modern world to be achieved. Frighteningly enough the state as I’m sure you are aware now controls the economy again, which is fundamentally why we have insurmountable debts, low interest rates and are on the brink of the next depression. It’s why Satoshi Nakamoto created Bitcoin.
Examples of countries whom lagged behind because they didn’t fulfil the requirements listed above were countless. Even France lagged behind because they were still going through political change transitioning from a mercantilist economic policy thus a market couldn’t exist. Russia lagged behind dramatically too because they still had serfs which prevented them from having the economic incentives required to necessitate investing in potential labour-saving devices.
The immorality of slavery was conceived and became almost universally reprehensible in Britain in the 18th century. The Wealth of Nations also in the 18th century (1776) marked the end of the mercantilist era, the laissez-faire doctrines of free-market economics diametrically opposed the imperialist policies of nation-states. England removed the last vestiges of the mercantile era. Industrial regulations, monopolies, and tariffs were abolished, emigration and machinery exports were freed.
So we can see that Britain’s dramatic improvement of ethics lead to the abolition of slavery, free trade policies, excess food from the agricultural revolution and then finally the industrial revolution which enabled Britain to became the dominant economic power in the world.
Why would it be a surprise that moving closer to the universal application of property rights and the non-initiation of the use of force made humans more productive, safer and prosperous?
Side Note
What did we have prior to Mercantilism?
Prior to mercantilism societies operated through a practice known as Feudalism.
Serfdom was the status of many peasants under feudalism, specifically relating to manorialism (medieval agricultural economy), and similar systems. It was a condition of debt bondage and indentured servitude, which developed during the Late Antiquity and Early Middle Ages in Europe around 700 A.D and lasted in some countries until the mid-19th century. Selfdom was ended in Britain with Tenures Abolition Act of 1660 through preceding steep decline.
Feudalism was a hierarchical pyramid-based system with the king at the apex of the pyramid and the peasant underclass of the country at the base of the pyramid. The social class of the peasantry can be differentiated into smaller categories. These distinctions were often less clear than suggested by their different names. Most often, there were two types of peasants:
Freemen: Freemen (or free tenants) held their land by one of a variety of contracts of feudal land-tenure and were essentially rent-paying tenant farmers who owed little or no service to the lord, and had a good degree of security of tenure and independence.
Villeins: (or villain) represented the most common type of serf in the Middle Ages. Villeins had more rights and higher status than the lowest serf, but existed under a number of legal restrictions that differentiated them from freemen. Villeins generally rented small homes, with a patch of land. As part of the contract with the landlord, they were expected to spend some of their time working on the lord’s fields. Villeins were tied to their lord’s land and couldn’t leave it without his permission. Their lord also often decided whom they could marry.
In many medieval countries, a villein could gain freedom by escaping from a manor to a city or borough and living there for more than a year; but this action involved the loss of land rights and agricultural livelihood, a prohibitive price unless the landlord was especially tyrannical or conditions in the village were unusually difficult.
Cotters: Status-wise the cottar ranked below a serf in the social hierarchy of a manor, holding a cottage, garden and just enough land to feed a family. Cottars were small farm labourers without any rights to land in the latter years. However initially they were allowed to own small pieces of land.
Slaves The last type of serf was the slave. Slaves had the fewest rights. They owned no tenancy in land, worked for the lord exclusively and survived on donations from the landlord. It was always in the interest of the lord to prove that a slave had excessive needs to please others. The status of a man was a primary issue in determining a person’s rights and obligations in many of the manorial court-cases of the period. Also, runaway slaves could be beaten if caught.
The Domesday Book showed that England comprised 12% freeholders, 35% serfs or villeins, 30% cotters and 9% slaves.
Sources:
https://www.britannica.com/event/Industrial-Revolution
https://www.history.com/topics/industrial-revolution/industrial-revolution





