Man, Economy, and Liberty

19

The Role of Government

Randall G. Holcombe

The scholarship of Murray Rothbard has traversed amazing breadth, but he is surely best known for his defense of individual liberty against violation by the government. Most readers of this volume will be familiar with Rothbard’s position that in an ideal world governments would not exist. His arguments that we should not have governments are persuasive, and he has supported his views from a number of different angles. This essay will use Rothbard’s ideas as a springboard to examine the role of government within a society.

The view that governments should not exist can be defended on several grounds, and indeed Rothbard has done so. One might argue that governments are inefficient and that our well-being would be enhanced without them, but one might also argue that the activities of governments are unethical. Rothbard has eloquently defended both views. Rothbard’s work also lends insight into the question of why governments exist. His discussion of government has been so extensive that it provides a fertile foundation for further analysis.

This essay considers several questions about the existence of governments. First is the question about why governments actually do exist, but then are the questions about why and whether governments should exist. As already noted, Rothbard has argued against the existence of government for both ethical and efficiency reasons. Should government really be eliminated? The essay considers this question in closing, with a defense of the defenses of anarchy.

Why Government?

The question that heads this section could be interpreted in many ways. It might ask why governments do exist, or it might ask why governments should exist. As a subset of why governments should exist, one might look for ethical reasons as well as efficiency reasons. This section will discuss why governments do exist, and the two following sections will consider both equity and efficiency rationales for government.

The question of why governments do exist is essentially a historical one, and some insight on the question can be gained by considering Murray Rothbard’s discussion about history from his introduction to his four volume treatise on American history, Conceived in Liberty. Rothbard states,

I see history as centrally a race and conflict between “social power”—the productive consequence of voluntary interactions among men—and state power. In those eras in history when liberty—social power—has managed to race ahead of state power and control, the country and even mankind have flourished. In those eras when state power has managed to catch up with or surpass social power, mankind suffers and declines.

For decades, American historians have quarreled about “conflict” or “consensus” as the guiding leitmotif of the American past. Clearly, I belong to the “conflict” rather than the “consensus” camp, with the proviso that I see the central conflict as not between classes (social or economic), or between ideologies, but between Power and Liberty, State and Society.1

Nobody familiar with Rothbard’s work will be surprised at the conflict that Rothbard sees between individual liberty and the existence of the state. It is interesting, however, to see that Rothbard views this as the central theme of history in general. Using this notion as a starting point, one might want to probe the nature of this conflict a bit further.

One can refer to the state in the abstract, but the power that Rothbard refers to as the state is actually a group of individuals, of necessity a minority, that run the government. Rothbard notes,

[S]ince a majority cannot live parasitically off a minority without the economy and the social system breaking down very quickly, and since the majority can never act permanently by itself but must always be led by an oligarchy, every state will subsist by plundering the majority in behalf of a ruling minority. A further reason for the inevitability of minority rule is the pervasive fact of the division of labor: the majority of the public must spend most of its time going about the business of making a living. Hence the actual rule of the state must be left to full-time professionals who are necessarily a minority of the society.2

In the division of labor, most individuals will be engaged in producing goods and services for social consumption, but in an economy productive enough that an individual can produce more than enough for bare sustenance, there will be some surplus above the subsistence level that others could consume. For example, those producing goods and services could provide some of that surplus to those in government in exchange for governance.

This gets slightly ahead of the story, however, for what if there were no government? Hobbes conjectured that life would be nasty, brutish, and short, as the more powerful individuals could rob the less powerful of any surplus they produced, and perhaps more, which would ultimately cost them their lives. Seen in this light, a role for government naturally emerges. The government protects the rights of individuals in exchange for payment.

Throughout history this has been the actual role of government. In feudal times, most obviously, the feudal lord would protect peasants in exchange for a share of their production. There was not even the pretense that payment was to cover the costs of production of government. Rather, a simple economic exchange was made: tribute in exchange for protection. While this exchange is more obvious in the case of dictatorships and kingdoms, it is the essence of all government. Citizens pay the government, and in exchange their rights are protected.

This idea is closely in line with Nozick’s idea of the minimal state that serves the role of protecting individual rights.3 But the argument here is not an abstract one about why governments might exist; instead, it is descriptive of governments in reality. Governments exist because most people, trying to make a living, cannot devote much time to protecting their rights. It is more efficient to pay tribute to a powerful individual or group in exchange for protection. In reality, governments do exactly that.

This makes governments appear as institutions imposed on individuals from the outside, rather than being institutions chosen by the governed. Often this is the case, but there may be instances where individuals would choose to form governments to further their own interests. Rothbard has argued something along these lines about the formation of the government of the United State. Rothbard states,

[T]he revolution was genuinely and enthusiastically supported by the great majority of the American population. It was a true people’s war … American rebels certainly could not have concluded the first successful war of national libertarian in history … unless they had commanded the support of the American people.4

Thus, while Rothbard portrays the American revolution as a revolution against the British government, it was also a revolution in support of the independent government of the United States, and a revolution supported by the great majority of Americans.

The point here is that not all governments are foisted on unwilling citizens by some powerful ruling group. Governments might be chosen and desired by their citizens. But even the popularly chosen government of the United States is at its foundation an institution that exchanges protection for tribute. The government of the United States was formed to protect the colonists from the British, emphasizing the exchange of protection for tribute as the key feature in the origin of governments. Rothbard points out that of necessity there will be some ruling minority that will control every government. Even in a government that has a strong element of voluntary choice like that in the United States, the challenge is to design institutions so that the ruling minority has as limited an ability as possible to exploit the majority.5

The initial objective of this section was to explain why governments exist. Specific governments may exist because the governed desired them, as in the American case, or because some more powerful individuals conquered less powerful individuals and subjected the conquered to governance by the conquerors. Historically, the latter case is more common, but even this obscures the actual reason why governments of both types exist. Historically, governments have emerged to exchange tribute for protection.

Note the incentives on both sides of this government transaction. Citizens have the incentive to pay the government in order to have their rights protected, but governments too have the incentive to protect the rights of their citizens. Without this protection, the productive capacity of the government’s citizens would be greatly diminished, which would also diminish the capacity of the government to collect its revenues. Governments may do many other things than protect rights, of course, such as redistribute income, produce goods and services, and even violate the rights of its citizens, but the actual origin of government is the exchange of protection for tribute.

The Ethics of Government

This essay has, up to this point, considered why in fact governments exist. The next question to consider is whether governments should exist. The present section will consider the issue from an ethical standpoint, considering the morality of government. The following section considers the question from an efficiency standpoint, asking whether a society actually is better off having a government.

It is interesting to note that libertarians have a wide range of opinions on the ethics of government. Ayn Rand and Robert Nozick both see roles for a limited government that protects the rights of individuals. This corresponds with the argument just made that real governments have actually emerged as protectors of rights in exchange for tribute. However, in Rand’s view of limited government, the ideal government has a monopoly over the use of force, but is financed voluntarily.6 James Buchanan, in a contractarian framework, sees the appropriate role of government to be whatever its citizens agree upon.7

Rothbard, in contrast, is a complete anarchist. The activities of government are simply unethical, as far are he is concerned. Rothbard argues,

Taxation is theft, purely and simply, even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State’s inhabitants, or subjects.

It would be an instructive exercise for the skeptical reader to try to frame a definition of taxation which does not also include theft. … If, then, taxation is compulsory, and is therefore indistinguishable from theft, it follows that the state, which subsists on taxation, is a vast criminal organization, far more formidable and successful than any “private” mafia in history. Furthermore, it should be considered criminal not only according to the theory of crime and property rights as set forth in this book, but even according to the common apprehension of mankind, which always considers theft to be a crime, [original emphasis]8

One might add that institutions such as the military draft make government activities include slavery as well as theft. And some might even argue that government income redistribution, by forcing some to work for the benefit of others, is slavery.9

One might speculate in a hypothetical framework about an ideal government in the Randian sense that collected payments voluntarily, but in the real world one would be hard-pressed to cite an example of a government funded by voluntary contributions. Such speculation would lead too far afield for the present essay; the point here is that Rothbard views the financing activities of government to be immoral.

Rothbard’s critique of the ethics of government is not limited to government’s methods of finance, however. He also objects to the government’s acquisition of monopoly power by force. He cites instances of enforced monopoly over police protection, the judiciary, money creation, postal services, and more.10 Clearly, Rothbard, unlike Nozick and Rand, sees any exercise of what is normally thought of as government power to be unethical. From an ethical standpoint, complete anarchy is what Rothbard views as the ideal role of the state.

Rather than evaluate Rothbard’s ethical arguments in detail, this essay will consider the question whether Rothbard’s ethically ideal state of anarchy would be practically feasible. In other words, what are the implications for economic efficiency in a world of anarchy? Hobbes envisioned life under anarchy as nasty, brutish, and short, but Rothbard has eloquently argued otherwise.

Economic Efficiency and the Role of Government

One of Rothbard’s many significant contributions to libertarian thought is his persuasive argument that in the absence of government the market would be able to provide all of the goods and services presently provided by government, and would be able to do so more efficiently. In response to those who argue that government production of some goods and services is necessary if they are to be produced at all, Rothbard has consistently answered that “every single one of the services supplied by government has been, in the past, successfully furnished by private enterprise.”11 Rothbard’s most complete argument along these lines is found in his 1973 book, For a New Liberty.12

Rothbard’s For a New Liberty and The Ethics of Liberty are complementary works. While The Ethics of Liberty sets out a libertarian ethical framework and argues against the activities of government from an ethical base, For a New Liberty argues more from a practical standpoint, that the activities of government would be better performed in the private sector anyway. Combining the two lines of argument, one should oppose the activities of government because they are unethical, and one should oppose the activities of government because they would be more efficiently performed in the private sector. There are both ethical and efficiency reasons for abolishing government.

Some alternatives to government are more easily pictured than others. For example, it is relatively easy to picture the private sector producing roads than national defense. After all, toll roads and toll bridges are in use today, although typically they are produced by the government. It requires little imagination to see that were it not for such a large amount of competition from freely accessed government roads, there would be a great incentive for private firms to produce bridges and turnpikes.

What about local travel where it is more difficult to charge tolls? Even today, builders of subdivisions build their own roads to provide access to homes in the subdivisions. Typically, they are then deeded over to the local government at no charge because the government will then maintain them using tax revenues. It is not hard to see, though, that if the government did not undertake this activity, the subdivision residents themselves would have an incentive to maintain the roads that provide access to their property. Likewise, today owners of shopping centers provide access roads and free parking for patrons (as opposed to metered parking that is often provided by governments). It is relatively easy to envision the private sector taking over the provision of roads.

What about police protection? Even today, most police services are provided by private services who protect stores, manufacturing facilities, and other commercial establishments. Often wealthy neighborhoods will hire their own police patrols in addition to the government provided protection. Again, it is easy to see that individuals could contract with a private policy organization in the absence of governmental provision, if only because it is frequently done today.

What about courts? Rothbard convincingly argues that private courts would be a superior replacement for the government’s current legal system. Rothbard argues that most law is derived from common law, which would be the essence of a private legal system. Private arbitration would replace state courts, and Rothbard argues that not only would it be possible in concept, but that there are historical cases that show the feasibility and superiority of a legal system unencumbered by government. The interested reader should read Rothbard’s discussion in its entirety.13 His arguments are persuasive.

What about national defense? Rothbard seems to become more creative and persuasive the more difficult the issue, and he makes a convincing argument that the nation would be better defended without a government at all.14 It is easy to see that if the entire world had no governments there would be no reason for national defense, because there would be no countries to attack each other. Rothbard is also realistic enough to see that if a subset of the United States decided to abolish all government authority within its borders, the U.S. government would quickly assert its authority. But what if a large area—say, the United States—decided just to do away with all governments? How would this governmentless area protect itself against foreign aggressors?

Rothbard first questions whether foreign countries would want to attack such an area. What quarrel could foreign countries possibly have with such a governmentless area? But even if some foreign country wanted to take over the governmentless area, Rothbard argues that it would be more difficult to take over the area without a government than if a government were in place.

With a government one needs only to take over the government’s leaders and force them to surrender in the name of all of the government’s citizens. But with no government to surrender, a foreign aggressor would have to force every individual to surrender, which would be a far more formidable task than simply overpowering the existing government. Rothbard’s argument is persuasive, for it is difficult to imagine how one would take over a country if nobody were empowered to surrender in the name of the group. Rothbard’s original argument is worth reading.

Rothbard’s For a New Liberty is interesting reading because it makes complete anarchy sound so reasonable as a way of improving the quality of life. Still, one must be skeptical of the arguments, because while one could imagine a better life in a world without government, one could also imagine the Soviets, bent on conquest, visiting the shores of a society the day after it abolished its government. It is one thing to argue that Rothbard’s ideas are interesting, challenging, and persuasive. It is yet another to argue that the world should be patterned along the anarchistic lines envisioned by Rothbard. Yet there is good reason for using Rothbard’s vision of the world, not as an immediate replacement for the present one, but as a model to move toward. Rothbard argues that the world would be a better place without government. The next section defends Rothbard’s defense of anarchy.

In Defense of Defenses of Anarchy

As noted earlier, libertarians are not in agreement on the appropriate role of government in a society. Rothbard is an anarchist, but others, such as Rand and Nozick, see a role for a limited government to protect individual rights. Some libertarians see such a role for government that they have gone so far as to form a libertarian political party.15 Should Rothbard’s extreme anarchy be accepted? Is it even feasible? Or is it more reasonable to accept the inevitability and even desirability of a limited government to protect the rights of individuals? This section will defend Rothbard’s position of extreme anarchy as a reasonable goal, regardless of whether it is attainable. This defense will be laid out in several steps.

The Government is Too Big

The first step, which would have been a controversial proposition in the 1960s, is hardly controversial in the 1980s. The government is too big, and the nation’s citizens would be better off with less of it. This is popularly expressed in the differences in political philosophy behind the Reagan government in the 1980s versus the Kennedy-Johnson government of the 1960s, and is finding its way more and more into the academic literature and in economics as well.

Buchanan has noted that economists are more committed to analyzing resources allocation problems in the public sector than was the case in the 1950s and 1960s.16 Armen Alchian has questioned the property rights system implied in government ownership,17 Harold Demsetz has questioned the regulation of natural monopolies,18 and the Chicago school of regulation, led by George Stigler,19 has argued that regulation in general is controlled by special interests and should not be expected to further the general public interest. These are but a few of many examples that could be cited of academic research arguing that the role of government in the economy should be reduced.

Rothbard’s For a New Liberty might be compared with Milton Friedman’s Capitalism and Freedom,20 but whereas Friedman argues that the scope of government should be reduced, Rothbard argues that it should be abolished altogether. Both agree about the desirable direction of change, but Friedman, while often viewed as an extremist, looks moderate in comparison to Rothbard’s more extreme views. The point here is that there is a widespread belief in popular, political and academic circles, that the role of government should be reduced. But there is the question about whether the more moderate stance of Friedman is more reasonable than Rothbard’s extreme views.

What is Possible?

The next step in the argument is to note that while there is a widespread belief that less government would be desirable, one can only speculate on the likely results of any intended reform. There is still debate on the likely effects of Friedman’s proposed voucher system more than two decades after it was originally proposed. Rothbard argues that the nation would be better off relying exclusively on private education, and the same goes for roads, courts, police, and everything else. How these institutions would work in practice in the modern world must be a matter of speculation, since they do not currently exist as Rothbard envisions them.

Are Rothbard’s anarchistic ideas feasible, or are they just too impractical? To consider this question, imagine a person who has no knowledge of the way in which a market economy works, and then imagine trying to propose to that person that a market economy be established to replace whatever economic institutions the person is familiar with. One would argue that individuals try to sell the resources at their command for as much as they can get for them and try to buy the most valuable resources possible at the lowest possible price. Exchange is facilitated by organized markets and a medium of exchange, and the result is that each individual, when pursuing his own self-interest, is led as if by an invisible hand to pursue the best interest of the whole society.

Considering all of the complications of the real world, such a story sounds farfetched. It sounds so farfetched, in fact, that even though everyone can see market economies in operation in the modern world, many nations have nevertheless made the collective choice to move away from market allocation toward some more rational form of national economic planning, and intellectuals often argue the theoretical superiority of centrally planned economies. The results of such moves away from the market allocation and the pitfalls of central planning are evident from real world cases, still there are people who seem to shut out the evidence to argue that the market system is simply not a feasible way to allocate resources in the complex world of the twentieth century.

Most readers of this volume will be sympathetic to the idea that the market does allocate resources efficiently, even though the abstract idea of market allocation sounds so simple as to appear simplistic and unrealistic to many. Now return to the question about the feasibility of abolishing government altogether. Rothbard’s proposals are so simple that they may also appear simplistic and unrealistic, but really he is arguing nothing more than that the market should be allowed to allocate all resources. And while nothing is perfect, including the market, one would be hard-pressed to point out an actual real world case where when things are done both by the market and the government, the government turns out to be more efficient. In the real world, governments have often responded to potential problems that have been foreseen. But it is difficult to think of examples where the government has intervened to solve an existing problem, and where the solution imposed by government was superior to the original problem. In contrast, there are numerous instances where government allocation of resources has been shown to be inferior to the market.21

Perhaps Rothbard’s ideas of orderly anarchy are feasible after all. There is certainly no direct evidence that they are not, and for every imagined problem with this type of orderly anarchy there is an imagined solution. Yes, the real world is complex, but this complexity seems to be the environment where the market organizes best. Perhaps the market system taken to its logical extreme where government is eliminated altogether really is feasible and desirable. Rothbard’s critics have not proven otherwise. If this is the case, how should one choose between Rothbard’s ideal work, Friedman’s ideal world, or some other alternative? As is next argued, this is not the nature of the choice facing society.

Marginal Adjustment

Marginal analysis is the economist’s stock in trade. Marginal changes are also, in reality, the way the world adjusts. If government as it stands is too big, then its size should be reduced, but in reality it would not even be possible to change overnight from the status quo to some individual’s ideal world. Rather, change would necessarily have to be by degrees. Is the optimal government a minimal one like Friedman and Rand discuss, or is it a nonexistent one like Rothbard advocates? For practical purposes, the ideal end state is not as significant as the optimal direction of change.

In the 1960s people saw increased government involvement as the solution to many of the world’s problems. Government grew over time. With hindsight, even some of the proponents of larger government saw that government did not solve the world’s problems as well as its proponents had imagined. Now the solution is to move toward a smaller government. How much smaller? The change will necessarily be slow, and as long as the change brings about an improvement in the nation’s well-being, the change is in the right direction. When the change is no longer an improvement, it has gone far enough. Because the changed final state of affairs must be at this point a hypothetical state of affairs, it is not really possible to say what ultimate outcome will prove to be most desirable.

This abstracts from the ethical arguments about government and considers only the pragmatic issues. But in reality, a reduction in government will come by degrees if it comes at all, and as long as the changes are beneficial, reduction should continue. When changes cease to be beneficial, they should stop. From a practical standpoint, it is not now relevant whether the process stops at Rothbard’s ideal state, Friedman’s ideal state, or at some other point. In reality, marginal changes will have to be made to seek the optimal state of affairs.

Anarchy: The Ultimate Solution to Smaller Government

The defense of anarchy up to this point has been that government is generally recognized as too large, so should be reduce. It is not really possible to identify ahead of time the ideal state of affairs, but it is not really necessary either, because adjustment to the ideal will be a marginal adjustment. At this point, Rothbard’s proposals of orderly anarchy have much to recommend them because Rothbard’s brand of anarchy is the ultimate solution to smaller government. Rothbard eloquently explains how it would be possible to do away with all governments, thus providing the logical end to the reduction of government, whether or not that end is practically attainable.

But as just noted, the practicality of the end is not an issue. By illustrating how it is possible, at least in principle, to replace all of the government’s activities by market activities, Rothbard points reformers in the direction of less government. Regardless of whether such a world will ever exist in practice, the imaginative and persuasive arguments of anarchists such as Rothbard provide a valuable service by providing an intellectual foundation for the movement toward less government. There is nothing logically inconsistent with a free and wealthy society and the absence of government. This factor alone makes the work of anarchists such as Rothbard a valuable intellectual contribution.

Conclusion

This essay has covered much territory, but all within the general subject matter of the role of government in a society. The essay began by arguing that the fundamental transactions made by governments is the exchange of protection for tribute, and the government has the incentive to provide such protection so that its citizens can continue to be productive and therefore can continue to provide tribute. In reality, this is why governments exist. The next question addressed in the essay is why (and whether) governments should exist.

Rothbard advocates the elimination of government on two grounds. First, he argues that the activities of government are unethical. Second, he argues that all of the goods and services currently provided by governments could be more effectively provided by voluntary private organizations. Rothbard’s arguments are interesting and at the same time compelling and persuasive. One always tends to view arguments advocating great change with skepticism, but Rothbard delivers his arguments with such clarity that even his most extreme ideas have an aura of reasonableness.

What in fact is the appropriate role of government in a society? Even libertarians are not in complete agreement, as some see a role for a limited government while others argue that governments should be eliminated altogether. But there is a consensus emerging among the general population in the 1980s that there is too much government involvement in the society.

In order to control government power, its foundations must be understood, and the beginning of this essay which argued that the most important transaction of government is the exchange of protection for tribute was an attempt to further that understanding. The essay went on to examine both ethical and efficiency reasons against government involvement in a society. Ideas such as these are always subject to discussion and debate, but even where there is disagreement one would hope that the ideas provide some food for thought, and ultimately, some motivation for constructive action.

_________________

The author gratefully acknowledges helpful comments from Don Boudreaux and Roger Garrison. Any shortcomings remain the responsibility of the author.

Notes

1. Murray N. Rothbard, Conceived in Liberty, vol. 1 (New Rochelle, N.Y.: Arlington House, 1975), p. 10.

2. Rothbard, Conceived in Liberty, vol. 3 (New Rochelle, N.Y.: Arlington House, 1976), p. 351.

3. Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974).

4. Conceived in Liberty, vol. 3, p. 350.

5. For a model of this process as might be applicable to the U.S. case, see Randall G. Holcombe, “A Contractarian Model of the Decline in Classical Liberalism,” Public Choice 35, no. 3 (1980): 260-74.

6. Ayn Rand, “The Nature of Government,” in The Virtue of Selfishness (New York: Signet Books, 1964); idem, “Government Financing in a Free Society,” in The Virtue of Selfishness (New York: Signet Books, 1964).

7. See James M. Buchanan, The Limits of Liberty (Chicago: University of Chicago Press, 1975).

8. Murray N. Rothbard, The Ethics of Liberty (Atlantic Highlands, N.J.: Humanities Press, 1982), pp. 162-63, 166.

9. In a well-written (if technical) critique of income redistribution, Martin Ricketts, “Tax Theory and Tax Policy,” in Alan Peacock and Francesco Forte, eds., Trie Political Economy of Taxation (New York: St. Martin’s Press, 1981), pp. 29-46, draws a parallel between government redistribution and taxation that will delight the critics of the so-called optimal tax literature in the economics journals.

10. The Ethics of Liberty, p. 162.

11. Murray N. Rothbard, “The Fallacy of the Public Sector,” in Egalitarianism as a Revolt Against Nature and Other Essays (Washington, D.C.: Libertarian Review Press, 1974), p. 87.

12. Murray N. Rothbard, For a New Liberty (New York: Macmillan, 1973).

13. See For a Neu Liberty, pp. 234-47.

14. For a New Liberty, pp. 247-52.

15. Note, though, that this may be consistent with the ultimate goal of anarchy, if working within the political system to eliminate government is viewed as a legitimate activity. Rothbard, apparently, would agree, for while he has argued in The Ethics of Liberty that the government is unethical and in For A New Liberty that the government is inefficient, he has praised the formation of the American government in the American revolution in Conceived in Liberty as a vehicle for eliminating the oppressive rule of the British government.

16. James M. Buchanan, “Public Finance and Public Choice,” National Tax Journal 28 (December 1975): 383-94.

17. Armen A. Alchian, “Some Economics of Property Rights,” IL Politico 30, no. 4 (1965): 816-29.

18. Harold Demsetz, “Why Regulate Utilities?” Journal of Law and Economics 11 (1968): 55-65.

19. George J. Stigler, “The Theory of Economic Regulation,” Bell Journal of Economics and Management Science 2 (Spring 1971): 1-10.

20. Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962).

21. A small listing of economic studies along these lines would include Cotton M. Lindsay, “A Theory of Government Enterprise,” Journal of Political Economy 84 (October 1976): 1061-77; David G. Davies, “The Efficiency of Public versus Private Firms: The Case of Australia’s Two Airlines,” Journal of Law and Economics 14 (April 1971): 149-65; W. Mark Crain and Asghar Zardkoohi, “A Test of the Property-Right Theory of the Firm: Water Utilities in the United States,” Journal of Law and Economics 21 (October 1978): 395-408; and Roger Ahlbrandt, “Efficiency in the Provision of Fire Services,” Pubitc Choice 16 (Fall 1973): 1-15.