Are Anarcho-Capitalists Members of the Far-Right?

An essay on Javier Milei and the thinkers who influenced him

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In October, Javier Milei, a self-described anarcho-capitalist, surprised the world by winning Argentina’s presidential elections. Many media commentators struggled to describe his worldview. Is he a member of the far right or not? This essay will take a deep dive into the issue.

In order to understand anarcho-capitalism, we need to backtrack to 1974 when Austrian-British economist Friedrich Hayek won a Nobel Prize. He was given the award for showing how prices communicate information in free markets. Imagine that you decide to change your image or your diet or your lifestyle in an unexpected way. In a market economy, there is no need to fill out any forms or communicate your new decisions to any authorities. Instead, your everyday decisions on what to buy (or what not to buy) will alter the calculations of supply and demand for retailers and wholesalers in a subtle way.

When aggregated with millions of other decisions, prices will move as a result of your personal decisions - they will tend to go up when certain goods and services become more popular; while prices for other goods and services will tend to go down as they become less popular. At the same time, freely moving prices also provide useful feedback for entrepreneurs and investors interested in innovation and value creation.

Hayek’s great insight shows why socialism is always doomed to failure. State planners in an economy run by bureaucrats lack any tools as good as prices to give them feedback when their plans inevitably fall short. This is a hard lesson for socialists, but not necessarily for social democrats, who seek to combine free markets with a welfare state. If Hayek’s insight troubles you, I have some good news for you. If you were able to develop or discover a tool that worked as well as freely moving prices, you would also win a Nobel Prize!

Hayek described himself as a classical liberal. His followers often brand themselves as libertarians to distinguish themselves from progressives, who are rather confusingly described as liberals in the USA.

Libertarian economists often specialise in colourful examples to show the power of markets. Hayek’s younger contemporary Milton Friedman, who won the Nobel Prize in 1976 for his work on inflation and other related subjects within economics, provides a good example of the genre with his homage to the humble pencil, which is available on YouTube. It is worth mentioning that Milei of Argentina (a country crippled by hyper-inflation) named one of his dogs after Friedman.

Libertarian economist Thomas Sowell has written many books popularising the power of freely moving prices. The author aims to show why markets work better than we might expect across many realms. For example, he shows why rent control always ends badly; why “price gouging” helps allocate resources in emergencies; and he also argues against the minimum wage. The message about gouging has resonated hard in Silicon Valley. A number of startups, including Uber, have instituted surge pricing as a direct result of arguments for freely moving prices.

Although Sowell is always worth reading and is usually more right than he is wrong, his recommendation against implementing minimum wages is a rare exception. Recent economic research shows that the labour market is extremely complex. Implementing or raising minimum wages is actually much less likely to generate unemployment than libertarian economists had predicted.

In order to understand why, we need to return to the distinction between hedgehogs (one model or reality) and foxes (multiple models), which we often refer to in these parts. Freely moving prices are one of the greatest discoveries of humanity. As minimum wage research shows, though, we sometimes need to factor in other elements for a more complete view. This is particularly true in the labour market, which has many moving parts.

Despite this warning, some hedgehogs will always be tempted to make freely moving prices the sole organising principle of society - a simplified worldview. We can call these pro-markets hedgehogs anarcho-capitalists or ultra-libertarians. Some call them market fundamentalists.

We have already discussed how anti-left narratives can act as a rabbit hole for liberals, which takes them from the centre to the far right. This rabbit hole is particularly dangerous for classical liberals and libertarians who are interested in hedgehog-like narratives that simplify shades of grey to black and white.

There are many examples of this tendency. For example, libertarian philosopher Jason Brennan has argued against democracy on the grounds that markets work better than elections. Meanwhile, libertarian economist Bryan Caplan has said that people who believe that markets will always be better than bureaucracy should support extreme austerity to shrink the state since this will create incentives for entrepreneurs to come up with better market-based solutions.

Caplan’s argument for austerity echoes the views of objectivist novelist Ayn Rand, a hedgehog-like defender of free markets who influenced many anarcho-capitalists despite thinking they were “hippies of the right.” She wrote of the dangers of government welfare, even though she ended up accepting it.

There is a certain nihilism at the heart of these arguments. Extremists often refuse to think about switching costs. Anarcho-capitalists are no exception. They expect markets to spring to life, as if by magic, with no consideration of the contingent ways they developed in history, as discussed in depth by Karl Polanyi. These ultra-high expectations about the quasi-magical properties of markets were partly behind Paul Bremer’s terrible decision to disband the Iraqi army (the country’s only functional institution) after the US invasion of 2003, with disastrous consequences.

There is a contrast between libertarians who want to break institutions and the great classical liberal philosopher Karl Popper, who identified a much more sane way to reform societies. He recommended starting with the biggest problem first, testing various solutions and then ramping up the best solutions. He advised against starting with the blueprint of the perfect society and working backwards from there. Milei’s bold flagship proposal on the campaign trail, dollarising the economy of Argentina to fight hyper-inflation, actually makes sense within Popper’s framework. We will discuss Popper’s approach in much more depth next week.

Dark side

Anarcho-capitalism has a dark side. Its leaders can take individualism and nihilism to their limits. One of the movement’s gurus, Walter Block, sought to defend pimps, drug dealers and blackmailers as ordinary people doing an honest day’s work in an unregulated market economy. Meanwhile, in the 1990s, another of its gurus, the late Murray Rothbard, published a troubling essay on why libertarians should embrace frankly racist and quasi-fascistic right-wing populism. He pitched “America First” as the movement’s slogan. Milei named another one of his dogs after Rothbard, who coined the term anarcho-capitalism in 1971.

Downstream of thinkers like Block, Brennan, Caplan, Rand and Rothbard, we can see figures like Steve Bannon, who talked about the “deconstruction of the administrative state” while he was still White House chief strategist under Donald Trump in 2017. He is currently appealing against a jail sentence for failing to comply with an investigation into Trump’s coup attempt in 2021.

Given Bannon’s coup-mongering and hostility to the welfare state, I think we can safely conclude that anarcho-capitalism can sometimes be considered an eccentric form of far-right politics, particularly when its proponents seek to tear down actually existing institutions. Anarcho-capitalist’s choice of allies can be particularly telling. For example, Block has publicly defended Russia’s invasion of Ukraine. His argument hinges on Russian disinformation about an alleged promise in the early 1990s not to expand the North Atlantic Treaty Organization (NATO) to the east after the reunification of Germany.

I’m not convinced that the far-right label is a particularly good fit for Milei, though, given his strong emphasis on personal freedom every single time he open his mouth. He taught macro-economics in universities for two decades and has published more than 50 academic papers. On the other hand, he has also embraced policies like “restoring the prestige” of Argentina’s military, which muddy the waters. He has also called climate change “a socialist lie.” His pick for vice-president, Victoria Villaruel, is a denialist about crimes by the military dictatorship between 1976 and 1983.

It is difficult to see how our species can deal with climate change (the world’s most pressing problem) without states or supranational blocs like the European Union (EU). This hard truth partly explains why anarcho-capitalists like Milei will always tend to be drawn to anti-scientific climate denialism - a position that moves them firmly towards the far-right side of the horseshoe. This is even true of people like Milei, who is an exponentialist in economic issues.

The Financial Times (FT) recently quoted an academic who described Milei as “a libertarian technocrat backed by alt-right outsiders” in the context of a stagflationary economy, which sounds about right. It is probably best to describe him as having one foot in the far right rather than being a full member. The FT also says that the size of the Argentine state has almost doubled as a share of the total economy over the last two decades, while the government has imposed artificial price and exchange controls that have led to some of the worst inflation in the world - an important piece of context for the unexpected victory of an anarcho-capitalist politician.

The key word in the preceding paragraph is “technocrat,” which means a technical expert who rises to the top in government. After Milei’s inaugaration, the FT also notes that the economist almost immediately dropped his incendiary rhetoric and pivoted to pragmatism and mainstream economic liberalism. “He left the crazy guy in the campaign behind but kept the liberal ideas,” one banking executive was quoted as saying in the article.

The obvious tensions between Milei’s chainsaw-wielding populist persona, which he developed on the campaign trail and before that as a guest in television talk shows, and the thoughtful academic who published dozens of peer-reviewed papers on the specific ways that freely moving prices benefit society hasn’t received nearly enough attention in most of the English-speaking press, with the exception of the FT.

Destination or journey?

It is worth mentioning that someone who had the chance to design an anarcho-capitalist society from scratch (without breaking any actually existing institutions in the process) might in theory occupy another point of the horseshoe and not the far right. The main problem lies in how anarcho-capitalists want to get from A to B and not so much the destination itself, which is based on economic freedom.

Ultra-libertarians are often drawn to ideas like seasteading, or creating permanent dwellings at sea with experimental new governance structures. This is an eccentric project, but not necessarily a far-right one. A society with a vibrant economy based on ultra-low taxes and insurance policies replacing the welfare state could work in theory. In practice, though, the children of alcoholics, drug addicts and people with mental health issues might struggle more in these societies than they do elsewhere.

Indeed, one of the major blindspots of anarcho-capitalism is the way that markets are supposed to generate failures after failures, with the occasional hit now and then taking up the slack. A market society can probably only work with something else to act as a bulwark to protect the population against a life full of failure. From a European perspective, the welfare state appears an obvious choice. Early American libertarians in the 1950s used to talk about “fusionism,” or merging their movement with social conservatism. The idea was that churches would act as a bulwark to protect the population against the excesses of the market.

Imagine anarcho-capitalists managed to design a society from scratch, with private insurance policies acting as an alternative to the welfare state. What would happen next? Philosophy geeks will want to check out Robert Nozick’s arguments about how minimal states could be expected to re-emerge fairly quickly.

If you really want to geek out, you should read John Rawls first and then finish up with Amartya Sen (the winner of the Nobel Prize for economics in 1998) The backdrop to the debate is whether freedom and equality (two of the three values of the French Revolution) can ever be truly compatible. To what extent can people in a free society be equal? And to what extent can people in an equal society really be free? Rawls defends egalitarianism from a progressive point of view; while Nozick defends personal freedom from a libertarian perspective. Meanwhile, Sen says that both concepts are connected at a deep level - extreme poverty reduces personal freedom.

Nobel Prize winner Sen makes an interesting point about government welfare when he discusses the Ethiopian famines of 1973. Emperor Haile Selassie said: “We have said wealth has to be gained through hard work. We have said those who don’t work starve.” As a result, there was little state-arranged famine relief. However, his regime was violently overthrown in a bloody uprising in the midst of the famine - a point that should trouble anarcho-capitalists and other nihilists of the right. As a wise man once said: no man is an island.

Good Theory, Wrong Species

It is worth reminding readers that there are clear tensions between the extreme individualism of those anarcho-capitalists who want to smash actually existing state structures, including the welfare state, and the communitarian views of nationalists (including fascists), who tend to dominate the far-right side of the horseshoe. Although anarcho-capitalism can find a home on the far right, this doesn’t necessarily mean that its proponents should be considered fascists or neo-fascists.

There might be some exceptions, though. Rothbard’s proposal for right-wing populism has a very fascistic feel, for example. Despite his fondness for Rothbard, I suspect that commentators who have accused Milei of fascism have missed something essential in his worldview, which is best understand as an extremist spin on classical liberalism in order to promote a course change for a dysfunctional economy.

People who believe in the horseshoe theory of politics will be unsurprised to see interesting parallels between anarcho-capitalists and socialists, who both want to redesign society from scratch along simplified lines. In the 1990s, biologist E. O. Wilson (an expert in ants) icily dismissed far-left politics in four words. He summed up Marxism like this: “Good theory. Wrong species.” As competitive primates, perfect coordination will never be possible.

We can say something similar about anarcho-capitalism, which ignores our species’ innate sense of solidarity, as we discussed last week. This tempers our competitive streak. Taken to extremes, ultra-individualism is just as alien to our nature as Marxism’s quixotic quest to create a non-competitive society.

Human beings are a complex species. We are social individualists. Social psychologist Jonathan Haidt memorably described us as “90 percent chimp and 10 percent bee.”*

Individuals compete with individuals within every group, and we are the descendants of primates who excelled at that competition. This gives us the ugly side of our nature, the one that is usually featured in books about evolutionary origins. We are indeed selfish hypocrites so skilled at putting on a show of virtue that we fool even ourselves.

But human nature was also shaped as groups competed with groups. As [Charles] Darwin said long ago, the most cohesive and cooperative groups generally beat the groups of selfish individuals. Darwin’s ideas about group selection fell out of favor back in the 1960s, but recent discoveries are putting his ideas back into play, and the implications are profound. We’re not always selfish hypocrites. We also have the ability, under special circumstances, to shut down our petty selves and become like cells in a larger body, or like bees in a hive, working for the good of the group. These experiences are often among the most cherished of our lives, although our hivishness can blind us to other moral concerns. Our bee-like nature facilitates altruism, heroism, war, and genocide.

Philosopher Michael Sandel makes a similar point when he says that markets should have limits - a point that is lost on Milei, who proposed liberalising the sale of body organs before his pivot to pragmatism. We have also discussed how the tensions between liberal democracy, a market economy and the welfare state can never be fully resolved, much to the disgust of anarcho-capitalists, socialists and other hedgehogs who want to base society on a single organising principle.

If we want to go deeper, we can see parallels in the work of Adam Smith, the great Scottish philosopher and economist who discovered the power of markets in the 18th century. He coined the phrase “the invisible hand” in his second book, The Wealth of Nations (1776), to explain how markets can deliver good results for society even when participants chase their own self-interest. Libertarian hedgehogs often forget that Smith also wrote The Theory of Moral Sentiments (1759), which explored what he called “sympathy.” In modern terms, we would call this “empathy” or “solidarity.”

Understanding our split nature can help us understand Milei’s appeal to many voters in Argentina. The country’s economy has long been a basket case after decades of rule by bee-like populists, who have implemented flawed policies like rent controls while growing the state and preventing freely moving prices in the name of equality. A little chimp-like individualism is much needed to get this society back on track. Argentina needs to let Smith’s invisible hand get to work.

Please note this isn’t an endorsement of Milei, who has developed a persona as a dogmatic and eccentric hedgehog. His criticism of Argentinian elites has a populist edge. Choosing a populist to fight populism is an interesting experiment. The country needs a dose of Hayek, but there is a risk it will receive ample servings of Rothbard instead. It is difficult to predict what the results will be, given the lack of precedents. Whatever, happens, observers of Argentina will learn a lot in the months ahead.

On one core point, though, it is worth stressing that Milei is absolutely right. Argentina’s economy is a basket case. The country needs to participate more fully in what humane liberal historian Deirdre McCloskey calls “the Great Enrichment,” or the unprecedented outcomes that come from letting freely moving prices do their work in a market economy. If Milei is able to turn Argentina’s economy around, it could lead to a revolution in development economics.

Finally, I would like to conclude this week’s essay with a few words on bitcoin. The largest cryptocurrency’s main use case (up to now) would be to act as the devolved currency for an anarcho-capitalist world. Many of its proponents have a conspiratorial view, which hinges on the imminent disappearance of the state. This prediction is a little improbable, to put it politely, as alert readers of Nozick will realise.

Bitcoin has actually managed to rally a little this year, despite the fundamental issues with a project based on unregulated finance. The field is plagued by grifters - a risk flagged by Sharpen Your Axe in August 2021. Bitcoin’s two most famous promoters, Sam Bankman-Fried and Changpeng Zhao, have both turned out to have feet of clay. Although freely moving prices are clearly a force for the good, in general, regulatory oversight remains very necessary for financial products, whatever anarcho-capitalist crypto bros might tell you.

Even so, it is interesting that regulators did not shut down Zhao’s Binance platform, which tells you that crypto is probably here to stay. Although crypto might not make much sense in terms of finance, it has more value if we see it as an emergent community-based methodology looking for a use case. The comments are open. Have a great Christmas! And see you next week!

Further Reading

The Righteous Mind: Why Good People Are Divided by Politics and Religion by Jonathan Haidt

Why Liberalism Works: How True Liberal Values Produce a Freer, Fairer, More Equal, Prosperous World for All by Deirdre Nansen McCloskey

Basic Economics: A Common Sense Guide to the Economy by Thomas Sowell

*Haidt’s insight into the dual and contradictory nature of our species provides us with a skeleton key to understand the values that we have been defending throughout this project. We can sum them up with ten words: personal freedom, shielded from executive power, and tempered by solidarity.

Of course, personal freedom correlates with a market economy; protection from executive power with the institutions of liberal democracy; and solidarity with the welfare state. These values clearly have their roots in the French Revolution, with personal freedom descending from liberté; being shielded from executive power coming from equality before the law (or eqalité); and solidarity having its roots in the final value of fraternité.

Sharpen Your Axe is a project to develop a community who want to think critically about the media, conspiracy theories and current affairs without getting conned by gurus selling fringe views. Please subscribe to get this content in your inbox every week. Shares on social media are appreciated!

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Opinions expressed on Substack and Substack Notes, as well as on Bluesky, Mastodon, Post and X (formerly Twitter), are those of Rupert Cocke as an individual and do not reflect the opinions or views of the organization where he works or its subsidiaries.