Extensions of Rothbardian Anarchist Analytics

0:00So the question I'm interested in is, studying to what extent economists agree that markets are a good thing, but, there's always a but, often it's a really big but, most economists believe that markets require some degree of state intervention, Specifically, almost all economists believe that the state is necessary for the enforcement of contracts. And I'll just give you this typical position. Richard Epstein of Chicago, under its classical liberal formulation, the great social contract sacrifices liberty, but only to the extent that it is necessary to gain security against force and fraud.

0:46Perhaps we might go farther, but surely we go this far. Law, he says, becomes critical to offer a secure framework for these voluntary transactions to take place. He says, one would be a naive visionary to believe that markets could operate of their own volition without any kind of support from the state. Okay, so this is the classical liberal consensus. All of these people, Hayek, Mises, Rand, Stigler, Friedman, believe that law enforcement must be provided by the state. So that's even the biggest advocates of liberty are also advocates of the state.

1:32Now, since then, mainly in the last 40 years or so, there is an alternative which is becoming more popular and I'll call this the private property anarchism of Rothbard and many subsequent writers. Rothbard basically questioned the idea that markets depend on the state. He questioned the idea that private law enforcement cannot exist and he also questioned the idea that government is created to fix problems with the market. In Rothbard's writings, he gave some theoretical arguments about how markets could work privately without government law enforcement.

2:22Law Enforcement, so he described his vision, and he also pointed to some examples of markets that functioned without relying on public law enforcement. So private law enforcement, and there's really some great work on this, if you act now, you too can own a copy of Anarchy in the Law by Edward Stringham. And at no additional charge, you get this wonderful free picture of me. Okay, so there's some historical examples of private law enforcement.

3:10But many people, even if you tell them that, they say, well, these are just peculiar episodes from the past. It couldn't work today. Maybe it could work in Iceland 700 years ago. But you can't have a complicated market today without government law. So they can look at any one of these studies, many of which are included in this great book. And they might say, well, okay, yeah, there's some studies of trade without external enforcement, Enforcement, but a lot of them are from primitive societies, from the past, ethically homogenous societies. I don't know if it would work. They say, yeah, there's some theories of how markets can have self-enforcing contracts, but the conventional view is that sophisticated markets, such as stock markets, financial markets, all the things we have today cannot emerge unless there is government Supervision. I just want to give you a couple quick quotes to give you the standard view on this. Manker-Olson, most of the gains from transactions like those in capital market require impartial third-party enforcement.

4:31Gordon Tullock, my former professor, transactions in which large payments will be made in the future would be impossible if we depended solely on the The Discipline of Continuous Dealings, and Janet Landa, The Discipline of Continuous Dealings cannot be relied upon if credit transactions are important. So what I want to talk about today is, are the classical liberals correct that sophisticated markets require government? Or was Rothbard on to something? Maybe even advanced markets, including stock markets, do not require government. And whenever there's a debate, I view it as an opportunity as a scholar to say, well, let's start writing about this.

5:20If someone makes a strong claim, markets can never do something. This is a potential research opportunity that can help either disprove that position or corroborate it in the other position. So when people are going around saying, all swans are black, if we find some white swans, we can help disprove this claim. So our examples of stateless orders, only examples from small, simple, close-knit markets. There's many potential case studies that one could do, and I've done a few, There are a few, but I want to share with you just one that I've conducted just to indicate an example of some of the things I'm doing.

6:11Okay, so what I am going to talk about today is a case study of the world's first stock market, and does anyone know where this is? All right, okay, 17th century Amsterdam. What I'm gonna do is I'm gonna talk about the legal and regulatory climate, and then I'm gonna look at a primary source to see the de facto practices of the stock market. Maybe economists can learn something by studying the evolution of the world's stock markets. Was it the case that government created this legal system And only later did that enable the markets to emerge, or did things go in a different order.

6:59Okay, and before I talk about the specifics of Amsterdam, I just wanted to talk about some preliminary evidence by some people who've addressed this. The first one is by Adam Smith, actually did discuss this in lectures on jurisprudence. I know that Adam Smith is sometimes a statist, but he does say some good things from time to time, many times actually. He talked about how in England buying stocks by time is against the law. He says the law gives no redress for a sum above five pounds. But he goes on to discuss how people do engage in these forward contracts and he says that the law is not effective.

7:48He says, in the same manner, all laws against gaming never hinder it. People actually go on and make these trades. But even though they're not enforceable in courts of law, he says, yet all the great sums that are lost are punctually paid. So there are these contracts taking place even though they're not enforceable in courts of law. He says, what's the explanation? He says, persons who game must keep their credit, else nobody will deal with them. It is quite the same for stock-jobbing. They who do not keep their credit will be turned out and in the language of change alley be called a lame duck. So this is a picture from 18th century England of the, kind of hard to see, but it does say Change Alley and there's a duck there waddling out.

8:40If you don't follow through with your contracts, people say, get out of here, we're not going to deal with you, because you don't want to be cheated. He says, of all the nations in Europe, the Dutch, the most commercial, are the most faithful to their word. It is reducible to self-interest, that general principle which regulates the actions of every man and which leads men to act in a certain manner from the views of advantage. A dealer is afraid of losing his character and is scrupulous in observing every engagement. When a person makes 20 contracts in a day, he cannot so much gain so much by endeavoring to impose on his neighbors as the very appearance of a cheat would make him lose, okay?

9:31So when you're in business and you're looking to get customers, you're not going to be able to get a lot of customers and stay in business very long if everybody knows you're a cheat, okay? So if you want to attract lots of business, you've got to establish a reputation, whether or not the law is telling you to do something. And the next bit of preliminary evidence I want to discuss before I talk about Amsterdam is this statement here by Janet Landa. There's actually a linguistically problematic part of the statement. Does anybody see what's linguistically wrong with the statement? Does anyone know the origin of the word credit? Where does the word credit come from, from Latin?

10:18What does it mean? Okay, good, alright. Belief, trust or reputation, okay? So rather than credit transactions being called transactions that require external government enforcement for them to work, okay, that's not how they were named. And there were transactions that require reputation and trust. And this is different from the governmental view. Okay. All right. So let me just give you some background of Amsterdam and then I can talk about the market. Amsterdam in the 1600s, this was a long time ago, right? Pretty undeveloped compared to what we have today.

11:05It was right after the Protestant Reformation. Here's a picture. It's called Fishing for Souls. The Catholics are on the right. The Protestants are on the left. In Amsterdam, they seceded from the government of Spain. And so it was kind of this new country. And one of the things they decided to have was more tolerance than in Spain before them. Other things we think about during this time period is things like windmills or flowers, including tulips. The most important thing was in the 17th century Netherlands, they invented Dutch gin, which is really important. If those of you haven't read it, I was in some national media recently for an article I had documenting how drinkers earn more money than non-drinkers.

12:02So, what the Dutch did is they started drinking, and they said, well, let's start making more money. I like that. They started looking to trade as a way of making more money, and they started to look to places that were traditionally monopolized by the Spanish and Portuguese as a way of making money. And this is a clavichord lid painting here that indicates Amsterdam. This is from 1606. They were already considering themselves the center for world trade, a society that relied heavily on commerce. So they started sending ships out around the globe.

12:50And one area was to the East Indies, which they viewed as a potentially lucrative trading area. One thing about this is it was very risky, okay? And the statistics from the late 1600s, but even in the late 1600s, 5% of ships would not come home, okay? So if you're just one person and you put all your eggs in one basket and your ship sinks, you're in a lot of trouble. So what the Dutch people realized is, well, what if we pool our money, okay? Send out 100 ships, not all of them come back So they created, right around 1600, the Dutch East India Company, which raised money from 3,000 investors from all over Holland, different types of people, and they issued shares, okay?

13:49So you would own a fraction of this company rather than owning the entire thing. The interesting thing about this was it wasn't initially created to be a long-term venture. They were going to send out a bunch of ships, they were going to come back, cash in the profits, liquidate the assets and that was it. But when the ships started coming back and they were making so much profits, They said, well, let's start reinvesting the profits and make this an ongoing venture. So this is something that kind of just evolved. The government didn't really think of this or anything. It's just something that happened. And for the first 10 years, they paid no dividends. And on the 11th year, they paid dividends of roughly 100% of your initial investment.

14:38So it was a pretty good thing. The other thing, they didn't plan ahead of time. I didn't plan that there was going to be a secondary market in shares. So initially, when you wanted to trade your share, you'd have to go in with the other person who you want to trade the share in, go to the offices of the East India Company, meet with some fine-looking gentlemen like this, and they would open their books and have the shares traded, which worked, but it involved high transaction costs. People after a while said, well, there's lots of people who want to trade and so people started specializing in being stock brokers that said, alright, I've got a bunch of people who want to buy, a bunch of people who want to sell, I'll just keep records of this and then I'll go to the offices every so often to minimize those transaction costs.

15:33So the brokers started trading on the Amsterdam bourse, which is here, there's a commodities exchange, they traded things like grains, whale oil, herring, tulips, all a bunch of things, and the stockbrokers occupied a corner of the exchange. This building no longer exists. It was built by this guy, but I was in Amsterdam last summer walking around and I saw this building built in the 1600s and it says built by Hendrik de Keeser. So some of these buildings are still around. It's kind of amazing. You get to see some just amazing sights in Amsterdam. And the company and the stock market grew with popularity along with the good fortunes of the East India Company.

16:37So over this century, this is the stock price appreciation. It's pretty steady, and over this entire century they paid an average of dividends of 22.5% per year for an entire 100 years. So it was a significant amount of money. At the end of the century they had factories in East India. Here's a whale oil factory. Here's one of their plants in Indonesia. And it created a lot of wealth and made certain people like this gentleman very wealthy. At the end of the century, they had 300 ships traveling back and forth.

17:24And they had over 20,000 employees, which is really large considering the fact that Amsterdam's population was only 50 or 100,000 people. So it was a very large concern. There was also a publicly traded firm. The other one was the West India Company. It started out with the same, roughly, number of investors and same size. But this one, they went to the West Indies. Here's a sugar plantation in Brazil. This one, in contrast, didn't do so well. I did some econometric analysis on this, And I found that this company is tracking exactly my investments in dot-com stocks. All right, okay, so those are the companies.

18:18Now I want to talk a little bit about the legal and regulatory status climate during this time. During the first decade of the trading, it started actually catching on and people started applying some relatively sophisticated contracts to it. They started engaging in short sales and types of forward contracts, but the government viewed the stock market with suspicion. The government thought it was a form of gambling. They said that all these people who are trading all the time, they're just doing this to manipulate and suppress stock prices.

19:05In 1608, the shares fell by 35% and the government blamed short sellers. So in 1610, the government then outlawed short selling or selling in Blanca. In 1621, they outlawed other forward contracts, Windhandle, which is trading in wind. How can you trade something that you don't own? That's what they said. Other ordinances in 1623, 24, 30, 36 and 77 outlawed other types of stock market transactions that we have that are legal and commonplace today, but at the time, they just did not like them. I was in Amsterdam Museum last summer and I saw these plates. It's kind of interesting.

19:57And you can see they have these little sayings on them. Does anyone here speak Dutch? They've got these sayings on them. And if you translate them, it says things like, away with dandy speculators. So this guy is a speculator. He's got a tennis racket, whatever type of He's playing with money. He's a very whimsical guy. These things say, squeeze the speculators tight, down with speculators, away with actions and speculators. I don't know who buys plates like this. So the law was motivated by a moralistic attack against speculation, rather than some sophisticated Joseph Stiglitz argument about economics.

20:55The Dutch authorities did not know as much about stock markets, the benefits of things like short selling as modern economists. So the law basically said, unless you transfer the shares to the other party within 14 days, Then it's going to be against the law. So that's how that worked. Interestingly, they did not actively punish people. The only thing they did is they said, if you engage in these illegal transactions, they're not going to be enforced in courts of law. So they were de jure, very strict, but de facto very hands-off. Not too much involvement. The government had better things to do, like go to the horse fairs, or here, this is kind of a neat picture, the assembly of the state general, 1651, Holland simply refused to approve a new stat holder.

21:54So it was kind of like this tenuous situation, not as organized as they didn't have a George Bush at the time. all right okay so the next thing I want to do is look at a primary source to see actually what was going on in the stock market there's not a lot of data from the 1600s but luckily I found an excellent account and there's this book published in 1688 Confusión de Confusiones by Joseph Penso de la Vega who was a stock And he wrote this book in the form of a dialogue between different characters where the different characters would say, Tell me, how does the stock market work? And the other characters say, Oh, it works like this, this and this.

22:44And the other one would say, And then how does this work? And the other one would explain it. So it's kind of written as a manual or frequently asked questions type of thing that you might see on the Internet.

23:01Okay, so the first thing he does is he talks about different types of transactions and whether or not they are legal or illegal. The first one he discusses is short sales and how they're against the law.ology. Frederick Henry promulgated an ordinance according to which he who sold shares for future delivery without putting them on a time account should be exposed to a danger that the buyer will not take the pieces at the time fixed upon. So when someone doesn't have the money to cover their position they might quote appeal to Frederick.

23:47So you sell something short, you're hoping it goes down, you can buy low and then give them the shares. But if it goes up, you've got to buy these shares at a higher price. Well, if that happened, people might say, oh, did we engage in this transaction? I'm sorry, that was illegal. I'm not going to pay you. So people could do that. And here's just some quotes. He says, if you act with unfair intentions, there is the ordinance of Frederic Henry in case of an unfavorable turn. So people could appeal to Frederic, but nevertheless, this was not common. The guy says, what do you do in these situations? He says, well, this is what you're supposed to do. He says, when a loss occurs, the losers are expected to pay at least what they have available at the moment.

24:36And it might be expected that when the wound is fresh, there would be no new injury. Other people gradually fulfill their obligations after having sold their last valuables, and thus meet with punctuality the reverses of misfortune. So despite people being able to call upon the law to get out of their contract, they actually didn't do that. People paid even though they didn't have to. So why is this? The real world is very different from the standard simple game theory prisoner's dilemma, which says people are always going to cheat, okay? It's always in your incentive to cheat. Well, there's not a lot of one-shot prisoner's dilemmas.

25:21If you're dealing with people every day, you cheat once, how many other times is that person going to deal with you? So markets have incentives. The discipline of continuous dealing says to people, you've got to be reliable otherwise you're not going to get any business. Other contracts he describes are different types of long-forward contracts. He describes how they have printed forms where they would then fill out the details of the amount of money, The dates, they would sign them, exchange them, and here, too, these were illegal. He says, the regulation applies in the case of time bargains, unless the seller has the shares transferred to the time account of the purchaser within a fortnight.

26:13The seller, as well as the buyer, is allowed to appeal to Frederic. If I have bought a share under these circumstances, I need neither declare myself bankrupt in order to free myself, nor disappear in order to shake loose. I can merely appeal to the edict. Okay, so this is something that's against the law, but nevertheless these forward contracts were very common throughout the entire century. All right, the next one, I just have a question. Does anyone know when options were invented? I was born in 1975, so if you were to ask me when options were invented, I'd say probably about 1975, right? Sound like a good one?

27:03Actually, do you know? The 1600s, they actually had very sophisticated options, markets, calls, puts, all of that stuff. He discusses this, how the contracts look, and he says, As to whether the regulation is applicable to options contracts, the opinions of experts diverge widely. With regard to the put premium, there are also great differences of opinion. For while the scholars assume that no legally valid claims can be made because of the regulation, there are contrary decisions by the courts, so that the law and legal opinion, the regulations and the decisions are contradictory.

27:55The theory remains uncertain, and one cannot tell which way adjudication tends. Okay, so government officials aren't always the most knowledgeable about modern finance theory, so the people could not rely on the courts of law. The next thing they had is called hypothecation, where you use an equity as collateral for a loan, if you pledge that as the collateral. However, if the price of the equity starts going down to below the value of the loan, your ability to pay might... it decreases, so people would have to actually sell the shares and repay the loan when this happened.

28:45But here too, he describes how you can raise the objection. The person who borrowed the money says, oh, actually this was illegal and so I don't really want to pay. However, this is not common. He says the mortgagee is obliged to pay the difference or declare himself insolvent. Okay, so these very sophisticated arrangements all against the law, right? If you're, you know, you're a banker and you need to have a reliable reputation to engage in business. The next thing they had was a type of securitization, which is basically creating new securities based on the existence of other securities.

29:34So back then they didn't have stock splits or stock dividends the way we have now. So the price of the shares had gone up to 15,000 guilders and daily wages for a laborer was roughly one gilder per day. So it would take a lifetime of earnings to buy one share, and that's obviously going to preclude lots of people from the market. And what people figured out is, well, let's create these new things called small shares. And we'll create 100 small shares will be equal to one large share. And he describes it as if it's like when you break a mirror and you've got a bunch of small mirrors, it's still the same size as the original.

30:19the original mirror and he talks about how popular this had become because it really allowed a lot more people to get into the market he says this and it was called it was called trading in Ducaton shares because this would be the rich people all the other people couldn't afford to buy it so it's called trading in Ducaton shares which is just a very small coin he says this branch of trade has been increasing during the last five years to such an extent and mainly with a certain group which is as boisterous as it is quick-witted that it is engaged in by both sexes, old men, women and children. He goes on he says, even children who hardly know the world and at best own a little pocket money agree that by that each point by which the large shares rise or fall will mean a In a certain amount of their pocket money for their small shares, if one were to lead a stranger through the streets of Amsterdam and ask him where he is, he would answer, among speculators, for there is no corner in the city where one does not talk shares.

31:31Okay, so this is a really just an amazing innovation, purely private. By the time government addressed trading in Ducaton shares, they declared it to be a form of gambling and a bet. So that too was not enforceable in courts of law, but they developed a very sophisticated system. People would hire a private party. They'd make the agreement with them. And then at the end of the month, this private party would go to the stock exchange, find out the price and then he would come out and there was this process called raising the stick where he'd raise the stick and say the price for these shares is this and there was like a big ruckus every time and they had to stop raising the stick but it worked really well and got a lot of people into the market and this is a purely private innovation rather than a government plant.

32:28Innovation. All right, so why did people follow through with their bargains? It obviously wasn't because of the law. There's a bunch of other potential hypotheses that people, critics of private ordered systems might say well it only worked because it's a small closed old boys network. This clearly was not the case. It was open to all different types of people. He describes how some live opulently, nevertheless, there are numerous people in the business simply for the reason of providing decently for the families, he says.

33:13Other dialogue, one of the characters says, how can I get involved? I have limited capital. I think that will preclude me from trading because there would be, quote, nobody to give me credit, but he's told to start with options, which is potentially lower risk, until he can, quote, gain in reputation for generosity as well as foresight, okay? So people could get into this market if they wanted to. A couple other hypotheses people have is they say, well, it can only work if everyone's In the book, my research indicates that traders followed through with their bargains not because of law or any of these other things, but simply because of market incentives.

34:19Okay? We see this in this market. We see this in markets today. Okay? Go on the internet and you see a website you've never heard of. Sometimes people will buy from that, but many times they won't. Say, I want to go to the established one. I'm willing to pay a premium. Or you go onto eBay and you see the person with the higher reputation score and you say, oh, this person is a reliable person. The market has created incentives for people to follow through with their bargains because, you know, obviously no one wants to get cheated. When you're dealing with someone a long time, you're not going to want to cheat each other. And when people are dealing with lots of other people, as long as they can share information about reputation and reliability of the other parties, then this can work.

35:13Alright, so let me just give you some, a couple more quotes to illustrate the importance of reputation in this market. He says, he says, the exchange business is comparable to a game. Some of the players behave like princes and can combine strength with tenderness, amiability with intelligence. I love reading about myself like that.

35:49But there are some participants who lose their reputation and others who lack devotion to their business even before the play begins. And as we would expect, the untrustworthy brokers are not going to get a lot of business compared to the trustworthy brokers. Since the status, the insignificant capital, the low reputation and the limited trustworthiness of such people are well known, they do not dare attempt to carry on any considerable business.

36:49So you've got to work to get your customers and people can talk, people can say don't deal with that person. and the people who can provide assurances that they're going to be more reliable are going to get more business and he describes this he says so great is the loyalty of some brokers to their principles whom they usually call their masters and so great is their industry their activity their zeal and their vigilance that the customers get their money's worth and I'll just finish up with one last nice quote he says to be sure there is with its wide-spread honesty and expedition on the exchange. For example, the business and stocks and the bustle of the sales which are made when unforeseen news occurs is wonderful to behold.

37:40Nobody changes the decisions which he makes in his momentary passion and his words are held sacred even in the case of a price difference of 50%. And although tremendous business is done by merchants without the mediation of brokers who could serve as witnesses, no confusion occurs and no quarrels take place. Such honesty, cooperation and accuracy are admirable and surprising. Okay, so some conclusions from this study. Government was not supportive of the world's first stock market. Nevertheless, traders developed very sophisticated contracts.

38:34The market, I find this case study interesting because the market was complex. It wasn't just a simple barter market, the market had lots of people, there were hundreds of brokers. The market had heterogeneous people, so lots of different people from different groups were interacting. And it worked even as some shares, you know, the shares were going up and down, some people were gaining, other people were losing. So it wasn't just the case where everyone was making money hand over fist. It worked over a hundred years throughout this entire swings in the market. So the stock market, in my opinion, developed not because of the law but in spite of the law. And the last thing that I find extremely interesting about this market is it worked basically without any formal enforcement.

39:26So often times private parties hire formal third party enforcement that is private, but here's an example of this working without that. So the idea that you have to have written contracts with formal arrangements for everything you do I think is overrated in the current world. So, to conclude, government is not necessary for the enforcement of contracts, even in sophisticated markets. And in my opinion, the more evidence we can amass of this, I think it's just a gold mine, we can just keep digging up more and more examples of this.

40:13The more evidence that we can amass of this, the less likely people like Mises, that statist Mises, Hayek, that statist Hayek, Wren, that statist Wren. I'm just kidding. I like these people. I like all of them. They're all my friends. Stigler and Friedman, the less likely they are to assume that private enforcement of contracts is impossible. It's just simply not true. Now, people might respond and they might say, well, okay, we grant that private law enforcement is possible.

40:58But they might say, well, socialized law enforcement is going to be better for these reasons. private law enforcement is going to be suboptimal and they can make that argument but that's a completely set separate set of arguments and I'd like to have people you know I'd like to have people having that debate compared to the position of 50 years ago where it's like no no no that's that's simply impossible I'd like to shift the debate I've talked about an example of contracts without external enforcement Management or an example of a private ordering. There's basically a million areas that we might study and I'm just one of the many people contributing to this very excellent field, but there's people like Bruce Benson and other people who are documenting examples of criminal law, alternatives to criminal law I should say, court law, property law, police, So what I would like to see is people just taking a subject and, okay, let's have 10 articles about each subject and then have 10 more people write 10 more articles and then, you know, at the end of the day, we're going to have this huge body of work that will document, look, the idea that government needs to do all this stuff is not exactly clear.

42:33So the more research we do, the more we can unravel what I consider the feeble case for socialized law enforcement. Markets work! Thank you. All right, so we've got some time for questions. Yeah. Thank you. I agree pretty much entirely with everything. Great. Excellent question. Okay, next one. The way you use the word law, you say people enforce their contracts even though there wasn't support from the law, and I think you're using law in the sense that, I don't use it that way anymore, I say government law, because in fact law is, as you prove in your book, law exists before government exists.

43:39I'm moving away from, like Milton Friedman said, we shouldn't have let them steal our word, which is liberal. We shouldn't have let them steal that other L word, law, because in fact law grows privately, everywhere, wherever people meet and pray. I totally think you're making an excellent point. The question said law precedes government and I totally agree with that. So should I change my language when I say when it's against the law?

44:24I could have added, when it's against government laws, but my talk would have been too long. Have you sent this to Gordon Tulloch, and if so, what did he have to say back to that? Yeah, I actually presented this in front of Gordon Tulloch, and then afterwards he said, He said, what's your address? And I gave it to him, and then he sent me something. And it was on, it's called, The Non-Prisoners' Dilemma, where it's really not a big problem. And the next time I saw him, he said, see, I'm not really a statist. Yeah.

45:11I found it fascinating. I'm not sure it proves the point you're trying to make, That's the point you're trying to make. The fact that, let's call it a business model, developed spontaneously, in spite of the fact that there wasn't specific legislation on it. In fact, legislation is usually way behind, trying to regulate and control businesses and activities that are already there. So, you know, I find it interesting that this develops spontaneously, but it doesn't really say that this could develop in the total absence of authority, which I think would be more an anarchist argument.

46:05The question would be, could it have developed in the absence of authority, not in the absence of legislation? Given that it does develop in the absence of legislation, but can it develop in the absence of authority?

46:35and Property Rights. Interestingly, actually, the East India Company had their own private militaries with their boats, they protected their boats all over, and there were some problems, but you're certainly right, this is just addressing one aspect, but I think it does get at a bunch of people say, today markets, financial markets, you can't have them without legislation, and I think that's what I'm showing is not necessarily true. The question about authority, I think that's a good one. It's just a matter of what kind of authority. And the history of financial markets were self-governing authorities rather than publicly governed authorities.

47:23I didn't mean that. I just meant that under the umbrella of an authority. No, it's common law and judgmental law. I mean, this would exist without any legislation.

47:59I've done some other work. The question is, what forces people out of the market is ostracism. I have other work on the London Stock Exchange, and it's a very similar story. They transformed coffee houses into private clubs. If you didn't follow the rules, you would get kicked out Do you know of any case in which you didn't keep an aeroplane because of the fact that both his son and his dad's son are in it?

48:58I'm not wanting to answer and I kept pressing and pressing them and then finally said, number six, David Friedman, so, so, yeah, number seven was, was Ed Stringham, Dan.

49:28and also the complexity of the issues and whatnot. But I guess I'm kind of skeptical as to whether or not you're living up to the terms or the way they use them.

49:44So, they may say complex and heterogeneous, altruistic and very different things. You mentioned earlier that young and old men and women, but they were still all Dutch.

49:58Portuguese people who had fled at that time. So there was all different languages going on during the exchange.

50:28No, I think you're making a good point. There are some more modern, sophisticated arguments about how it can only work in certain cases. But at least some of the traditional classical liberals wouldn't even grant the possibility of private ordering at all. So yes, I agree with you that you could come up with a more complex market. The stock market in London 100 years later was more complex or markets today are more complex, there's more people, so I'm not saying this is the most complex market ever, but I think that it is showing that it's much more sophisticated than a barter market, which is what people like Manker-Olson say, well you can have barter but you can't have anything else, so good question, yeah.

51:52... Wow. Wow. Thank you for the fascinating story. Walter.

52:41I want to put a wet blanket on you, Walter.

53:19I totally agree with you, Walter, and I think this is just one piece of evidence to say if you want to be intellectually honest about it, you can't make those claims. So thank you very much for being such a great professor to me.

53:49is another one.