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<html>
<head>
<title>
F.9 Is Medieval Iceland an example of "anarcho"-capitalism working in practice?
</title>
</head>
<p>
<h1>F.9 Is Medieval Iceland an example of "anarcho"-capitalism working in practice?</h1>
<p>
Ironically, medieval Iceland is a good example of why "anarcho"-capitalism
will <b>not</b> work, degenerating into de facto rule by the rich. It should be
pointed out first that Iceland, nearly 1,000 years ago, was not a capitalistic
system. In fact, like most cultures claimed by "anarcho"-capitalists as
examples of their "utopia," it was a communal, not individualistic, society,
based on artisan production, with extensive communal institutions as well as 
individual "ownership" (i.e. use) and a form of social self-administration, 
the <b>thing</b> -- both local and Iceland-wide -- which can be considered a 
"primitive" form of the anarchist communal assembly.
<p>
As William Ian Miller points out <i>"[p]eople of a communitarian nature. . .
have reason to be attracted [to Medieval Iceland]. . . the limited role
of lordship, the active participation of large numbers of free people . . .
in decision making within and without the homestead. The economy barely 
knew the existence of markets. Social relations preceded economic 
relations. The nexus of household, kin, Thing, even enmity, more than the
nexus of cash, bound people to each other. The lack of extensive economic 
differentiation supported a weakly differentiated class system . . . [and
material] deprivations were more evenly distributed than they would be
once state institutions also had to be maintained."</i> [<b>Bloodtaking and 
Peacemaking: Feud, Law and Society in Saga Iceland</b>, p. 306]
<p>
Kropotkin in <b>Mutual Aid</b> indicates that Norse society, from which the
settlers in Iceland came, had various "mutual aid" institutions, including
communal land ownership (based around what he called the <i>"village community"</i>)
and the <b>thing</b> (see also Kropotkin's <b>The State: Its Historic Role</b> for a
discussion of the "village community"). It is reasonable to think that
the first settlers in Iceland would have brought such institutions with
them and Iceland did indeed have its equivalent of the commune or "village 
community," the <b>Hreppar</b>, which developed early in the country's history. 
Like the early local assemblies, it is not much discussed in the Sagas but 
is mentioned in the law book, the Gr�g�s, and was composed of a minimum of
twenty farms and had a five member commission. The Hreppar was self-governing
and, among other things, was responsible for seeing that orphans and the 
poor within the area were fed and housed. The Hreppar also served as a 
property insurance agency and assisted in case of fire and losses due to 
diseased livestock. The Hreppar may have also have organised and controlled
summer grazing lands (which in turn suggests "commons" -- i.e. common
land -- of some kind).
<p>
Thus Icelandic society had a network of solidarity, based upon communal life.
In practice this meant that <i>"each commune was a mutual insurance company, or
a miniature welfare state. And membership in the commune was not voluntary. 
Each farmer had to belong to the commune in which his farm was located and 
to contribute to its needs."</i> [Gissurarson quoted by Birgit T. Runolfsson 
Solvason, <b>Ordered Anarchy, State and Rent-Seeking: The Icelandic Commonwealth,
930-1262</b>] However, unlike an anarchist society, the Icelandic Commonwealth
did not allow farmers <b>not</b> to join its communes.
<p>
Therefore, the Icelandic Commonwealth can hardly be claimed in any 
significant way as an example of "anarcho"-capitalism in practice. This 
can also be seen from the early economy, where prices were subject to popular 
judgement at the <b>skuldaping</b> (<i>"payment-thing"</i>) <b>not</b> supply and demand.
[Kirsten Hastrup, <b>Culture and History in Medieval Iceland</b>, p. 125]
Indeed, with its communal price setting system in local assemblies, the
early Icelandic commonwealth was more similar to Guild Socialism (which
was based upon guild's negotiating "just prices" for goods and services)
than capitalism. Therefore Miller correctly argues that it would be wrong 
to impose capitalist ideas and assumptions onto Icelandic society:
<p><blockquote>
<i>"Inevitably the attempt was made to add early Iceland to the number of
regions that socialised people in nuclear families within simple
households. . . what the sources tell us about the shape of Icelandic
householding must compel a different conclusion."</i> [<b>Op. Cit.</b>, p. 112]
</blockquote><p>
In other words, Kropotkin's analysis of communal society is far closer
to the reality of Medieval Iceland than David Friedman's attempt in
<b>The Machinery of Freedom</b> to turn it into a capitalist utopia. 
<p>
However, the communal nature of Icelandic society also co-existed (as 
in most such cultures) with hierarchical institutions, including some with 
capitalistic elements, namely private property and "private states" around
the local <b>godar.</b> The godar were local chiefs who also took the role of 
religious leaders. As the <b>Encyclopaedia Britannica</b> explains, <i>"a kind of
local government was evolved [in Iceland] by which the people of a
district who had most dealings together formed groups under the leadership
of the most important or influential man in the district"</i> (the godi). 
The godi <i>"acted as judge and mediator"</i> and <i>"took a lead in communal
activities"</i> such as building places of worship. These <i>"local assemblies.
. . are heard of before the establishment of the althing"</i> (the national
thing). This althing led to co-operation between the local assemblies.
<p>
Therefore we see communal self-management in a basic form, <b>plus</b> 
co-operation between communities as well. These communistic, mutual-aid
features exist in many non-capitalist cultures and are often essential for
ensuring the people's continued freedom within those cultures (section
<a href="secB2.html#secb25">B.2.5</a> on why the wealthy undermine these popular <i>"folk-motes"</i> in favour 
of centralisation). Usually, the existence of private property (and 
so inequality) soon led to the destruction of communal forms of 
self-management (with participation by all male members of the 
community as in Iceland), which are replaced by the rule of the 
rich.
<p>
While such developments are a commonplace in most "primitive" cultures, 
the Icelandic case has an unusual feature which explains the interest 
it provokes in "anarcho"-capitalist circles. This feature was that
individuals could seek protection from any godi. As the <b>Encyclopaedia
Britannica</b> puts it, <i>"the extent of the godord [chieftancy] was not fixed
by territorial boundaries. Those who were dissatisfied with their chief
could attach themselves to another godi. . . As a result rivalry arose
between the godar [chiefs]; as may be seen from the Icelandic Sagas."</i> It
is these Sagas on which David Friedman (in <b>The Machinery of Freedom</b>)
bases his claim that Medieval Iceland is a working example of "anarcho"
capitalism.
<p>
Hence we can see that artisans and farmers would seek the "protection" of 
a godi, providing their labour in return. These godi would be subject to 
"market forces," as dissatisfied individuals could affiliate themselves 
to other godi. This system, however, had an obvious (and fatal) flaw. As 
the <b>Encyclopaedia Britannica</b> points out:
<p><blockquote>
<i>"The position of the godi could be bought and sold, as well as inherited;
consequently, with the passing of time, the godord for large areas of the
country became concentrated in the hands of one man or a few men. This was
the principal weakness of the old form of government: it led to a struggle
of power and was the chief reason for the ending of the commonwealth and 
for the country's submission to the King of Norway."</i>
</blockquote><p>
It was the existence of these hierarchical elements in Icelandic society 
that explain its fall from anarchistic to statist society. As Kropotkin 
argued <i>"from chieftainship sprang on the one hand the State and on the 
other <b>private</b> property."</i> [<b>Act for Yourselves</b>, p. 85] Kropotkin's 
insight that chieftainship is a transitional system has been confirmed 
by anthropologists studying "primitive" societies. They have come to the 
conclusion that societies made up of chieftainships or chiefdoms are 
not states: <i>"Chiefdoms are neither stateless nor state societies in the 
fullest sense of either term: they are on the borderline between the two. 
Having emerged out of stateless systems, they give the impression of being
on their way to centralised states and exhibit characteristics of both."</i> 
[Y. Cohen quoted by Birgit T. Runolfsson Solvason, <b>Op. Cit.</b>] Since the 
Commonwealth was made up of chiefdoms, this explains the contradictory
nature of the society - it was in the process of transition, from anarchy
to statism, from a communal economy to one based on private property.
<p>
The <b>political</b> transition within Icelandic society went hand in hand with
an <b>economic</b> transition (both tendencies being mutually reinforcing).
Initially, when Iceland was settled, large-scale farming based on extended
households with kinsmen was the dominant economic mode. This semi-communal
mode of production changed as the land was divided up (mostly through
inheritance claims) between the 10th and 11th centuries. This new economic
system based upon individual <b>possession</b> and artisan production was then
slowly displaced by tenant farming, in which the farmer worked for a
landlord, starting in the late 11th century. This economic system (based 
on a form of wage labour, i.e. capitalistic production) ensured that 
<i>"great variants of property and power emerged."</i> [Kirsten Hastrup, <b>Culture 
and History in Medieval Iceland</b>, pp. 172-173] During the 12th
century wealth concentrated into fewer and fewer hands and by its 
end an elite of around 6 wealthy and powerful families had emerged.
<p>
During this evolution in ownership patterns and the concentration of wealth 
and power into the hands of a few, we should note that the godi's and wealthy
landowners' attitude to profit making also changed, with market values 
starting to replace those associated with honour, kin, and so on. Social 
relations became replaced by economic relations and the nexus of household, 
kin and Thing was replaced by the nexus of cash and profit. The rise of 
capitalistic social relationships in production and values within society
was also reflected in exchange, with the local marketplace, with its
pricing <i>"subject to popular judgement"</i> being <i>"subsumed under central
markets."</i> [<b>Ibid.</b>, p. 225]
<p>
With a form of wage labour being dominant within society, it is not surprising
that great differences in wealth started to appear. Also, as protection did 
not come free, it is not surprising that a godi tended to become rich also. 
This would enable him to enlist more warriors, which gave him even more 
social power (in Kropotkin's words, <i>"the individual accumulation of wealth 
and power"</i>). Powerful godi would be useful for wealthy landowners when
disputes over land and rent appeared, and wealthy landowners would be 
useful for a godi when feeding his warriors. Production became the means 
of enriching the already wealthy, with concentrations of wealth producing 
concentrations of social and political power (and vice versa). Kropotkin's
general summary of the collapse of "barbarian" society into statism seems 
applicable here - <i>"after a hard fight with bad crops, inundations and 
pestilences, [farmers]. . . began to repay their debts, they fell into 
servile obligations towards the protector of the territory. Wealth 
undoubtedly did accumulate in this way, and power always follows wealth."</i> 
[<b>Mutual Aid</b>, p. 131]
<p>
The transformation of <b>possession</b> into <b>property</b> and the resulting rise
of hired labour was a <b>key</b> element in the accumulation of wealth and power,
and the corresponding decline in liberty among the farmers. Moreover, with
hired labour springs dependency -- the worker is now dependent on good 
relations with their landlord in order to have access to the land they need.
With such reductions in the independence of part of Icelandic society, the
undermining of self-management in the various Things was also likely as 
labourers could not vote freely as they could be subject to sanctions from 
their landlord for voting the "wrong" way. Thus hierarchy within the
economy would spread into the rest of society, and in particular its
social institutions, reinforcing the effects of the accumulation of
wealth and power.
<p>
The resulting classification of Icelandic society played a key role in its 
move from relative equality and anarchy to a class society and statism. 
As Millar points out:
<p><blockquote>
<i>"as long as the social organisation of the economy did not allow for
people to maintain retinues, the basic egalitarian assumptions of the
honour system. . . were reflected reasonably well in reality. . . the
mentality of hierarchy never fully extricated itself from the egalitarian 
ethos of a frontier society created and recreated by juridically equal
farmers. Much of the egalitarian ethic maintained itself even though it
accorded less and less with economic realities. . . by the end of the
commonwealth period certain assumptions about class privilege and
expectations of deference were already well enough established to have
become part of the lexicon of self-congratulation and self-justification."</i>
[<b>Op. Cit.</b>, pp. 33-4]
</blockquote><p>
This process in turn accelerated the destruction of communal life and the 
emergence of statism, focused around the godord. In effect, the godi and
wealthy farmers became rulers of the country and <i>"the old form of government
became modified in the course of time."</i> This change from a communalistic,
anarchistic society to a statist, propertarian one can also be seen from 
this quote from an article on Iceland by Hallberg Hallmundsson in the 
<b>Encyclopaedia Americana</b>, which identifies wealth concentration in fewer 
and fewer hands as having been responsible for undermining Icelandic 
society: <blockquote>
<p><i>"During the 12th century, wealth and power began to accumulate in the
hands of a few chiefs, and by 1220, six prominent families ruled the
entire country. It was the internecine power struggle among these
families, shrewdly exploited by King Haakon IV of Norway, that finally
brought the old republic to an end."</i>
<p></blockquote>
This process, wherein the concentration of wealth leads to the destruction
of communal life and so the anarchistic aspects of a given society, can be
seen elsewhere, for example, in the history of the United States after the
Revolution or in the degeneration of the free cities of Medieval Europe.
Peter Kropotkin, in his classic work <b>Mutual Aid</b>, documents this process
in some detail, in many cultures and time periods. However, that this 
process occurred in a society which is used by "anarcho"-capitalists as an
example of their system in action reinforces the anarchist analysis of the
statist nature of "anarcho"-capitalism and the deep flaws in its theory,
as discussed in section <a href="secF6.html">F.6</a>.
<p>
As Miller argues, <i>"[i]t is not the have-nots, after all, who invented the
state. The first steps toward state formation in Iceland were made by 
churchmen. . . and by the big men content with imitating Norwegian 
royal style. Early state formation, I would guess, tended to involve
redistributions, not from rich to poor, but from poor to rich, from
weak to strong."</i> [<b>Op. Cit.</b>, p. 306]
<p>
David Friedman is aware of how the Icelandic Republic degenerated and its
causes. He states in a footnote in his 1979 essay <i>"Private Creation and 
Enforcement of Law: A Historical Case"</i> that the <i>"question of why the system
eventually broke down is both interesting and difficult. I believe that two 
of the proximate causes were increased concentration of wealth, and hence 
power, and the introduction into Iceland of a foreign ideology -- kingship.
The former meant that in many areas all or most of the godord were held by 
one family and the latter that by the end of the Sturlung period the
chieftains were no longer fighting over the traditional quarrels of who 
owed what to whom, but over who should eventually rule Iceland. The
ultimate reasons for those changes are beyond the scope of this paper."</i>
<p>
However, from an anarchist point of view, the "foreign" ideology of kingship
would be the <b>product</b> of changing socio-economic conditions that were
expressed in the increasing concentration of wealth and not its cause.
<p>
The settlers of Iceland were well aware of the "ideology" of kingship
for the 300 years during which the Republic existed. However, only
the concentration of wealth allowed would-be Kings the opportunity to
develop and act and the creation of boss-worker social relationships on
the land made the poor subject to, and familiar with, the concept of
authority. Such familiarity would spread into all aspects of life and,
combined with the existence of "prosperous" (and so powerful) godi to
enforce the appropriate servile responses, ensured the end of the relative 
equality that fostered Iceland's anarchistic tendencies in the first place.
<p>
In addition, as private property is a monopoly of rulership over a given 
area, the conflict between chieftains for power was, at its most basic, a 
conflict of who would <b>own</b> Iceland, and so rule it. The attempt to ignore 
the facts that private property creates rulership (i.e. a monopoly of 
government over a given area) and that monarchies are privately owned 
states does Friedman's case no good. In other words, the system of private
property has a built in tendency to produce both the ideology and fact of 
Kingship - the power structures implied by Kingship are reflected in the 
social relations which are produced by private property.
<p>
Friedman is also aware that an <i>"objection [to his system] is that the rich 
(or powerful) could commit crimes with impunity, since nobody would be able
to enforce judgement against them. Where power is sufficiently concentrated
this might be true; this was one of the problems which led to the eventual
breakdown of the Icelandic legal system in the thirteenth century. But so
long as power was reasonably dispersed, as it seem to have been for the
first two centuries after the system was established, this was a less
serious problem."</i> [<b>Op. Cit.</b>]
<p>
Which is quite ironic. Firstly, because the first two centuries of Icelandic
society was marked by <b>non-capitalist</b> economic relations (communal pricing
and family/individual possession of land). Only when capitalistic social
relationships developed (hired labour and property replacing possession 
and market values replacing social ones) in the 12th century did power
become concentrated, leading to the breakdown of the system in the 13th
century.
<p>
Secondly, because Friedman is claiming that "anarcho"-capitalism will 
only work if there is an approximate equality within society! But this 
state of affairs is one most "anarcho"-capitalists claim is impossible
and undesirable!
<p>
They claim there will <b>always</b> be rich and poor. But inequality in wealth 
will also become inequality of power. When "actually existing" capitalism 
has become more free market the rich have got richer and the poor poorer. 
Apparently, according to the "anarcho"-capitalists, in an even "purer" 
capitalism this process will be reversed! It is ironic that an ideology 
that denounces egalitarianism as a revolt against nature implicitly 
requires an egalitarian society in order to work.
<p>
In reality, wealth concentration is a fact of life in <b>any</b> system based 
upon hierarchy and private property. Friedman is aware of the reasons why 
"anarcho"-capitalism will become rule by the rich but prefers to believe 
that "pure" capitalism will produce an egalitarian society! In the case of 
the commonwealth of Iceland this did not happen - the rise in private 
property was accompanied by a rise in inequality and this lead to the
breakdown of the Republic into statism.
<p>
In short, Medieval Iceland nicely illustrates David Weick's comments (as
quoted in section <a href="secF6.html#secf63">F.6.3</a>) that <i>"when private wealth is uncontrolled, then 
a police-judicial complex enjoying a clientele of wealthy corporations 
whose motto is self-interest is hardly an innocuous social force controllable
by the possibility of forming or affiliating with competing 'companies.'"</i>
This is to say that "free market" justice soon results in rule by the rich, 
and being able to affiliate with "competing" "defence companies" is 
insufficient to stop or change that process.
<p>
This is simply because any defence-judicial system does not exist in a 
social vacuum. The concentration of wealth -- a natural process under
the "free market" (particularly one marked by private property and wage
labour) -- has an impact on the surrounding society. Private property,
i.e. monopolisation of the means of production, allows the monopolists to
become a ruling elite by exploiting, and so accumulating vastly more
wealth than, the workers. This elite then uses its wealth to control the
coercive mechanisms of society (military, police, "private security
forces," etc.), which it employs to protect its monopoly and thus its
ability to accumulate ever more wealth and power. Thus, private property,
far from increasing the freedom of the individual, has always been the
necessary precondition for the rise of the state and rule by the rich.
Medieval Iceland is a classic example of this process at work.
<p>
</body>
</html>