Adam Smith Goes to Somalia: "Competition Keeps Prices Low"

Many people would agree that modern-day Somalia represents a Hobbesian state of nature. But could anarchy strengthen Somalia's private sector? This article is certainly very old, but I came across it yesterday and thought the argument would be of interest to political theorists and classical liberals:

...local businesspeople find it easier to do business in a country where there is no government. "There is no need to obtain licences and, in contrast with many other parts of Africa, there is no state-run monopoly that prevents new competitors setting up. Keeping price low is helped by the absence of any need to pay taxes."

Of course, the absence of a stable and legitimate political and judicial system, compounded by unyielding internecine violence, means individual and private property rights can never be fully protected and we aren't likely to see foreign businesses flocking to this chaotic country in the foreseeable future. Generally speaking, the proper role of government is to protect individual rights. But the proper role of our government -- abroad -- should be limited to instances when our national sovereignty or territorial integrity is at risk. As exemplified in Somalia, America's attempts to stabilize failed states or pacify foreign populations usually fail, exacerbates already disastrous situations, and are, in principle, gratuitous abuses of American power [See: the calamitous U.S.-backed Ethiopian invasion of Somalia].

[Originally posted on Cato-At-Liberty, April 30, 2009]