In Search of that Mythical Free-Market Road Network

What do many minarchic supporters of the free-market, proponents of free trade and champions of financial regulation have in common?  They all doubt the plausibility of a free-market in road construction and transport.  There may be many things that the private sector can do better than the State, but roads will always be a public good.  Otherwise, how would the average person be able to commute from his house to the grocery store!  Good heavens, the economy would come to a standstill!  Trucks would not be able to ship goods cross-country and employees would not be able to make their daily trips to and from their places of employment.  In a complex society like that in which we live in today, a private road network would simply be impossible for the free-market to supply in an efficient manner.  This is one good which should be left to the urban planners.  A free-market road network would only exist in a world of fantasy.

Imagine a town of roughly three thousand individuals situated in the middle of a gorgeous expanse of cultivated farmland.  The village’s location makes agriculture the primary local industry, although there is also a paper mill, construction firms, heavy machinery operators, wine and olive oil cooperatives, and a myriad of other vibrant businesses.  This town, for some unfortunate reason, can only enjoy the roads which the Government paved with the dime extracted from the taxpayer’s pocket.  These roads are those which connect each house with each other.  They were originally dirt roads, built by those who had constructed the houses lining the streets, but it was the State which had come in and graciously paved them.  Other than these residential streets, the farmers and the businessmen have no other arteries to which to get to work every day and conduct their daily trades.  Of course, the glorious State has provided a community-wide two-lane highway for major traffic between large cities.  But, other than that, the town’s population is left on its own to provide its own road network to connect themselves to their fields of barley, vineyards and trees, and to their small (and large) businesses on the outskirts.

At this point, the reader is most likely looking at the screen with horror.  With a jaw now an inch south of where it should be, that person is thinking that the people of this town are running around with their heads cut off.  Indeed, without government assistance in road building, how will they survive?!

This make-believe town does not wither on the vine, despite the State’s unwillingness to provide a countryside road network to each and every plot of land.  Clearly because the rules of economics do not apply in this fantasy world, the farmers are able to build and organize a road network of their own.  Each farmer sets aside part of his parcel of land to build a dirt road.  These small, single-car wide, veins lead to major arteries, which are designed cooperatively by the different farmers which own the land on which these supposed major arteries are built on.  Very quickly, without the State and without regulation, the farmers are able to build themselves a sufficient amount of roads to allow them to get to work with their tractors, and even use them to tow their goods to local markets, processing plants or distributors.  To their misfortune, the farmers find that some of their goods cannot be processed in their small town, because somebody has not come up with the capital to set up that kind of industry.  The nearest relevant processing center is twenty kilometers away.  So, these people decide to build a two-lane highway from their town to that town.  Because of safety concerns and to allow for higher speed travel, the owners of the land on which the highway is built on decide that it should be paved.  Of course, a paved highway such like this one can only be built by private land owners in this imaginative fantasy world.

All the while, other entrepreneurs, like the owner of the paper mill, and the construction company owners build small dirt paths of their own to their work.  These small dirt paths grow in size as the number of laborers they employ increases.  Ultimately, these paths are paved into roads.  At some point, the paved roads are turned into small highways that go from town to town, allowing these industries to trade their resources without having to deal with an oftentimes congested State highway.  This allows for efficient, quick and profitable business to be done between entrepreneurs of different cities and towns.

These other urban centers, to which this particular town is connecting itself to, are very much on the same boat.  They too are devoid of public roads in the countryside, apart from a state two-lane highway, and soon enough a web of roads across the entire province is developed by a complex web of private individuals.  An entire regional economy is soon linked, with thousands of farmers now able to go to their farms and ship their goods to far-off markets.  Business owners, following their own self-interests, have put together a network of paved roads, allowing them to avoid the heavy traffic of the State highways.  Not just that, but many times the private highways are maintained to superior standards, as the owners have an intrinsic interest in making sure their profits are maximized.  Potholes and other forms of wear and tear would only make cross-country shipping slower, as trucks and tractors would have to stop to repair blown-out tires and the like.  This picturesque, ideological society has not only constructed an efficient road network without the aid of the State, but they have done so with higher standards.

What could have led, or even allowed, the citizens of this town to build themselves such an efficient network of roads?  What real market force does not exist in this make-believe world?  The people of this utopia are led by self-satisfaction.  Farmers realize that without a major road their tractors would not be able to tow their goods to where they could sell them and make a profit.  The farmer of the plot of land next to one of the main arteries may be expending a lot of money to build that main artery, but for him it was worth it.  Besides, the property is still his, and he could bar others from using it if they decided not to pitch in to cover the costs.  In fact, the farmers do not always cooperate.  Sometimes, they decide to cut access to their small roads that lead to their land because the heavy usage is forcing them to spend much more than originally conceived on maintenance.  So, this selfishness forces people to cooperate, because everyone has self-interest to fulfill when donating to a common pool of funds to pay for a road or a highway.  The same remains true for the businessman.  That paved road to a town ten kilometers to the West may be used by others than just the man who paid for it, but for that man the costs were justified because it allows him to make more money than he would have otherwise made.

One could conclude that it was a drive for profit that led to the materialization of a private road network, without help of the government and without regulation.  Obviously, that does not exist in the real world, and so a free-market in roads is impossible.  In the real world, entrepreneurs would not be able to organize a road network on such a massive scale, allowing companies of such size to trade with others, dozens of kilometers away.  Such a web is the product of the crazy mind of a crackpot amateur Austrian economist (crackpot and Austrian are, of course, redundant).  The real world requires the State to provide all roads.

Someone should make this fact aware to the people of El Provencio, a small town in the province of Cuenca (Castilla-La Mancha, Spain).  They have been living in a fantasy world for centuries.