Absolutely not. The default economic system is anarchy, also known as sharing and mutual aid. You see this even in the reddest of US states, where disaster victims help each other, and a huge pastime is sharing food via potlucks. But all evidence points to anarchical/egalitarian cultures as the baseline mechanism of human organization from prehistory.
Externalities don't exist in anarchic systems, because there is no hierarchical separation between producer and consumer. You can't push off costs to some members of the community when they have equal power to retaliate in kind, and there is no incentive to do so.
Sure they do. I do a thing, it benefits me but causes a problem for my neighbor in the process, I say "oh well fuck him", that's a textbook externality.
> they have equal power to retaliate in kind
A convenient fiction often engaged in by proponents of anarchy. In practice if you compare pairs of people at random you will find almost none that can reasonably be described as equal. Equality is something imposed by the law in an attempt to improve our lives on average.
Anarchy lasts exactly as long as it takes people to start banding together and no longer.
The far left tends to treat humans as essentially good and plastic — corrupted by unjust systems, but redeemable once those systems are dismantled. Remove capitalism, hierarchy, scarcity, and people will naturally cooperate. The far right tends toward a Hobbesian view — humans are greedy and lazy by default. Without the discipline, consequences, and hierarchy, civilization unravels. Hence “if you tax people more they’ll stop working.”
Both are cartoon versions of something real, and both fail in predictable ways.
The more honest picture comes from behavioral economics and evolutionary psychology: humans are neither blank slates nor rational maximizers. We’re a messy bundle of cooperative instincts and tribal ones, capable of extraordinary generosity within in-groups and breathtaking cruelty toward out-groups. Our “goodness” has always been conditional and contextual.
What really undermines the anarchist vision specifically isn’t that people are evil — it’s that they’re biased and self-deceiving in systematic ways. There’s a well-replicated finding that when you ask members of a team to estimate their individual contribution to a group outcome, the percentages sum to well over 100%. Everyone genuinely believes they pulled more than their weight. This isn’t malice — it’s a predictable artifact of how memory and attention work. We have more access to our own effort than to others’, so we weight it more heavily.
The practical consequence of this is underappreciated: it means that even in a community of genuinely well-meaning people with no bad actors, you’ll still get persistent grievance and conflict, because everyone will sincerely believe they’re being shortchanged. This isn’t a solvable problem with better norms or more transparency — it’s baked into human cognition.
This is what people say when they have no idea what people mean by the POLITICAL system of Anarchism (Libertarian Socialism).
Anarchism, the political system, is not "chaos". That is propaganda that started during the 1930's. If you want to learn about it, real the Anarchist FAQ.
(I have a degrees in American History and Economics if that matters).
Anarchism means "without hierarchy". This how humans organized until the populations of sedentary agricultural communities exploded. I will argue, and keep arguing despite downvotes, that anarchism has the least impedance mismatch with human nature out of every system, because it was the status quo before civilization became the norm.
Externalities don't exist in anarchic systems, because there is no hierarchical separation between producer and consumer. You can't push off costs to some members of the community when they have equal power to retaliate in kind, and there is no incentive to do so.