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Author Topic: Somalia After State Collapse: Chaos or Improvment  (Read 744 times)


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Somalia After State Collapse: Chaos or Improvment
« on: July 31, 2008, 02:49 PM NHFT »

Excellent report on Somalia.  If even a fraction of what they write is true, Somalia is an unqualified success.  The report points out that it is not an ancap paridise that Rothbard predicted, but relative to where it was, and its neighboring nations, Somalia is better by most measures.  Some gems I liked below.  BTW, the Somalians have a paper currency identical in ideal to the Hampshires concept that I came up with awhile back, and JJ ran with.   :) That gem is near the bottom of this post, and in the pdf article linked below.  It is prolly worth noting, that every anlysis I have read that compares the regions in Somalia, has stated the north end is more stable and peaceful.  The north end is where the traditional Xeer system and clan based networks remained the strongest.  Xeer is very similar in some ways to English common law.

The pastoral sector was largely neglected or harmed by the central government.1
In the rural pastoral lands the government rarely constructed roads, health clinics or
schools. The population didn’t use the government to settle disputes or administer justice,
and the government generally took more in revenue than it gave back in services (Little
2003:15). Not surprisingly, the pastoral sector has done quite well since the collapse of
the central government.  Herders who have always relied heavily on social relationships
and kinship to gain access to markets do so even more heavily now, and they do so
without active government interference. The results are impressive.
The Somali live animal trade, which flows between neighboring Ethiopia and
Kenya as well as to overseas markets, has increased dramatically. In Garissa, a major
export market in Kenya for southern Somali cattle, the value of cattle sales increased 600
percent and the volume of sales quadrupled from 1989 to 1998 (Little 2003: 91). In the
North animal trade from Somalia and neighboring land-locked Ethiopia flows to northern
Somali ports for export. The two northern ports of Bossaso and Berbera exported nearly
3 million head of goat and sheep in 1999, accounting for 95 percent of all goat and 52
percent of all sheep exports for East Africa (Little 2003: 131).  Somaliland is the leading
exporter of livestock from eastern African nations (Little: 2003: 132). In 2002 Somalia
as a whole exported more than 480 million metric tons of agricultural products and more
than 180 million metric tons of livestock (Country Watch 2005: 40).

Somali Law
Somali law is based on custom, and decentralized clan networks interpret and
enforce it. The Somali customary law (Xeer) has existed since pre-colonial times, and it
continued to operate under colonial rule. The Somali nation state tried to replace the
Xeer with government legislation and enforcement. However, in rural areas and border
regions where the Somali government lacked firm control, people continued to apply the
common law. When the Somali state collapsed, much of the population returned to their
traditional legal system.4
The Xeer outlaws homicide, assault, torture, battery, rape, accidental wounding,
kidnapping, abduction, robbery, burglary, theft, arson, extortion, fraud, and property
damage (Van Notten 2005: 49). The legal system focuses on the restitution of victims,
not the punishment of criminals. For violations of the law, maximum payments to
compensate victims are specified in camels (payment can be made in equivalent
monetary value).

During the late 1980s the Somali central bank expanded the money supply while
attempting to gain seigniorage revenue for the government. The amount of currency in
circulation expanded from 3.8 billion Somali shillings (SoSh) in 1985 to more than 155.7
billion SoSh in 1990.7 During this time the difference between the official exchange rate
and black market rate was as large as 275 percent (Little 2003: 7). The Somali central
bank and the rest of the state-owned banking system disappeared with the collapse of the
central government. Demand deposits disappeared, and inside money contracted by 54
percent. Despite the collapse of the central government, Somalis continue to accept pre-
1991 Somali shillings. The collapse and continued absence of the central government
have not shaken people’s expectation that the currency has an exchange value.
Since 1991 no central bank has existed to issue currency. Since the collapse four
currencies have been introduced in Somalia. The system that has emerged does not reflect
the type of private competing monies envisioned by theorists like Hayek (1976),
however. The Na’ shilling was first introduced in north Mogadishu in 1992 and then
again reissued in 2001. A distinct note that does not resemble the pre-1991 notes, it has
failed to gain widespread acceptance and circulates mostly within a single clan. The
region of Somaliland has established its own central bank and issues a currency intended
to circulate as the exclusive currency in its territory. A south Mogadishu leader issued
Balweyn I bank notes in 1997. These notes are widely accepted forgeries of the pre-1991
central bank notes. Similarly, the Puntland administration has issued its own forged pre-
1991 Balweyn II SoSh. By 2003 new bank notes and forged currency accounted for
about 80 percent of all currency in circulation.
Although the Balweyn notes can be distinguished from pre-1991 SoSh, the
Somalis have treated them all as the same currency. Unlike a competitive banking system
with distinct currencies in which competition could limit the amount of inflation and
seigniorage individual issuers could achieve, the competition in Somalia is for
seigniorage in the same currency. One would expect this competition to lead to an infinite
level of inflation and ultimately public abandonment of the currency. Somalis, however,
refuse to accept denominations larger than those that existed in 1991. This has
constrained inflation and actually allowed for a relatively stable monetary system to
Mubarak (2003) estimates that it costs $0.03 to print and import new bank notes
to Somalia. When the first Balweyn notes were printed in 1997, the largest denomination
SoSh (1000) traded for about $0.12. By late 2001 competition for seigniorage had driven
the SoSh 1,000 note down to about $0.04. At this exchange rate printing SoSh 500 notes
was no longer profitable, and the SoSh 1,000 notes were down to nearly their commodity
cost, making further printing of them no more profitable than other investments.
the initial bout of inflation, Mubarak reports that “there is no sign of significant inflation
let alone an infinite one,” and that “Since July 2001... consumer prices have stabilised. If
the market exchange rate movements are an indication of price stability... the Somali
shilling has appreciated slightly since the importation of new reprints slowed” (2003:
323). Though very different than the currencies advocated by those who advocate 100
percent commodity backed currencies, the effect of the competition for seigniorage
coupled with the Somalis’ failure to accept new, higher denominations has led to the
creation of a stable ‘commodity currency’ worth its paper, ink, and transport costs.7 This section draws on Mubarak (2003). Statistics come from this source unless otherwise cited.
While such a currency provides some stability, it is not without its problems. To make
purchases of any significant size, large bundles are needed. For this reason the SoSh is
used alongside U.S. dollars in Somalia. The SoSh is used for small transactions while the
dollar is used for larger ones. The Somali people’s continued use of the SoSh in absence
of a state monopoly is testament to the currency’s relative success, as is the fact that it
circulates with easy convertability 50km inside the Ethiopian border
while the Ethiopian
Birr has little circulation in Somalia (Little 2003: 144).

« Last Edit: July 31, 2008, 03:32 PM NHFT by David »


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Re: Somalia After State Collapse: Chaos or Improvment
« Reply #1 on: August 07, 2008, 06:01 AM NHFT »

Quite interesting.

However, other sources usually cite Somalia as being in state of chaos and constant violence albeit recognizing economic growth thanks to lack of state regulation. The violence is attributed to warring clans. UN seeks to establish a government there in the name of establishing "stability" in that region and from what I heard they are planning to send their troops to the one clan which fits the bill as the strongest and most worthy of the government title.

So UN would essentially strenghten one of the clans to a point of making it an undefiable coercive monopoly in Somalia, a government.

What I'm wondering about now is the cause of all the violence and the extent to which it actually exists. One theory could be that the reason there is violence is exactly this foreign involvment where UN is essentially promising a grand prize to the one clan which shows itself to be most influential and powerful in the region, so clans wage war on each other to win this position. This implies that Somalia would much more quickly resort to peace if UN and all foreign political interests just kept their stinky noses out of there.

Second theory is that these clans are operated by people who don't actually believe the anarcho-capitalist / voluntaryist principles (and this seems likely) and are still infected by the desire to control the lives of others if anyhow given a chance. And so they keep warring on each other. Then UN involvement wouldn't be the root cause, but merely the fuel on the fire that's already burning.

That said, however, it still remains pretty amazing that despite the existence of these coercion seeking clans Somalia could develop a rapidly growing and increasingly stable economy. It seems to point out the truth in the notion that free market interactions are completely natural to a human being and that left to their own devices and without a central authority to fear from, people would indeed resort to building a free market based entirely on voluntary interactions - EVEN in face of few bandit ridden clans wishing to exert their control over them!

I think then, that if the volntaryist idea took a more genuine stronghold in Somalia, to a point of penetrating those who work for these clans, the violence would start dropping and in the mid term Somalia could be a shining example of a voluntaryist society at work, a compelling case study for the entire world to see and perhaps even a new place for freedom loving people like us to move to!

Once clans themselves abandon violence and embrace free market competition, Somali people may have what it takes to send a strong message to UN and any other foreign political meddler: "We don't want a government. We are fine as is, leave us alone" and back that up with their individual guns and defense agencies. Unless UN or some other country plans on launching a full scale invasion of Somalia at that point, they have no other choice but to leave them alone. Meanwhile, Somali free market would become strong enough to provide people effective means of defense from any would be invaders.

I can't say I have a precise and complete knowledge of what's going on, but based on what I know those are my thoughts.. What do you think?


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Re: Somalia After State Collapse: Chaos or Improvment
« Reply #2 on: August 07, 2008, 01:48 PM NHFT »

I think you are right. 
As long as the hope for a 'democratic' gov't exists, there will be clan warfare as each clan wants to be the one dominating the gov't.  Clan based societies do not vote on the 'issues', they vote on the clan.  This can also be seen in Iraq, very clearly also.  If the UN and the US minded their own business, there would be less clan warfare because the hope of a 'democratic' gov't would be weaker. 
I also think you are right about the violence.  What the Somalians have is small clan based gov't units, with no federal or central gov'ts.  If the system had been allowed to operate free of coersive gov't, it would not have been reborn in the middle of a civil war.  I think it would have been much more peaceful.  War and violence always take on a life of its own.  The outcome is not based on what is best for peaceful people, but rather it is based on who ever is a greater warmaker or thug(lenin, mao, kemer rouge, castro, white americans over the indians). 


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Re: Somalia After State Collapse: Chaos or Improvment
« Reply #3 on: August 10, 2008, 04:16 PM NHFT »

My brother fought in Somalia.

He is also an anarchist.

He told me that if America and the UN stopped trying to be the world's police force, they would be in less wars and could minimize unnecessary bloodshed. I agree, the UN and US should've minded their own business. But to what extent? Let's not forget that there was a genocide there. Adid was taking the food and killing people for no reason. Like the war in Iraq, we stayed to long in Somalia. We stayed to long and lost ridiculous amount of troops and innocent civilians.

I agree with the segment of the police action where we were trying to help the innocent people and free them from Adid. We did. But like always, the government made us stay; thank the Clinton administration for that.

Yes, it's true that Somalia has improved some over a period of 15 years. However, they still won't adopt american democracy. Which is good. We already have the real America and its antics, we DO NOT need another. Third world countries look at us and realize that America is the victim of lax standards from "leaders" wrongfully put in office. Then we wonder why these other countries won't be like us.
Truth be told, countries like Somalia don't need our help. Seeing as they never wanted it in the first place.

We just need to leave them to their own world and ideals, forcing them to be like us only ruins our reputation as a "tolerant" country; which we're not! Some places in the world just don't want have anything to do with America.

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Re: Somalia After State Collapse: Chaos or Improvment
« Reply #4 on: August 11, 2008, 12:41 PM NHFT »

Its quite natural for clans (not just human) to clash on various issues. Many times this is the control of resources as the membership of the clan grows, in humans it may be beyond their immediate needs.
Skirmishes at the local levels existed loong before the US and UN, so the logic of causation is a disconnect.


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Re: Somalia After State Collapse: Chaos or Improvment
« Reply #5 on: August 12, 2008, 08:20 PM NHFT »

The desire to control money resources, and land, is what a gov't is all about.  True the UN and US did not start the process, but they definitely seem to make it worse. 
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