Ross Ulbricht, who called himself the Dread Pirate Roberts and created the Silk Road online drugs market, has just been sentenced to life in prison. In a letter to the judge, he pleaded for clemency, claiming that “I learned from Silk Road that when you give people freedom, you don’t know what they’ll do with it.” The judge didn’t buy this claim, and retorted that “You were captain of the ship as Dread Pirate Roberts, and you made your own law.” This seems like a strange claim at first glance. We think of criminals as lawbreakers not as lawmakers. What did the judge mean?

Criminals can’t trust each other

As I discuss at length in this article on Silk Road, written for Aeon, criminals have great difficulty in trusting each other. Almost by definition they are likely to have untrustworthy characters. If one criminal is cheated by another, he can’t go to the police, or sue in civil court. This often leads to violence, but also means that criminals who can figure out ways to cooperate together will do better than criminals who can’t. As the research of Diego Gambetta demonstrates, the Sicilian Mafia has elaborate rules and customs, many of which are designed to support cooperation among mafiosi, and to make it harder for outsiders to successfully pretend to be mafiosi. David Skarbek’s research shows how the “Mexican Mafia” gang is able to use their control of prisons to police agreements between gangs on the street (since gang members anticipate going to prison sometime, they don’t want to incur the wrath of the Mexican Mafia).

Online anonymity hurts criminals as well as helping them

At first, it might seem as though buying and selling drugs online is a great idea. The Internet can make you anonymous (especially if you are using a ‘darknet’ designed to make your actions untraceable). You are probably less likely to get caught than if you are buying on a street corner. You also have a better idea of where to go to find drugs and/or customers, and are less likely to be robbed or beaten up. However, anonymity has its downside. If you are dealing with an anonymous criminal, you are going to have a hard time retaliating if she cheats you. She will have a hard time retaliating if you cheat her (she sends you the drugs, and then you refuse to pay). Anonymity makes it hard for the police to catch you, but it also makes it hard for criminals to use their traditional tools of persuasion and deterrence.

This is where the Dread Pirate Roberts (and other similar entrepreneurs) found his niche. He created a Web site which was intended to allow people to buy and sell drugs from each other in a reliable environment. It was a little like eBay, allowing customers to provide feedback and criminals to build up scores for fair dealing over time. It also allowed criminals, if they wanted, to use an escrow system to minimize the risks of cheating, in which the Silk Road held onto the customer’s money until everyone was happy with the deal.

To stop cheating, you need rules

The Silk Road, like both eBay and the Sicilian Mafia, had extensive rules for its users. It forbade the sale of many items (stolen credit cards, counterfeit currency and other items intended to harm or defraud. It policed cheaters, and tried to shore up customer confidence by forbidding dealers from keeping records on transactions. However, it had great difficulty in enforcing many of its rules. It could ban dealers who cheated their customers, so that they lost their hard-earned reputation and customer ratings, but had no way to stop them from re-registering under a new identity. It also had to redesign the ratings system several times to make it harder for con artists to game it. Not only did the Dread Pirate Roberts make rules — he had to remake them repeatedly in order to keep his customers from cheating each other.

It’s hard to believe Ulbricht’s claim that he didn’t know what his customers would do with their freedom. Not only did he know and monitor exactly what his customers were doing, but he repeatedly and deliberately set rules to shape their freedom in ways that would keep the marketplace running. People (sometimes including libertarians like Ulbricht) sometimes like to forget that markets do not appear out of thin air. They need rules to keep them going. If you want to become a truly successful outlaw, and build an alternative order to the state you are trying to get away from, you need to start building and enforcing your own laws. As the judge’s remarks indicate, Ulbricht fell into exactly this paradox, however much he may have wanted to pretend differently.