Who holds the strait holds the world's throat

The Hill reports that following weekend strikes, both the United States and Iran are claiming command of the Strait of Hormuz. I will not pretend to know the engineering of modern naval warfare, nor the precise terms of the engagement. But I know what a chokepoint is, and I know who pays when it is contested.

The Strait of Hormuz is, in the vocabulary I would have recognized, a natural passage of commerce — the kind of waterway whose free navigation is a public good of the first order. Through it moves an enormous share of the world's traded oil. When sovereigns quarrel over such a passage, the immediate losers are not the admirals on either side. They are the workman who heats his home, the manufacturer who runs his machinery, the consumer who buys every good whose production or transport touches petroleum. The cost of political contest is always, in the end, a tax on exchange.

I argued at some length in the Wealth of Nations that defense is the first duty of the sovereign — prior even to justice, prior certainly to opulence — because without security no contract can be enforced and no merchant can plan. That argument cuts both ways. A sovereign who secures the passage serves commerce. A sovereign who closes it, or whose contest with a rival closes it in practice, has imposed on the trading world a restriction no parliament of merchants would ever have dared to legislate openly, because the public would instantly recognize the injury.

Iran's position is, by inference, a mercantilist one of a peculiar military variety: control the chokepoint and you possess a lever over every nation that depends upon it. This is the logic of the monopolist applied to geography. I spent a great deal of The Wealth of Nations demonstrating that monopoly — whether granted by royal charter to a trading company or seized by a dominant merchant — always enriches the few at the expense of the many, and always does so by restricting the supply that free exchange would otherwise generate. A military chokepoint is simply a monopoly enforced by cannon rather than by patent.

The deeper institutional question, and the one I would urge any serious statesman to sit with, is this: what framework disciplines the passage of such straits? In my own century it was British naval supremacy, which was neither perfectly benign nor perfectly disinterested, but which did, on balance, keep the sea-lanes open for a expanding world trade. I do not know what the equivalent institution is in 2026, and I will not pretend to recall events I could not have witnessed. But the principle is durable: some framework of law or enforced agreement must govern the chokepoint, or the chokepoint governs everyone. The absence of that framework is not freedom; it is the freedom of the strongest to prey upon the rest — which is no freedom at all, and no foundation for honest commerce.

Let those who invoke my name in defense of unregulated markets take note. I never argued that markets govern themselves in the absence of institutions. I argued the opposite. The invisible hand operates inside a framework of law, enforced contract, and public security. Remove the framework, and what you have is not a market. You have a plunder.