How Anarchy Would Work
Insurance companies would either sell defense or maintain proximity with Defense Companies. If we both are customers of Reliance Defense Company, and a dispute between us occurs, the dispute would be submitted to the court of Reliance Defense company, or a court patronized by Reliance Defense Company. The decision of the court would be respected. If you are found guilty, the Reliance Defense Company, or its Insurance Company would compensate me for the damages done by you. It will be then the task of Reliance Defense Company to get back their money by putting you in a debtor workhouse (prison) or by garnishing your wages. I, the Defense Company, and the Insurance Company would be in a position of inconvenience due to the damages caused by you. So, it would be in the rational self interest of Defense and Insurance companies to not deal with (Insurance companies might rate their insurance premiums up in some cases) you, or other people with criminal tendencies. If a person doesn’t have insurance, no sane person would deal with him in any manner, as they won’t be able to claim compensation in case a dispute occurs. Almost every one would have Insurance under anarchy, as without Insurance, one can’t get a job, rent a house, buy a car, travel through a private road or get into any other contractual situation.
In the case mentioned above, If I am a customer of Reliance Defense Company, and you are a customer of Tata Defense company, our dispute would first be set for arbitration in the court of the plaintiff (I)-which means: a court of, or patronized by Reliance Defense company. If the defendant (You) is found innocent, the matter has come to an end. If you are found guilty, then the arbitration would run in the Court of Tata Defense Company. If that court too finds you guilty, you would be punished. If it finds you innocent, the arbitration would move to an appeals court. The decision of the appeals court would be respected. If a person (defendant) refuses arbitration, the arbitration would be held in the court of the plaintiff, and the decision would be binding. So, a person who didn’t commit a crime will not refuse arbitration in normal cases. If he disagrees with the decision, he can take the case to his court, or a mutually consented appeals court. It is rational to assume that if the defendant and the plaintiff are customers of different Defense Companies, these Companies together might decide the court in which the arbitration would run. The courts would try to be as honest and objective as possible, as their profits depend on the number of cases they receive for arbitration. People won’t deal with dishonest Insurance companies, or their customers, as no sane person would want to be taken advantage of. So, a dishonest Insurance company would soon find it deserted by almost all its customers. An Insurance company which patronizes poor courts too would be soon deserted by its customers.
Wouldn’t Defense Companies battle?
Battles could be ruled out for two reasons. 1) Wars are costly and would result in high Insurance premiums. Most customers would desert Insurance Companies with high premiums. 2) People won’t deal with the customers of warring defense agencies as they would lose in any case. As of it, the customers of the warring agency would be forced to patronize another Insurance company, if they want to get into contracts with other people. A court too should be honest if they want more cases handed over to them. What if a rich person bribes the court of Insurance company? If that is the case, most people won’t use those courts and Insurance companies. Nothing like that happens in the case of Government courts. People are forced to use them, even if they don’t trust them.
Fraud under Anarchy
Fraud would be kept at minimum as Defense Companies would lose their profits if they don’t. If a defense company engages in fraud, most of its customers would desert it, as people won’t deal with the customers of such a defense company, as they don’t have a legal recourse in case of crimes.
Poor under Anarchy
It is often argued that poor will be defenseless under Anarcho-Capitalism. However, the argument completely lacks sense-For several reasons.
1) It is very unlikely-nearly impossible that there would be extreme poverty as of now under anarchy.
2) Under the present system, a rich person can easily bribe a bureaucrat or a judge and get his things done as bureaucrats and judges are not risking their own funds. A private judge is risking his own funds and profits, and he would lose his income or profits if he isn’t honest or objective. It is very unlikely that bribery is going to work.
3) Customers would desert courts which have a poor reputation.
4) Insurance companies selling defense wouldn’t patronize corrupt courts as, if they do, their customers would patronize another Insurance company. Such a court would be soon out of business. Nothing like this happens under statism.
5) One might argue that public courts can work with proper regulation. It will inevitably founder upon these questions-Who regulates the regulators? What is the incentive? How does such a system make profit and loss calculations? Without profit-loss calculations, how does one know whether job is being performed well or not?
6) As Roderick Long has pointed out, “any court that got the reputation of discriminating in favor of millionaires against poor people would also presumably have the reputation of discriminating for billionaires against millionaires. So, the millionaires would not want to deal with it all of the time.”
7) Under anarchy, the media won’t have to spend most of its space on politics. They would divert more of their energy to exposing corrupt institutions and extraordinary achievements of men. People won’t deal with customers of dishonest defense companies, and these customers will be forced to move to another Defense company.
8) A rich person who commits a crime would suffer from boycott by his clients and customers when insurance companies reject him. Such a boycott affects the rich more than the poor.
9) Even if a poor person can’t afford to file a case, he can sell that claim, or part of that claim to a rich person. Such a system existed in Iceland. That would make sure that eventually, all sorts of criminals are punished. One can’t commit a crime against a poor person and go unpunished. If someone murders a poor person, the person who has homesteaded the estate of that poor person can file a case and get compensation.
Do Anarchists assume a change in human nature?
No change in human nature is assumed here. We, libertarians don’t take a rosy view of human nature. We see human nature rightly, and admit all its flaws. Three things have to be pointed out-1) If you believe human nature is flawed, you have to admit that the politicians and bureaucrats chosen by these flawed creatures too would be of that sort, and there would be no excuse for state action. 2) A change in human nature is not necessary for libertarian anarchy to work. 3) People with power lust are more likely to rise to the top under statism. The state attracts all kinds of rascals.
What libertarian anarchy does is that it leads to a system in which criminal acts are hard to perform. It also punishes those who resort to such acts in a just manner. Under the present system, a judge has no financial incentive to be honest and objective. He has only a moral incentive. Under anarchy, he would have both financial and moral incentive. Ask yourself which system will deal with criminals better.
Almost every major problem mankind faces can be traced back to the state. The state drags innocent people into war. Involuntary unemployment results when a minimum wage law is passed and labor union coercion is sanctioned. Price controls result in shortages. Protectionism leads to poverty and wars. High prices and poor quality products result when Government monopolizes certain industries. Taxation prevents capital accumulation. Credit expansion leads to inflations and depressions. Some estimates say that there were nearly 262 million deaths caused by the Government in the twentieth century. In the light of all this, I see no reason for a person who loves humanity to support the state. It should be obvious that in any sector, monopoly is bad. How do statists get around this fact? In any monopoly, there is an incentive problem. There is no incentive to provide better service at a low cost. It is not just that. There is no way to know whether the service is provided in the best possible manner in the absence of competition.
Isn’t voluntary taxation better?
Voluntary taxation is a contradiction in terms. Taxation implies that money is collected at the muzzle of a gun. How could it be voluntary? How could it be certain that money collected in this manner would be sufficient to provide defense and security? Moreover, the problem with monarchy isn’t just that state collects its revenues using coercion. State prevents anyone from competing with it.
Why do minarchists make an exception for defense, law and police? Some minarchists believe in the Non Aggression Principle. Why don’t they apply it to the case of Security? How monstrous is it to forcefully extort money from a person maintaining the pretense of protecting him? It could be argued that these are public goods and can’t be provided privately. But, this argument was refuted several times. In the past, most of the roads and lighthouses (Public goods theorists usually point out the case of light house. Ronald Coase has pointed out the fallacy. Light house owners charge people for using the harbor) were privately owned. By 1800 there were over 60 private road companies in the United States and by 1830 they had built over 400 private “turnpikes” (highways). Out of 46 Lighthouses in England in 1830, 36 were privately owned. There was privately produced law in the ancient Ireland and medieval Iceland, for instance. And several thinkers have envisioned how libertarian anarchy would work- and it sounds perfect.
Why do I want to impose anarchy on people against it?
Some argue if people don’t want Anarcho-Capitalism, imposing it over them would be violating their freedom. If you tell a thief to not rob from your house, will you be imposing your views on him? If someone takes your money by force, gives you stale food, forbidding you from buying food from anyone else, is that right or wrong? If you tell that person to not do it, will you be imposing your views on him? Will you be violating his freedom? That precisely is what Government does. It forcefully takes money, gives poor quality defense, and forbid us from buying the service from private organizations.
Is human nature consonant with anarchy?
State is a relatively new institution. Mankind has lived hundreds of thousands of years without a state. If so, is it true that human nature is not inclined to live under a state? How come we are living under a state then? Slavery and serfdom existed for a long time. Doesn’t that mean slavery is consonant with human nature? If so, how men got out of it? Obviously, when people realized the advantages of co-operation, people shifted to the present system. When people realize the advantages of anarchy, they would move into such a system. No change in human nature is required. Blaming human nature for being flawed doesn’t make any sense. People are mostly corrupt under the present system as people respond to incentives. Under statism, men have every incentive to be corrupt. To say that anarchy won’t work as human nature is flawed is tantamount to saying that capitalism won’t work as most people are poor. A person who makes such an argument fails to understand that it is precisely the lack of Capitalism which made the people poor.
Minarchy isn’t sustainable
There is no empirical or theoretical evidence to prove that a constitutionally limited government is sustainable. Government power has increased steadily in countries like United States and Britain. Tax experts like Irwin Schiff has pointed out that according to the law and constitution of United States, taxation is illegal. He is in jail now, and his book “Federal Mafia” is banned. That’s not an aberration, but the result of a limited Government. I admit that Anarcho-Capitalism was not the dominant form of social organization for the large part of human existence. But so wasn’t democracy or a limited Government. These are recent developments. The limited Government in United States broke down after 8 decades as of a civil war-But it took 1000 years for the near Anarcho-capitalistic system to break down in Celtic Ireland, and 290 years in Iceland. Who do minarchists support democracy and a limited Government then, when it is obvious that anarchy is far more workable?
How can one support Anarcho-Capitalism when it was never practiced anywhere?
It is true that pure Anarcho-Capitalism was never put into practice anywhere. However, that can’t be an argument against anarchy. A person who invents an electric bulb doesn’t have to prove that there were electric bulbs in the past. A new invention, innovation or theory is something which crushes all existing conceptions. It is unprecedented. I think this should be obvious and it makes no sense to argue against it.
Empirical Evidence for Anarcho Capitalism
Anarcho capitalism was not practiced in most parts of the world for most of the human history. However, there were societies which were really close to Anarcho-Capitalism. There was the law merchant in the past, as Bruce Benson has pointed out. Such a system has worked in Iceland, Celtic Ireland, American old west, British colonies in North America, Rhode Island, Albemarle, and Pennsylvania. There is a lot of historical evidence to prove that these societies worked really well and had sophisticated legal codes. Crime rates were strikingly low. In Celtic Ireland, it lasted for nearly thousand years. It was a civilized, advanced society as there was no Government administered justice. Even when these societies collapsed, it was not due to extreme anarchy, but due to contradictions in the anarchistic structure. Iceland is a classic example, where chieftains were granted more power, and religious issues led to a civil war.
Further Empirical Evidence: Present day Somalia
Somalia hadn’t a central Government since 1991. Yet, it has an efficient telephone system and mobile phone network, which is far better than that of its neighboring countries. The same is true of the electricity system. The situation is Somalia is much more peaceful than it was under the Government, and hence it is easier to do business there. There is a clan system which enforces contracts, though there isn’t a monopoly Government to enforce law. There was an improvement in 14 out of 18 development indicators after the collapse of the state in Somalia. One indicator was the same, and the other one, GDP, was blown up by the Government during its rule. Peter Leeson points out that “Under statelessness life expectancy in Somalia has grown, access to health facilities has increased, infant mortality has dropped, civil liberties have expanded, and extreme poverty has plummeted. In many parts of the country even security has improved. In these areas citizens are safer than they’ve been in three decades.” Even World Bank Economists like Tatiana Nenova and Tim Harford admit that things are getting better in Somalia. These Economists aren’t anarchists by any stretch of imagination.