On another thread, a certain poster is critiquing private courts by saying there is no final arbiter, so people would not have to agree to arbitration. This issue only appears because of semantic fuzziness in the English language.
There is no ONE final arbiter for all cases.
However, for any given case, there is a final arbiter. (http://mises.org/Community/forums/p/8848/228755.aspx#228755)
See the difference? With that, the objection becomes moot. I made this a separate post because I think it's important everyone see this. We need to be aware of logical fallacies and how language can easily mislead us (and our opponents).
Like to see that trick again? "Hey, there is no final arbiter! So I can just take my case elsewhere until I find an arbiter I like." Certainly, there is no one final arbiter for all cases (like a Supreme Court), but as Rothbard explains, for any given case there is a way of determining a final arbiter. So, although there is no one final arbiter for all cases, all cases do have a final arbiter.
Think outside the monopoly paradigm. Net-based microsecession | Why anarchy hasn't worked
"If he does nothing, the court's judgment proceeds against him."
Who proceeds against him?
"Arriving at a decision and then allowing chaotic gunplay would scarcely be considered valuable judicial service by their customers."
The hell it wouldn't! I want a court that's going to fight for me, since I can't call the police.
"In short, every court would agree to abide by an appeals trial, as decided by a voluntary arbitrator to whom Metropolitan and Prudential would now turn. The appeals judge would make his decision, and the result of this third trial would be treated as binding on the guilty."
Who is going to force the courts to abide by the appeals trial? And why would their ruling be any more binding than the last two? There's no force behind it! Besides, I can just go to another court.
"it seems most sensible for the legal code to declare that a decision arrived at by any two courts shall be binding."
Who's going to enforce this one??
"As for the number of courts, that one is indeed like asking how many burger bars, in the sense that the market must decide and we cannot know."
There may be tens or hundreds or thousands? Who's going to enforce the decisions of all of them? Private defense contractors? What if I set up a Bloom's Criminal Court and hire THE most powerful private defense firm to back up my rulings? Who's going to stop me from serving criminals everywhere?
"To demand that an advocate of free market law describe in advance how markets would supply legal services (or shoes) is to issue an impossible challenge."
Except that I've seen how shoes are provided in a free market, I've never seen how law is provided in one.
"Free markets supply human wants better than state monopolies precisely because they allow an unlimited number of suppliers to attempt to do so."
Except that with shoes, there is no one shoe that consistently fits everyone. With laws, there has to be one consistent law that is one size fits all. Otherwise, everyone gets their own shape and size of law...that's a recipe for chaos.
"The beauty of the free market is that all each person has to look after is his or her own self-interest, but this "magically" results in great prosperity for all. There need be no central planner."
If you let pure self interest run the law, you won't be able to enforce your rules because criminals commit crimes because it's in their interest to do so. What gives you the power to tell them they're not serving their self interest? Markets are variable sum games. Law is zero sum. You have a winner and a loser. Free markets are not compatible with legal systems for precisely the same reason free markets work so well with goods and assets: because everyone can't get what they want under the law, some people have to get what they don't want.
Jacob Bloom:If you let pure self interest run the law, you won't be able to enforce your rules because criminals commit crimes because it's in their interest to do so. What gives you the power to tell them they're not serving their self interest? Markets are variable sum games. Law is zero sum. You have a winner and a loser. Free markets are not compatible with legal systems for precisely the same reason free markets work so well with goods and assets: because everyone can't get what they want under the law, some people have to get what they don't want.
The concept of "self-interest" is an ultimate human given. You cannot remove self-interest. The agents of a monopolized arbitration agency (i.e., a state) are just as self-interested at the agents of a non-monopolized arbitration agency (i.e., a private arbitration agency). Either way, "pure self interest run[s ] the law".
Jacob Bloom: Except that with shoes, there is no one shoe that consistently fits everyone. With laws, there has to be one consistent law that is one size fits all. Otherwise, everyone gets their own shape and size of law...that's a recipe for chaos.
What gets driven out in such situations is the transparency and impersonal exchange that typifies Anglo and Western European business. The guys at Tires Plus will fix your car just like they'd fix their cousin's car. But in places where there's no idea of a uniform rule of law, you only deal with family, because the guys who aren't from your village will cut corners when it comes to fixing your car and since the judge isn't your third or second cousin, you're just SOL. End result, division of labor is stunted and living standards deteriorate.
Basically, you get an economy that runs on who you know, not what you know. Since that's not sustainable and most people will vote with their feet to leave it, I think anarchy will be more along the lines of neo-feudalism. People will join, for lack of a better term, "fees" in order to enjoy higher living standards enabled by impersonal exchange. These fees will negotiate among themselves for uniform commercial codes and sojourners' rights for their subscribers.
Over time, these fees will evolve into hereditary institutions.
Jacob Bloom: "If he does nothing, the court's judgment proceeds against him." Who proceeds against him?
The enforcement agency, probably the one that brought the case against the defendent. Remember that the reason the enforcement agency doesn't throw him in jail without a trial is that it would be seen as an outlaw firm, and would get action taken on it by other PDAs whose customers do not want rogue PDAs running around jailing people. Once they have a final ruling by a generally accepted court (or two courts, if needed) of law, they could then proceed to dispense punishment without fear of retribution or loss of reputation.
Jacob Bloom: "Arriving at a decision and then allowing chaotic gunplay would scarcely be considered valuable judicial service by their customers." The hell it wouldn't! I want a court that's going to fight for me, since I can't call the police.
That's what a PDA is for: (I'm not expecting an itemized response to this long passage; I'm just saying it will probably help clear up the matter for you, thereby making our discussion more interesting and useful.)
M. Rothbard: The market and private enterprise do exist, and so most people can readily envision a free market in most goods and services. Probably the most difficult single area to grasp, however, is the abolition of government operations in the service of protection: police, the courts, etc. — the area encompassing defense of person and property against attack or invasion. How could private enterprise and the free market possibly provide such service? How could police, legal systems, judicial services, law enforcement, prisons — how could these be provided in a free market? We have already seen how a great deal of police protection, at the least, could be supplied by the various owners of streets and land areas. But we now need to examine this entire area systematically. In the first place, there is a common fallacy, held even by most advocates of laissez-faire, that the government must supply "police protection," as if police protection were a single, absolute entity, a fixed quantity of something which the government supplies to all. But in actual fact there is no absolute commodity called "police protection" any more than there is an absolute single commodity called "food" or "shelter." It is true that everyone pays taxes for a seemingly fixed quantity of protection, but this is a myth. In actual fact, there are almost infinite degrees of all sorts of protection. For any given person or business, [p. 216] the police can provide everything from a policeman on the beat who patrols once a night, to two policemen patrolling constantly on each block, to cruising patrol cars, to one or even several round-the-clock personal bodyguards. Furthermore, there are many other decisions the police must make, the complexity of which becomes evident as soon as we look beneath the veil of the myth of absolute "protection." How shall the police allocate their funds which are, of course, always limited as are the funds of all other individuals, organizations, and agencies? How much shall the police invest in electronic equipment? fingerprinting equipment? detectives as against uniformed police? patrol cars as against foot police, etc.? The point is that the government has no rational way to make these allocations. The government only knows that it has a limited budget. Its allocations of funds are then subject to the full play of politics, boondoggling, and bureaucratic inefficiency, with no indication at all as to whether the police department is serving the consumers in a way responsive to their desires or whether it is doing so efficiently. The situation would be different if police services were supplied on a free, competitive market. In that case, consumers would pay for whatever degree of protection they wish to purchase. The consumers who just want to see a policeman once in a while would pay less than those who want continuous patrolling, and far less than those who demand twenty-four-hour bodyguard service. On the free market, protection would be supplied in proportion and in whatever way that the consumers wish to pay for it. A drive for efficiency would be insured, as it always is on the market, by the compulsion to make profits and avoid losses, and thereby to keep costs low and to serve the highest demands of the consumers. Any police firm that suffers from gross inefficiency would soon go bankrupt and disappear. One big problem a government police force must always face is: what laws really to enforce? Police departments are theoretically faced with the absolute injunction, "enforce all laws," but in practice a limited budget forces them to allocate their personnel and equipment to the most urgent crimes. But the absolute dictum pursues them and works against a rational allocation of resources. On the free market, what would be enforced is whatever the customers are willing to pay for. Suppose, for example, that Mr. Jones has a precious gem he believes might soon be stolen. He can ask, and pay for, round-the-clock police protection at whatever strength he may wish to work out with the police company. He might, on the other hand, also have a private road on his estate he doesn't want many people to travel on — but he might not care very [p. 217] much about trespassers on that road. In that case, he won't devote any police resources to protecting the road. As on the market in general, it is up to the consumer — and since all of us are consumers this means each person individually decides how much and what kind of protection he wants and is willing to buy. All that we have said about landowners' police applies to private police in general. Free-market police would not only be efficient, they would have a strong incentive to be courteous and to refrain from brutality against either their clients or their clients' friends or customers. A private Central Park would be guarded efficiently in order to maximize park revenue, rather than have a prohibitive curfew imposed on innocent — and paying — customers. A free market in police would reward efficient and courteous police protection to customers and penalize any falling off from this standard. No longer would there be the current disjunction between service and payment inherent in all government operations, a disjunction which means that police, like all other government agencies, acquire their revenue, not voluntarily and competitively from consumers, but from the taxpayers coercively. In fact, as government police have become increasingly inefficient, consumers have been turning more and more to private forms of protection. We have already mentioned block or neighborhood protection. There are also private guards, insurance companies, private detectives, and such increasingly sophisticated equipment as safes, locks, and closed-circuit TV and burglar alarms. The President's Commission on Law Enforcement and the Administration of Justice estimated in 1969 that government police cost the American public $2.8 billion a year, while it spends $1.35 billion on private protection service and another $200 million on equipment, so that private protection expenses amounted to over half the outlay on government police. These figures should give pause to those credulous folk who believe that police protection is somehow, by some mystic right or power, necessarily and forevermore an attribute of State sovereignty.1 Every reader of detective fiction knows that private insurance detectives are far more efficient than the police in recovering stolen property. Not only is the insurance company impelled by economics to serve the consumer — and thereby try to avoid paying benefits — but the major focus of the insurance company is very different from that of the police. The police, standing as they do for a mythical "society," are primarily interested in catching and punishing the criminal; restoring the stolen [p. 218] loot to the victim is strictly secondary. To the insurance company and its detectives, on the other hand, the prime concern is recovery of the loot, and apprehension and punishment of the criminal is secondary to the prime purpose of aiding the victim of crime. Here we see again the difference between a private firm impelled to serve the customer-victim of crime and the public police, which is under no such economic compulsion. We cannot blueprint a market that exists only as an hypothesis, but it is reasonable to believe that police service in the libertarian society would be supplied by the landowners or by insurance companies. Since insurance companies would be paying benefits to victims of crime, it is highly likely that they would supply police service as a means of keeping down crime and hence their payment of benefits. It is certainly likely in any case that police service would be paid for in regular monthly premiums, with the police agency — whether insurance company or not — called on whenever needed. This supplies what should be the first simple answer to a typical nightmare question of people who first hear about the idea of a totally private police: "Why, that means that if you're attacked or robbed you have to rush over to a policeman and start dickering on how much it will cost to defend you." A moment's reflection should show that no service is supplied in this way on the free market. Obviously, the person who wants to be protected by Agency A or Insurance Company B will pay regular premiums rather than wait to be attacked before buying protection. "But suppose an emergency occurs and a Company A policeman sees someone being mugged; will he stop to ask if the victim has bought insurance from Company A?" In the first place, this sort of street crime will be taken care of, as we noted above, by the police hired by whoever owns the street in question. But what of the unlikely case that a neighborhood does not have street police, and a policeman of Company A happens to see someone being attacked? Will he rush to the victim's defense? That, of course, would be up to Company A, but it is scarcely conceivable that private police companies would not cultivate goodwill by making it a policy to give free aid to victims in emergency situations and perhaps ask the rescued victim for a voluntary donation afterward. In the case of a homeowner being robbed or attacked, then of course he will call on whichever police company he has been using. He will call Police Company A rather than "the police" he calls upon now. Competition insures efficiency, low price, and high quality, and there is no reason to assume a priori, as many people do, that there is something [p. 219] divinely ordained about having only one police agency in a given geographical area. Economists have often claimed that the production of certain goods or services is a "natural monopoly," so that more than one private agency could not long survive in a given area. Perhaps, although only a totally free market could decide the matter once and for all. Only the market can decide what and how many firms, and of what size and quality, can survive in active competition. But there is no reason to suppose in advance that police protection is a "natural monopoly." After all, insurance companies are not; and if we can have Metropolitan, Equitable, Prudential, etc., insurance companies coexisting side by side, why not Metropolitan, Equitable, and Prudential police protection companies? Gustave de Molinari, the nineteenth-century French free-market economist, was the first person in history to contemplate and advocate a free market for police protection.2 Molinari estimated that there would eventually turn out to be several private police agencies side by side in the cities, and one private agency in each rural area. Perhaps — but we must realize that modern technology makes much more feasible branch offices of large urban firms in even the most remote rural areas. A person living in a small village in Wyoming, therefore, could employ the services of a local protection company, or he might use a nearby branch office of the Metropolitan Protection Company. "But how could a poor person afford private protection he would have to pay for instead of getting free protection, as he does now?" There are several answers to this question, one of the most common criticisms of the idea of totally private police protection. One is: that this problem of course applies to any commodity or service in the libertarian society, not just the police. But isn't protection necessary? Perhaps, but then so is food of many different kinds, clothing, shelter, etc. Surely these are at least as vital if not more so than police protection, and yet almost nobody says that therefore the government must nationalize food, clothing, shelter, etc., and supply these free as a compulsory monopoly. Very poor people would be supplied, in general, by private charity, as we saw in our chapter on welfare. Furthermore, in the specific case of police there would undoubtedly be ways of voluntarily supplying free police protection to the indigent — either by the police companies themselves for goodwill (as hospitals and doctors do now) or by special "police aid" societies that would do work similar to "legal aid" societies [p. 220] today. (Legal aid societies voluntarily supply free legal counsel to the indigent in trouble with the authorities.) There are important supplementary considerations. As we have seen, police service is not "free"; it is paid for by the taxpayer, and the taxpayer is very often the poor person himself. He may very well be paying more in taxes for police now than he would in fees to private, and far more efficient, police companies. Furthermore, the police companies would be tapping a mass market; with the economies of such a large-scale market, police protection would undoubtedly be much cheaper. No police company would wish to price itself out of a large chunk of its market, and the cost of protection would be no more prohibitively expensive than, say, the cost of insurance today. (In fact, it would tend to be much cheaper than current insurance, because the insurance industry today is heavily regulated by government to keep out low-cost competition.) There is a final nightmare which most people who have contemplated private protection agencies consider to be decisive in rejecting such a concept. Wouldn't the agencies always be clashing? Wouldn't "anarchy" break out, with perpetual conflicts between police forces as one person calls in "his" police while a rival calls in "his"? There are several levels of answers to this crucial question. In the first place, since there would be no overall State, no central or even single local government, we would at least be spared the horror of inter-State wars, with their plethora of massive, superdestructive, and now nuclear, weapons. As we look back through history, isn't it painfully clear that the number of people killed in isolated neighborhood "rumbles" or conflicts is as nothing to the total mass devastation of inter-State wars? There are good reasons for this. To avoid emotionalism, let us take two hypothetical countries: "Rumania" and "Walldavia." If both Ruritania and Walldavia were dissolved into a libertarian society, with no government and innumerable private individuals, firms, and police agencies, the only clashes that could break out would be local, and the weaponry would necessarily be strictly limited in scope and devastation. Suppose that in a Ruritanian city two police agencies clash and start shooting it out. At worst, they could not use mass bombing or nuclear destruction or germ warfare, since they themselves would be blown up in the holocaust. It is the slicing off of territorial areas into single, governmental monopolies that leads to mass destruction — for then if the single monopoly government of Walldavia confronts its ancient rival, the government of Ruritania, each can wield weapons of mass destruction and even nuclear warfare because it will be the "other [p. 221] guy" and the "other country" they will hurt. Furthermore, now that every person is a subject of a monopoly government, in the eyes of every other government he becomes irretrievably identified with "his" government. The citizen of France is identified with "his" government, and therefore if another government attacks France, it will attack the citizenry as well as the government of France. But if Company A battles with Company B, the most that can happen is that the respective customers of each company may be dragged into the battle — but no one else. It should be evident, then, that even if the worst happened, and a libertarian world would indeed become a world of "anarchy," we would still be much better off than we are now, at the mercy of rampant, "anarchic" nation-states, each possessing a fearsome monopoly of weapons of mass destruction. We must never forget that we are all living, and always have lived, in a world of "international anarchy," in a world of coercive nation-states unchecked by any overall world government, and there is no prospect of this situation changing. A libertarian world, then, even if anarchic, would still not suffer the brutal wars, the mass devastation, the A-bombing, that our State-ridden world has suffered for centuries. Even if local police clash continually, there would be no more Dresdens, no more Hiroshimas. But there is far more to be said. We should never concede that this local "anarchy" would be likely to occur. Let us separate the problem of police clashes into distinct and different parts: honest disagreements, and the attempt of one or more police forces to become "outlaws" and to extract funds or impose their rule by coercion. Let us assume for a moment that the police forces will be honest, and that they are only riven by honest clashes of opinion; we will set aside for a while the problem of outlaw police. Surely one of the very important aspects of protection service the police can offer their respective customers is quiet protection. Every consumer, every buyer of police protection, would wish above all for protection that is efficient and quiet, with no conflicts or disturbances. Every police agency would be fully aware of this vital fact. To assume that police would continually clash and battle with each other is absurd, for it ignores the devastating effect that this chaotic "anarchy" would have on the business of all the police companies. To put it bluntly, such wars and conflicts would be bad — very bad — for business. Therefore, on the free market, the police agencies would all see to it that there would be no clashes between them, and that all conflicts of opinion would be ironed out in private courts, decided by private judges or arbitrators. To get more specific: in the first place, as we have said, clashes would [p. 222] be minimal because the street owner would have his guards, the storekeeper his, the landlord his, and the homeowner his own police company. Realistically, in the everyday world, there would be little room for direct clashes between police agencies. But suppose, as will sometimes occur, two neighboring home owners get into a fight, each accuses the other of initiating assault or violence, and each calls on his own police company, should they happen to subscribe to different companies. What then? Again, it would be pointless and economically as well as physically self-destructive for the two police companies to start shooting it out. Instead, every police company, to remain in business at all, would announce as a vital part of its service, the use of private courts or arbitrators to decide who is in the wrong.
The market and private enterprise do exist, and so most people can readily envision a free market in most goods and services. Probably the most difficult single area to grasp, however, is the abolition of government operations in the service of protection: police, the courts, etc. — the area encompassing defense of person and property against attack or invasion. How could private enterprise and the free market possibly provide such service? How could police, legal systems, judicial services, law enforcement, prisons — how could these be provided in a free market? We have already seen how a great deal of police protection, at the least, could be supplied by the various owners of streets and land areas. But we now need to examine this entire area systematically.
In the first place, there is a common fallacy, held even by most advocates of laissez-faire, that the government must supply "police protection," as if police protection were a single, absolute entity, a fixed quantity of something which the government supplies to all. But in actual fact there is no absolute commodity called "police protection" any more than there is an absolute single commodity called "food" or "shelter." It is true that everyone pays taxes for a seemingly fixed quantity of protection, but this is a myth. In actual fact, there are almost infinite degrees of all sorts of protection. For any given person or business, [p. 216] the police can provide everything from a policeman on the beat who patrols once a night, to two policemen patrolling constantly on each block, to cruising patrol cars, to one or even several round-the-clock personal bodyguards. Furthermore, there are many other decisions the police must make, the complexity of which becomes evident as soon as we look beneath the veil of the myth of absolute "protection." How shall the police allocate their funds which are, of course, always limited as are the funds of all other individuals, organizations, and agencies? How much shall the police invest in electronic equipment? fingerprinting equipment? detectives as against uniformed police? patrol cars as against foot police, etc.?
The point is that the government has no rational way to make these allocations. The government only knows that it has a limited budget. Its allocations of funds are then subject to the full play of politics, boondoggling, and bureaucratic inefficiency, with no indication at all as to whether the police department is serving the consumers in a way responsive to their desires or whether it is doing so efficiently. The situation would be different if police services were supplied on a free, competitive market. In that case, consumers would pay for whatever degree of protection they wish to purchase. The consumers who just want to see a policeman once in a while would pay less than those who want continuous patrolling, and far less than those who demand twenty-four-hour bodyguard service. On the free market, protection would be supplied in proportion and in whatever way that the consumers wish to pay for it. A drive for efficiency would be insured, as it always is on the market, by the compulsion to make profits and avoid losses, and thereby to keep costs low and to serve the highest demands of the consumers. Any police firm that suffers from gross inefficiency would soon go bankrupt and disappear.
One big problem a government police force must always face is: what laws really to enforce? Police departments are theoretically faced with the absolute injunction, "enforce all laws," but in practice a limited budget forces them to allocate their personnel and equipment to the most urgent crimes. But the absolute dictum pursues them and works against a rational allocation of resources. On the free market, what would be enforced is whatever the customers are willing to pay for. Suppose, for example, that Mr. Jones has a precious gem he believes might soon be stolen. He can ask, and pay for, round-the-clock police protection at whatever strength he may wish to work out with the police company. He might, on the other hand, also have a private road on his estate he doesn't want many people to travel on — but he might not care very [p. 217] much about trespassers on that road. In that case, he won't devote any police resources to protecting the road. As on the market in general, it is up to the consumer — and since all of us are consumers this means each person individually decides how much and what kind of protection he wants and is willing to buy.
All that we have said about landowners' police applies to private police in general. Free-market police would not only be efficient, they would have a strong incentive to be courteous and to refrain from brutality against either their clients or their clients' friends or customers. A private Central Park would be guarded efficiently in order to maximize park revenue, rather than have a prohibitive curfew imposed on innocent — and paying — customers. A free market in police would reward efficient and courteous police protection to customers and penalize any falling off from this standard. No longer would there be the current disjunction between service and payment inherent in all government operations, a disjunction which means that police, like all other government agencies, acquire their revenue, not voluntarily and competitively from consumers, but from the taxpayers coercively.
In fact, as government police have become increasingly inefficient, consumers have been turning more and more to private forms of protection. We have already mentioned block or neighborhood protection. There are also private guards, insurance companies, private detectives, and such increasingly sophisticated equipment as safes, locks, and closed-circuit TV and burglar alarms. The President's Commission on Law Enforcement and the Administration of Justice estimated in 1969 that government police cost the American public $2.8 billion a year, while it spends $1.35 billion on private protection service and another $200 million on equipment, so that private protection expenses amounted to over half the outlay on government police. These figures should give pause to those credulous folk who believe that police protection is somehow, by some mystic right or power, necessarily and forevermore an attribute of State sovereignty.1
Every reader of detective fiction knows that private insurance detectives are far more efficient than the police in recovering stolen property. Not only is the insurance company impelled by economics to serve the consumer — and thereby try to avoid paying benefits — but the major focus of the insurance company is very different from that of the police. The police, standing as they do for a mythical "society," are primarily interested in catching and punishing the criminal; restoring the stolen [p. 218] loot to the victim is strictly secondary. To the insurance company and its detectives, on the other hand, the prime concern is recovery of the loot, and apprehension and punishment of the criminal is secondary to the prime purpose of aiding the victim of crime. Here we see again the difference between a private firm impelled to serve the customer-victim of crime and the public police, which is under no such economic compulsion.
We cannot blueprint a market that exists only as an hypothesis, but it is reasonable to believe that police service in the libertarian society would be supplied by the landowners or by insurance companies. Since insurance companies would be paying benefits to victims of crime, it is highly likely that they would supply police service as a means of keeping down crime and hence their payment of benefits. It is certainly likely in any case that police service would be paid for in regular monthly premiums, with the police agency — whether insurance company or not — called on whenever needed.
This supplies what should be the first simple answer to a typical nightmare question of people who first hear about the idea of a totally private police: "Why, that means that if you're attacked or robbed you have to rush over to a policeman and start dickering on how much it will cost to defend you." A moment's reflection should show that no service is supplied in this way on the free market. Obviously, the person who wants to be protected by Agency A or Insurance Company B will pay regular premiums rather than wait to be attacked before buying protection. "But suppose an emergency occurs and a Company A policeman sees someone being mugged; will he stop to ask if the victim has bought insurance from Company A?" In the first place, this sort of street crime will be taken care of, as we noted above, by the police hired by whoever owns the street in question. But what of the unlikely case that a neighborhood does not have street police, and a policeman of Company A happens to see someone being attacked? Will he rush to the victim's defense? That, of course, would be up to Company A, but it is scarcely conceivable that private police companies would not cultivate goodwill by making it a policy to give free aid to victims in emergency situations and perhaps ask the rescued victim for a voluntary donation afterward. In the case of a homeowner being robbed or attacked, then of course he will call on whichever police company he has been using. He will call Police Company A rather than "the police" he calls upon now.
Competition insures efficiency, low price, and high quality, and there is no reason to assume a priori, as many people do, that there is something [p. 219] divinely ordained about having only one police agency in a given geographical area. Economists have often claimed that the production of certain goods or services is a "natural monopoly," so that more than one private agency could not long survive in a given area. Perhaps, although only a totally free market could decide the matter once and for all. Only the market can decide what and how many firms, and of what size and quality, can survive in active competition. But there is no reason to suppose in advance that police protection is a "natural monopoly." After all, insurance companies are not; and if we can have Metropolitan, Equitable, Prudential, etc., insurance companies coexisting side by side, why not Metropolitan, Equitable, and Prudential police protection companies? Gustave de Molinari, the nineteenth-century French free-market economist, was the first person in history to contemplate and advocate a free market for police protection.2 Molinari estimated that there would eventually turn out to be several private police agencies side by side in the cities, and one private agency in each rural area. Perhaps — but we must realize that modern technology makes much more feasible branch offices of large urban firms in even the most remote rural areas. A person living in a small village in Wyoming, therefore, could employ the services of a local protection company, or he might use a nearby branch office of the Metropolitan Protection Company.
"But how could a poor person afford private protection he would have to pay for instead of getting free protection, as he does now?" There are several answers to this question, one of the most common criticisms of the idea of totally private police protection. One is: that this problem of course applies to any commodity or service in the libertarian society, not just the police. But isn't protection necessary? Perhaps, but then so is food of many different kinds, clothing, shelter, etc. Surely these are at least as vital if not more so than police protection, and yet almost nobody says that therefore the government must nationalize food, clothing, shelter, etc., and supply these free as a compulsory monopoly. Very poor people would be supplied, in general, by private charity, as we saw in our chapter on welfare. Furthermore, in the specific case of police there would undoubtedly be ways of voluntarily supplying free police protection to the indigent — either by the police companies themselves for goodwill (as hospitals and doctors do now) or by special "police aid" societies that would do work similar to "legal aid" societies [p. 220] today. (Legal aid societies voluntarily supply free legal counsel to the indigent in trouble with the authorities.)
There are important supplementary considerations. As we have seen, police service is not "free"; it is paid for by the taxpayer, and the taxpayer is very often the poor person himself. He may very well be paying more in taxes for police now than he would in fees to private, and far more efficient, police companies. Furthermore, the police companies would be tapping a mass market; with the economies of such a large-scale market, police protection would undoubtedly be much cheaper. No police company would wish to price itself out of a large chunk of its market, and the cost of protection would be no more prohibitively expensive than, say, the cost of insurance today. (In fact, it would tend to be much cheaper than current insurance, because the insurance industry today is heavily regulated by government to keep out low-cost competition.)
There is a final nightmare which most people who have contemplated private protection agencies consider to be decisive in rejecting such a concept. Wouldn't the agencies always be clashing? Wouldn't "anarchy" break out, with perpetual conflicts between police forces as one person calls in "his" police while a rival calls in "his"?
There are several levels of answers to this crucial question. In the first place, since there would be no overall State, no central or even single local government, we would at least be spared the horror of inter-State wars, with their plethora of massive, superdestructive, and now nuclear, weapons. As we look back through history, isn't it painfully clear that the number of people killed in isolated neighborhood "rumbles" or conflicts is as nothing to the total mass devastation of inter-State wars? There are good reasons for this. To avoid emotionalism, let us take two hypothetical countries: "Rumania" and "Walldavia." If both Ruritania and Walldavia were dissolved into a libertarian society, with no government and innumerable private individuals, firms, and police agencies, the only clashes that could break out would be local, and the weaponry would necessarily be strictly limited in scope and devastation. Suppose that in a Ruritanian city two police agencies clash and start shooting it out. At worst, they could not use mass bombing or nuclear destruction or germ warfare, since they themselves would be blown up in the holocaust. It is the slicing off of territorial areas into single, governmental monopolies that leads to mass destruction — for then if the single monopoly government of Walldavia confronts its ancient rival, the government of Ruritania, each can wield weapons of mass destruction and even nuclear warfare because it will be the "other [p. 221] guy" and the "other country" they will hurt. Furthermore, now that every person is a subject of a monopoly government, in the eyes of every other government he becomes irretrievably identified with "his" government. The citizen of France is identified with "his" government, and therefore if another government attacks France, it will attack the citizenry as well as the government of France. But if Company A battles with Company B, the most that can happen is that the respective customers of each company may be dragged into the battle — but no one else. It should be evident, then, that even if the worst happened, and a libertarian world would indeed become a world of "anarchy," we would still be much better off than we are now, at the mercy of rampant, "anarchic" nation-states, each possessing a fearsome monopoly of weapons of mass destruction. We must never forget that we are all living, and always have lived, in a world of "international anarchy," in a world of coercive nation-states unchecked by any overall world government, and there is no prospect of this situation changing.
A libertarian world, then, even if anarchic, would still not suffer the brutal wars, the mass devastation, the A-bombing, that our State-ridden world has suffered for centuries. Even if local police clash continually, there would be no more Dresdens, no more Hiroshimas.
But there is far more to be said. We should never concede that this local "anarchy" would be likely to occur. Let us separate the problem of police clashes into distinct and different parts: honest disagreements, and the attempt of one or more police forces to become "outlaws" and to extract funds or impose their rule by coercion. Let us assume for a moment that the police forces will be honest, and that they are only riven by honest clashes of opinion; we will set aside for a while the problem of outlaw police. Surely one of the very important aspects of protection service the police can offer their respective customers is quiet protection. Every consumer, every buyer of police protection, would wish above all for protection that is efficient and quiet, with no conflicts or disturbances. Every police agency would be fully aware of this vital fact. To assume that police would continually clash and battle with each other is absurd, for it ignores the devastating effect that this chaotic "anarchy" would have on the business of all the police companies. To put it bluntly, such wars and conflicts would be bad — very bad — for business. Therefore, on the free market, the police agencies would all see to it that there would be no clashes between them, and that all conflicts of opinion would be ironed out in private courts, decided by private judges or arbitrators.
To get more specific: in the first place, as we have said, clashes would [p. 222] be minimal because the street owner would have his guards, the storekeeper his, the landlord his, and the homeowner his own police company. Realistically, in the everyday world, there would be little room for direct clashes between police agencies. But suppose, as will sometimes occur, two neighboring home owners get into a fight, each accuses the other of initiating assault or violence, and each calls on his own police company, should they happen to subscribe to different companies. What then? Again, it would be pointless and economically as well as physically self-destructive for the two police companies to start shooting it out. Instead, every police company, to remain in business at all, would announce as a vital part of its service, the use of private courts or arbitrators to decide who is in the wrong.
Jacob Bloom: "In short, every court would agree to abide by an appeals trial, as decided by a voluntary arbitrator to whom Metropolitan and Prudential would now turn. The appeals judge would make his decision, and the result of this third trial would be treated as binding on the guilty." Who is going to force the courts to abide by the appeals trial? And why would their ruling be any more binding than the last two? There's no force behind it! Besides, I can just go to another court.
If the court didn't abide by the appreals trial, no one would use them because they don't follow convention. That would just be a waste of money and time for all parties involved. Their ruling would be binding by convention (meaning generally accepted operating procedures), and then no one could blame the enforcement agency for dealing out punishment (on the defendant they already hold in custody - assuming a criminal trial, not a civil suit). You can't just go to another court, because the enforcement agency has you in custody, and will not likely respect your appeals. Their use of force against you now has the sanction of society via the free market and the system it has created.
Jacob Bloom: "it seems most sensible for the legal code to declare that a decision arrived at by any two courts shall be binding." Who's going to enforce this one??
See above.
Jacob Bloom:What if I set up a Bloom's Criminal Court and hire THE most powerful private defense firm to back up my rulings? Who's going to stop me from serving criminals everywhere?
Other PDAs and courts. And also, since there is no monopoly (no government), "THE most powerful private defense firm" would not be much more powerful than the others, and would be nothing compared to the others combined. Plus, there would be a natural suspicion of any court trying to establish a monopoly - remember, the most important guiding principle of this society is to avoid monopolies. So there will be strong market demand and hence profit incentive to crush monopolies.
Jacob Bloom: "To demand that an advocate of free market law describe in advance how markets would supply legal services (or shoes) is to issue an impossible challenge." Except that I've seen how shoes are provided in a free market, I've never seen how law is provided in one.
That's not exactly related to what you quoted, but that criticism is relevant to a degree. We don't have tons of examples of a free market law systems, but we have a few good ones. Also, remember that international businesses have to rely on private arbiters in all areas where neither government of the two parties has jurisdiction. But even if you reject all of that, and the Law of the Sea, and the Law Merchant and such, we still come back to: do you really think monopoly is the best system? Surely it's not too much of a stretch to believe that we can do better, and the private law systems so far, albeit limited, were very effective and efficient for at least a large number of cases, so it's not a total reach or anything.
Jacob Bloom: "Free markets supply human wants better than state monopolies precisely because they allow an unlimited number of suppliers to attempt to do so." Except that with shoes, there is no one shoe that consistently fits everyone. With laws, there has to be one consistent law that is one size fits all. Otherwise, everyone gets their own shape and size of law...that's a recipe for chaos.
A monopoly show maker would have all sizes - nothing to be gained by losing customers who decide to go barefoot. In other words, our criticism of monopoly is not that monopolies don't offer enough variety, and that anarchy would. Our criticism of monopoly is that it is inefficient and tends to be abusive, or in the case of justice, corrupt. Whether there is one size fits all or not depends on whether the particular industry in question is one where one-size-fits-all is more or less inefficient and abusive/corrupt. In shoes, the free market gives great variety, because consumers want it. In law, the system will give what consumers want as well, and that ought to be - as you say - more of a one-size-fits-all so there would be equal protection under the law. It gets confusing when we talk about different areas having different laws and such, but that equal protection would be there if the market demanded it, and of course it in all likelihood would. Any courts deviating from this would tend to lose business from the PDAs, because if not then the PDAs would lose customers because they do not adhere to the standard justice that most people find appealing. Just because there are multiple firms doesn't mean that there can't be standards (ISO is a counterexample to that general notion). I know there will be more objections here, but that's to be expected: remember how different this is from the current system. Don't let the number of uncertainties you may have about anarchy (as I did and still do on certain things) fool you into think that it can't work. If we didn't have myriad uncertainties and doubts, it could only mean it's pretty similar to our current system and requires no questioning of our basic assumptions of how the world works.
Jacob Bloom: "The beauty of the free market is that all each person has to look after is his or her own self-interest, but this "magically" results in great prosperity for all. There need be no central planner." If you let pure self interest run the law, you won't be able to enforce your rules because criminals commit crimes because it's in their interest to do so. What gives you the power to tell them they're not serving their self interest?
If you let pure self interest run the law, you won't be able to enforce your rules because criminals commit crimes because it's in their interest to do so. What gives you the power to tell them they're not serving their self interest?
I didn't say that we allow everyone to serve their self-interest. Rephrasing what I wrote above, things work out best if everyone pursues their self-interest, as long as their are no monopolies. ("The power to tell them...?" What do you mean?)
As an aside, by the way, you are basically right about power, in that it does make possible, and in that "rights" are - practically speaking - just a shorthand for "what people are allowed (by those with power) to do." If people talk about how things "should" be, we have to ask, "For what purpose?" Of course, not offending our natural human senses of empathy and justice is a purpose, too. Talk of morals and rights seems for more obfuscating than elucidating, especially when people don't agree on definitions (which they seldom do on those two particular words - so I say scrap 'em!).
Jacob Bloom:Markets are variable sum games. Law is zero sum. You have a winner and a loser.
You're mixing domains of activity. Markets are variable sum in the sense that exchange can benefit both parties to a market interaction. Law is zero sum in that (say in a civil suit for the sake of clarity), if litigant A sues litigant B, the punitive money paid by one will be money gained by another (the payment of punitive damages is not a free market exchange). However, when we talk about a free market for law, we are NOT* suggesting that punitive damages are a market interaction, we are saying that there is free competition (no monopoly) on who makes and enforces the law. (Again, competition does not imply lack of standards. See above.)
*Edit: typo, I forgot the "NOT"! That would be pretty confusing...
Jacob Bloom: Free markets are not compatible with legal systems for precisely the same reason free markets work so well with goods and assets: because everyone can't get what they want under the law, some people have to get what they don't want.
Even criminals want the law to protect them, and the only way the market can supply that service effectively is to provide equality under the law. In other words, whether they realise it or not, most criminals (even murderers) probably want the policy to be that anyone who kills anyone else should be punished severely. That they hope to escape punishment themselves is immaterial. In a free market, they would still have a demand for equality under the law, which would of course be asking and paying for something that could eventually come back to bite them. Or to be ultra-precise, they would have a consumer demand for equality for all persons except themselves, but they themselves would be the ONLY consumer paying for that, where every other consumer would be paying for that criminal to be subject to the law. So all you're really saying is that being a criminal in anarchy would suck, as everyone is against you and everyone is paying to have you incarcerated, whereas you are the only one paying for your defense. In other words, going back to your statement, the market can provide for some people getting what they don't want...if that's what everyone wants
Got a question:
What do you say to someone who keeps insisting that private courts would be biased and only rule in their customers favor and that these courts would survive because there would be a great demand for unbiased service? Afterall, why pay for an unbiased service when you can pay for one that will rule in your favor? Surely enough people will demand that kind of thing?
The purpose of courts is to resolve disputes: that's why someone would join a private court in the first place. In order to do this, the court must be as unbiased as possible, because otherwise everyone who is disadvantaged by the bias will quit.
For example, if there was one court that was biased in favor of men, then its membership will consist almost entirely of men. Conversely, if another court was biased in favor of women, then its members would be almost all women. Then, if a man and woman had a dispute, then their courts could not resolve it, and neither party would have derived any benefit from their court memberships. Therefore, the incentive for customers is to seek unbiased courts, and the incentive for courts is to fulfill that demand.
Zavoi: The purpose of courts is to resolve disputes: that's why someone would join a private court in the first place. In order to do this, the court must be as unbiased as possible, because otherwise everyone who is disadvantaged by the bias will quit. For example, if there was one court that was biased in favor of men, then its membership will consist almost entirely of men. Conversely, if another court was biased in favor of women, then its members would be almost all women. Then, if a man and woman had a dispute, then their courts could not resolve it, and neither party would have derived any benefit from their court memberships. Therefore, the incentive for customers is to seek unbiased courts, and the incentive for courts is to fulfill that demand.
I understand this, but how do you respond to someone who insists that there would be a substantial market for biased courts (courts that always rule in the favor of the person paying them)? And if people have the option of quitting, how are rulings enforced at all. Wouldn't you just quit any time some court didn't rule in your favor?
Also, does anyone know of any article or piece that deals with this issue of private law? Namely, the idea of bribery and "highest bidder wins" type criticisms against private courts?
Seems simple to me : a monopoly court is clearly most vulnerable to bribery and "highest bidder wins."
AJ: Seems simple to me : a monopoly court is clearly most vulnerable to bribery and "highest bidder wins."
I agree, but somehow I doubt that will be an effective argument against someone who doesn't believe in private law.
What about someone who keeps insisting that there would be a overwhelming demand for biased courts (people want to hire judicial services that are going to rule on their behalf)? What creates the demand for unbiased justice, IOW.
Thanks.
Ultimately, the final arbiter is the court of public opinion.
Say I sue a restaurant for selling me food that caused food poisoning. We can argue day after day about who is in the right, and which arbitration service is the most reliable, but ultimately the restaurant has to vindicate itself before public scrutiny, or it goes out of business.
"As long as there are sovereign nations possessing great power, war is inevitable."
That's where you went wrong.
Courts don't fight. They are mediators that offer opinions. This is of course why quality courts will out compete biased ones, no one is going to agree to be bound by the decision of a biased court. And no one is going to care if someone "appeals" to a fraudulent court.
sirmonty:What creates the demand for unbiased justice, IOW.
Well, do you demand unbiased justice? Do I? Yes. How many people do you think would be willing to pay for unbiased justice? A lot. The vast majority. So the market opportunity for a service offering unbiased justice is huge. So some companies will rise up to offer that service, and if they fail to remain unbiased, they will lose all that market share. Also, other companies would refuse to deal with them or enforce their ruling if they were biased.
Think about it this way: even a criminal wants unbiased justice for everyone else! So he would be numbered among those people willing to pay for the service of unbiased justice, and by extension they are willing to pay for a company not ever associating with rogue court or enforcing their orders. They are just as willing to take their business elsewhere the moment a court shows signs of bias, or any association with biased courts.
AJ: sirmonty:What creates the demand for unbiased justice, IOW. Well, do you demand unbiased justice? Do I? Yes. How many people do you think would be willing to pay for unbiased justice? A lot. The vast majority. So the market opportunity for a service offering unbiased justice is huge. So some companies will rise up to offer that service, and if they fail to remain unbiased, they will lose all that market share. Also, other companies would refuse to deal with them or enforce their ruling if they were biased. Think about it this way: even a criminal wants unbiased justice for everyone else! So he would be numbered among those people willing to pay for the service of unbiased justice, and by extension they are willing to pay for a company not ever associating with rogue court or enforcing their orders. They are just as willing to take their business elsewhere the moment a court shows signs of bias, or any association with biased courts.
Let's say I do not want unbiased justice, I want to use a court that will side with me, because I am paying them. It isn't hard to think of lots of instances where individuals might want a court biased in their favor. What reason is there to believe that there wouldn't be a significant market for that service other than the simple assertion that "most people demand unbiased justice."
Just to clarify, I am fully in support of polycentric legal order, but these are the common most objections I have heard from doubters when I have discussed it. They insist that there would be a significant demand for such thing.
sirmonty: Let's say I do not want unbiased justice, I want to use a court that will side with me, because I am paying them. It isn't hard to think of lots of instances where individuals might want a court biased in their favor. What reason is there to believe that there wouldn't be a significant market for that service other than the simple assertion that "most people demand unbiased justice." Just to clarify, I am fully in support of polycentric legal order, but these are the common most objections I have heard from doubters when I have discussed it. They insist that there would be a significant demand for such thing.
Let us theorize that A and B goes to Court X and Court X is a biased court for individual A. A wins but B appeals. B goes to Court Z that is biased for B and B wins the appeal. Court X and Court Z's claims are now contradictory. So X and Z go to a third court system. Court Y hears the cases of both X and Z and rules in favor of the winner.
'It is difficult to imagine any normal person wishing to meet Marx for a third time.' - Alexander Gray, The Socialist Tradition
People figure out when dishonesty is occurring. An unbiased court, thus I would say one based on natural rights, will receive the highest demand. Dishonesty occurs now in the court rooms based on arbitrary, non-universal decisions, thus, they are biased. People are locked by a government monopoly and thus coerced into a limited choice as to what court can be used today even if the court is dishonest and bias. There is nothing in the current system, and this goes for government institutions in general, that keeps itself honest - no mechanism exists in the current system. At least in an anarchy society if dishonesty happens, then without the monopoly there is a mechanism in the society for honest court systems to prevail.
"I used to see a mountain as a mountain.. Thereafter.. when I saw a mountain; lo! it was not a mountain.. yet now of final tranquillity: I see a mountain just as a mountain as I used to.." - Master Yuan; molon labe
sirmonty:Let's say I do not want unbiased justice, I want to use a court that will side with me, because I am paying them. It isn't hard to think of lots of instances where individuals might want a court biased in their favor. What reason is there to believe that there wouldn't be a significant market for that service other than the simple assertion that "most people demand unbiased justice."
Of course everyone wants biased justice favoring themselves, but for each individual that market demand is separate so it's a minuscule market from the point of view of a justice company.
Say we have a court has consistent rulings (if it didn't, soon no one would deal with it). Now say Joe is willing to pay that court to be biased for him. If it retains consistent rulings, the court is now biased for Joe, but for no one else. It might lose all its other customers.
But then the objection naturally arises: what if a court goes easy on thieves, so all thieves subscribe to that court's adjudication services. This objection still has two problems.
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