A World Without Theft
-- go back to the Garden of Eden. (laughter) (applause)
They didn't have microphones then at that time, but what they did have
was a superabundance of goods, and if you have a superabundance of goods
then it is impossible that human beings have any conflicts with each
other, because what should they fight about, if there exists a
superabundance of things.
Except of course, in two regards even in the Garden of Eden problems
would exist, namely with regard to our own physical bodies. That is
still scarce -- we have only one of them, not millions. And of course
the standing room on which our physical bodies rest.
And insofar as scarcity exists, even in the Garden of Eden in these two
regards, conflicts are possible. And because conflicts are possible, it
would be even in the Garden of Eden necessary to have certain rules in
order to avoid these conflicts. And the rules would have to be rules
assigning rights of exclusive control, rights of ownership with regard
to scarce resources, namely our bodies.
And what the rules would be most likely adopted in the Garden of Eden
would be: every person is the owner of his own physical body and can do with
it whatever he wants with his own physical body and anybody else who
wants to do something to me or I want to do something to somebody else,
he would need the permission of the owner.
And the second rule that we would need is: I can move around wherever I
want, but I cannot try to occupy a space that has already been occupied
by someone else.
And outside of the Garden of Eden, where we have all-around scarcity,
and all sorts of conflicts can arise, we would also need rules that
avoid conflicts in this situation. And again, without going into very
detailed explanation what sort of rules would be most likely adopted
outside of the Garden of Eden, there would be again: every person owns
his own physical body, we acquire the right of exclusive control over
scarce resources that were previously unowned, by being the first one to
put scarce resources to some use. The third rule would be: whoever uses
his physical body and some originally apropriated, previously unowned
goods and further produces something with the help of his body and so
forth, would be the owner of whatever he has produced. And the final
rule would be the rule that exclusive rights of control over scarce
resources can also be acquired by voluntarily transferring ownership from
the previous owner to a later owner.
These elementary rules are very old rules, through all of mankind
basically these rules have been recognized. They make intuitive sense.
We can even see them adhered to in the animal kingdom to a certain
extent. And we recognize that even small children for instance
recognize the rule that he who uses something first becomes the owner of
it, because whenever kids get into a fight the first thing that they
point out is that I played with the toy first, and until I drop it you
had better leave me alone.
It should also be clear that the alternative to these rules are rather
absurd. The first alternative to self-ownership would be slavery, which
is morally objectionable as well as economically inefficient. If the
second person coming along would become the owner of something, then the
second person would become the first because the first one wouldn't do
it. And that has absurd consequences. If the first owner would have to
share ownership with other people, then again conflicts would not be
avoided and in addition this would be economically unproductive, because
the incentive to be the first would be reduced and so forth. The
incentive to be the producer would be reduced if the producer would have to
share his property with those people who have not produced it, and so
Now the next problem that then arises is: even if we recognize the truth,
the morality, the economic efficiency of these sorts of principles, what
do we do about those people who do not respect these rules? And of
course there are always people who break these rules. That is, we need
some institution that enforces and threatens with punishment breakers of
And the traditional answer to the question who is in charge of enforcing
these rules and threatening potential violators of these rules with
punishment in case they do not adhere to these rules, the traditional
answer is: this is the task of the state. This is the sole and only
task of the state.
Now whether this answer is correct or not depends on what is the
definition of the state. Now states are traditionally defined as being
a territorial monopolist of ultimate decision-making or ultimate
arbitration in cases of conflict. In every case of conflict, the
ultimate judge who is right and who is wrong, is the state. And because
the state is the monopolist of ultimate decision making, the state has
then by implication also the right to say what the price for its
arbitration is, and it can unilaterally impose what the price would be,
that is to say: the state is also a territorial monopolist of
Now once we have this definition of the state in front of us, then it is
not all that difficult to discover that there is something wrong with
this answer to the question who should enforce the rules that I
First of all we have a classical argument against any type of monopoly.
And as I said, the state is a monpolist. He is the only one that can do
such-and-such. The classical argument against monopolists is: whenever
we do not have free entry into a specific line of production, in this
case the production line of arbitration, of police protection and so
forth. Whenever we have restrictions with regards to free entry, then
producers are no longer forced to produce at the lowest possible cost.
As long as free entry exists producers must produce at the lowest
possible cost because otherwise they will invite competition against
And monopolists because of that tend to be, from the point of view of
consumers, more pricey, and the quality of their product tends to be
lower than it would be if competition existed in their area of
But when it comes to the state, matters are actually worse
than in the case letsay of a milk monopoly, which would produce milk at
above minimum cost, price would be higher quality of the milk would be
lower. But in the case of government, the problem is that governments
do not just produce maybe lousy goods. But they can actually produce
Namely in the following sense: because governments are the ultimate
arbitrator in any type of conflict, governments can also cause conflicts
and then decide, when it comes to who is right and who is wrong in the
case of conflicts, in their own favor. And given that they are human
beings just like everyone else, and realize this possibility, of course
they will cause conflicts and then decide the conflicts in their own
favor and then on top of it they determine what the price of the victims
of their misjustice have to pay for this misservice of causing
conflicts, deciding them in their own favor, and what the price for this
So this is the fundamental problem with having a state in charge of this
particular task. And now this problem is even compounded if we have a
democratic state in front of us. The classical liberals, who proposed
the state as the solution to the problem of social conflicts, faced as
their opponents typically monarchical governments, kings and queens.
And they rejected the rule of kings and queens for the simple reason
that they thought that they had privileges, that they were treated
differently by the law than the rest of the people were. And they
advocated, instead, that the state should be organized democratically,
by making the point that if everyone can enter the state, not just some
king or queen, then we have so to speak equality before the law.
However it turns out that this is of course a fundamental mistake to
think that once you create open entry into every governmental position
that you have equality before the law. What actually happens is that we
substitute a democracy for monarchy, is we replace personal privileges
-- privileges restricted to the king and queen and so forth -- with
functional privileges, privileges that are given to public
But in fact the distinction between 'higher law' and 'lower law' exists in a
democracy just as much as it exists under monarchy. In the form of two
different types of law: one that we call 'public law', that covers so to
speak the actions of public officials, and 'private law' that covers the
activities of private citizens.
As a private citizen, you may not steal. As a public official however,
covered by public law, you can steal.
As a private citizen, you may not enslave somebody else. On the other
hand, if you do the same as a public official, draft somebody into the
army for instance, then that is perfectly alright.
If you steal from somebody and give it to somebody else, that is fence
stolen goods, this is considered to be under private law a crime. If
you do it as a public official it's called redistribution of income.
So under public law you can do certain things that under private law
would be considered to be illegal. So the distinction between two types
of law exists still exists under democracy just as much as it exists
In addition there are some more problems arising once we have a
democracy. What you do is you exchange somebody, the king or queen who
considers the country his own private property, with somebody, a
democratically elected politician, who is the temporary caretaker of
public property. And now ask yourself: will this make a difference in
terms of the behavior of these two individuals? And the answer of
course is it will make a fundamental difference.
If you consider yourself the owner of a country, you will as every
private owner does, by and large be concerned about preserving or
enhancing the value of the country. After all, you want to pass on
something valuable to the next generation. You might even sell off some
of this and are concerned about the price that you will get for whatever
you sell off and so forth.
On the other hand, if you are just a temporary caretaker, and not the
owner of it, then you will take the short-run perspective: I have to
loot the country as fast as possible because I only have four years to
do it (laughter) and no chance afterwards.
So you will be engaging in capital consumption, rather than in the
preservation and the enhancement of the capital value embodied in the
In addition, it is frequently pointed out that but isn't it good that we
have open entry into the position of governmental rulers under democracy
whereas entry into governmental positions under monarchy is of course
restricted by accident of birth.
Now, what is wrong with this argument is the fact that: yes, open entry
is good as long as we are talking about the production of goods. But
open entry is not good when it comes to the production of bads -- and I
already explained that governments produce something bad.
We would not want to have open competition in who is the best killer; we
would not want to have competition in who steals more effectively than
other people do.
And when it comes to this we notice some very important difference. A
king might be bad, that is true, as all governmental positions can be
filled by bad people. But because he is a member of a family, other
family members will have an interest in containing people who are bad
because they might just lose the property of the family, might threaten
the position of the dynasty, and bad kings are typically surrounded by
members of his own family, by entourage, that controls him.
And if need be, they get killed, if they just go out of line.
And on the other hand a king can be conceivably a good and decent
person, because it just an accident of birth that he comes into his
But now look at a democratic politician: a democratic politician can
never be good. Because he has to just compete openly for this
position, and in order to be elected to this he must be a very good and
proficient liar, cheater, somebody who is 'good' in terms of qualities
that we definitely do not want to have.
So we might have good kings; we will never have anybody of any decent
moral values ever coming into the position of President or Prime
Minister or whatever it is.
So now we come then to the question: what is the right answer to
the question of how do we enforce the rules that I initially mentioned?
Self-ownership, first-use-first-own principle, producer owns whatever he
has produced, and the rule of you can acquire property through voluntary
And the correct answer is: the enforcement of these rules has
to occur by individuals and agencies that are bound by the same rules as
everybody else. That is, we need a society where the only type of law
that is in existence is private law. No such institution that is
covered by public law, which of course as I explained is a misnomer, it is not
public law, it is just criminal activities masquerading as law.
Now this, if the enforcement of these rules also has to occur by
individuals and agencies bound by the same rules, involves then two
One the one hand, unlimited rights to self-defense must be permitted.
And the immediate implication of course of this is that private
ownership of weapons and guns must be permitted in any free society.
And despite everything that we always hear from governments in terms of
contrary propaganda, there is an untuitively sensible rule that says:
the more guns there are, the less crime will exist. And the wild west,
contrary to what some movies insinuate, is a clear indication of the
fact that this is indeed the case. If people own guns, private
ownership of guns is unrestricted, then there will be less crime.
But in complex societies of course, we will not want to provide for our
own security only by our own means. We do not make our own suits or
shoes; we rely on the division of labor in this regard. And of course
in every complex society we would want to rely on division of labor, on
specialized agencies, and agents also when it comes to the protection of
private property rights.
And a very important role, in a free society when it comes to the
protection of these rules that I mentioned before, would be insurance
agencies, and associated with insurance agencies, directly or
indirectly: police, detective, and arbitration agencies.
Now what would be the result of this, and a very brief comparison
between the state provision of security and the provision of security by
freely-funded insurance operations. The first thing would be: there
would be a drastic fall in the price that we have to pay for security.
As I explained, the tendency under monopolist provision of security is
the price of security always goes up, we have to pay more and more, and
we get lower and lower quality of protection. Precisely the opposite
would occur if there were competition in this area.
The second fundamental change that would occur with regard to how much
security should be produced. Every resource that is expended on
providing us with security can no longer be used to provide us with
other things. Money spent on security can no longer be spent on
vacations, on beer and wine and food and whatever it is. Normally
people decide voluntarily, based on their own judgement how important
security is to them as compared to other needs that they might have.
If you have government deciding for you how much security you need, they
will of course decide: the more I can spend the better it is. That this
involves a restriction of satisfaction of other needs is of no concern.
That is, if we have competition in this area, there will be no
overproduction of security.
The next point I want to emphasize is: would there be a large amount of
money, resources, expended on victimless crimes, if we had competing
insurance agencies wanting to protect us. As we all know, currently
huge amounts of resources are expended on combatting victimless crimes,
such as drug use, prostitution, gambling, whatever it is. But it should
be perfectly clear that, as much as many people dislike these type of
activities, since these activities are victimless crimes and we are not
directly affected in our own property by the existence of these types of
activities, very few people would be willing to spend huge amounts of
money to be protected from something that they do not see as a
Insurance agencies that would want to protect you against these
sorts of things would obviously have to charge higher premiums than
insurance companies that would abstain from protecting you against these
things. And since most people are not affected by such things,
insurance companies that would offer services such as this would likely
go out of business very quickly. So victimless crimes would tend to be
treated for what they are, namely as not a big deal at all, and likely
no persecution of the perpetrators of victimless crimes would occur.
More important than this is the following: insurance companies would
indemnify you in case they fail in the task that they have accepted in
return for you paying a premium. Governments on the other hand,
monopolists of course do not indemnify you if they fail. If somebody
steals from you, robs you, mistreats you and so forth, the government
will not come and say: look we failed in what we promised to do, and
because we failed you we will offer you compensation of such-and-such an
amount. I have at least never heard of any government anywhere doing
anything like this, and I'm sure that you have never heard anything like
Why would insurance companies be good at this? They would be good at
prevention of crime because whatever they can prevent, they would not
have to pay up for it. A government police officer on the other hand,
if he does fail to prevent a crime, he gets his salary paid no matter
what. And in this situation it is of course better to hang around at
7-11 stores than just trying to prevent what he is supposed to
When it comes to the next thing that we want is, we want things that
have been stolen, taken from us and so forth, returned to us if at all
possible. What is the incentive of governmental police to find stolen
goods, to find the loot? Anyone who has any experience with this knows
that the police will file a report and then you ask them what will you
do about these goods and they will say we will file it away, and that's
the end of the story. By accident sometimes things might be recovered,
but only by accident.
What incentive on the other hand exists for insurance companies to
recover things, the answer is: because they otherwise have to indemnify
you, of course they have the financial incentive to recover whatever
they can recover at reasonable cost. I had an acquantance whose VW got
stolen in Italy. He went to the Italian police and asked them what will
you do it about and they said "nothing". And then he reported this to
his insurance company and a week later the insurance detective
discovered where his car was. Of course the car was pretty much
worthless also, but nonetheless you can see that there's an entirely
different incentive in both cases.
And the last thing that you want of course is like, that the
perpetrators of the crime are found and captured, and that they have to
compensate the victim. Now how likely is it that the government finds
the perpetrators? In capital crimes yes they do occasionally find them,
because public opinion pressure is quite high. In crimes of a lesser
sort: rarely if ever, do they apprehend the criminal.
And if they do apprehend the criminal, what will they do with the
criminal? Will they force the criminal to now compensate the victims?
And again I have never heard of this. Quite to the contrary they will
probably jail the person, and the victim plus other taxpayers are forced
to even pay for the incarceration of the person who victimized them in
the first place, and if I remember correctly incarceration in the United
States, per person per year, costs about $70,000 or in the neighborhood
of this. There you can just engage in physical workouts, you have TV,
you complain if you don't get your right muesli in the morning.
And you might even study law, to prepare yourself for the next
apprehension, you know how to better defend yourself. And all the rest
of it. And does the victim ever see a penny out of this? And the
answer's of course: never ever.
Would insurance companies operate like this? Imagine an insurance
company would tell you: this is the condition under which I insure you,
as soon as we apprehend the criminal, we will ask you also just to pay
for his incarceration. I don't think that insurance companies would get
very far with this type of treatment.
Next point: how about the point of disarmament of the public? As we all
know, governments of course always disarm people. In the United States
we are not as 'progressive' as in many other countries, but we are
definitely moving in the direction of disarming the citizenry,
increasingly also. And it should be perfectly clear that a business
that is in the business of taxing you is interested in disarming those
people that they want to tax.
But now imagine that you would go to an insurance company and the first
question that they ask you: do you have any arms, weapons, dangerous
objects, at home? And you say yes I do. And they would say: but the first
condition attached to insuring you is that you have hand over all of
these things to me. I think everyone except a moron would immediately
recognize that there must be something suspicous about an agency such as
this, that wants to disarm you first as a condition of protecting you
Quite to the contrary, insurance agencies would actually encourage you
to own guns, and to prove to them that you know how to safely handle
these instruments, and would likely offer you a reduction in your premium
that you have to pay, if can show that you are proficient in the
handling of instruments of self-defense. Just as insurance companies
offer you a reduction in the premium if you have a safe at home, as
compared to just storing your family heirlooms on top of the kitchen
table, so they would likely offer you a reduction in premium if you can
show them yes, I own a gun, yes I have a training course, yes I have a
certificate that shows that I know how to handle these things and so
forth. So a very different type of treatment you would get there.
Moreover, insurance companies are by their very nature defensive
organizations. And I should emphasize this because states of course are
by their very nature aggressive institutions. Because, given that all
people have a certain inclination to be aggressive, some people more
than others. But assuming so to speak a natural inclination of being
aggressive, if you can externalize the cost of being aggressive onto
other people. That is, I don't have to pay all the price myself for
being aggressive, pay my own body guards, pay for my own weapons, but I
can make other people to pay for my own aggression, which I can of
course once I can tax people, then I will tend to be more aggressive
than I would naturally be.
Insurance companies, who cannot resource to taxation, must because of
this be defensive. Aggression is an expensive proposition, and you will
have to charge higher premiums if you engage in aggressive activities.
If you charge higher premiums then of course you will tend to be less
attractive. Most people will prefer not to be insured with aggressive
agencies but with defensive agencies because this is less costly.
And not only this. Insurance companies will also make it as a
requirement of all the clients that they insure that they themselves
should engage in non-aggressive behavior. No insurance company would
cover the risk for instance that I provoke you, then you retaliate, and
then I go to my insurance company and complain about you having attacked
me. Instead they would just say: look, you provoked first and then
retaliation ensued, and risks of this nature will not be covered.
So, as a condition of insurance, they will impose on you code of
conduct, that forces you to accept a behavioral style that is civilized,
so to speak. That will also include that insurance companies will most
likely insist that you do not engage in vigilante justice. Not that
self-defense under certain circumstances would be excluded, but in order
to make retaliation and permanent conflict, to rule that out as far as
possible, they would insist: if something has happened, please come to
us and there will be some sort of regular procedures set in motion in
order to avoid any unnecessary conflicts.
Furthermore, if we would have competition in the protection of private
property rights, we will get on the one hand a greater variety of law
and on the other hand as I will explain in a minute, a greater
unification of law. What will happen on the one hand is, there might be
insurance agencies or protection agencies that offer you to apply letsay
Canon law. There might be others that offer to apply Mosaic law. There
might be others that propose to use Islamic law, and so forth. These
rules would only apply of course to people who are insured with the same
company. Everybody being insured with one company knows, these are the
laws that will apply to me, and everybody else who is insured with the
same company. They agree to this type of law and the law procedures.
So there we would have a greater variety of laws, everybody could live
so to speak under those rules that he wants to accept in his own
On the other hand of course: conflicts can also arise between members
that are insured by different law agencies, that have internally
different types of law codes. And it should be perfectly clear that in
conflicts between members of different types of law codes, then, in
order to resolve their conflicts, we would have to have independent
arbitration. And in these independent arbitration of inter-agency
conflicts, there then a tendency would emerge of hammering-out the
principles of procedures, punishment, conflict-resolution, and so forth,
that can be said to be truly universal.
That is, so to speak, the smallest common denominator, uniting,
combining all the different internal law codes that exist. So we would
get a greater variety of law and at the same time enormous incentive to
create a unified, international type of private law, developed by
arbitration agencies competing against each other in cases of
Which brings me to my last point, that is to say, in such a situation,
with competing insurance providers, we would first of all get contracts
offered about what will be done in what cases. Currently, when it comes
to the question do we get any conflicts offered, the answer is of
course: no, there is no contract offered at all. The government only
promises to do something, but they never say what exactly it is
that they will do, and in addition they even change the rules of the
game as they go along. They engage in legislation. They change the
laws. Something that might be legal today might be illegal tomorrow,
and vice-versa. An insurance company that would say OK we will not
promise you exactly what we will do and also we will reserve the right
to change the rules of procedure as we go along without your consent
again would not be able to get a single client to agree to such a
And an insurance company would have to offer a conflict that has
provisions first for the first contigency that everyone can forsee: that
is, what will you do in case I have a conflict with somebody insured by
you, just as you insure me? That is, what would you do in cases if two
clients of yours have a conflict with each other. Obviously the
contract would have to have provisions what to do in this case.
And secondly, these contracts provided by insurance companies would also
have to have provisions: what do you do in cases when I have a conflict
with a member of a different insurance agency? And in order to be
believeable, they must have a provision that says: in such a case of
course we will go to third party independent arbitration. All insurance
companies would likely have a provision such as this. Yes, if conflict
exists between client A and client B, both clients are insured with a
different company, an independent arbitrator will be appealed to.
And there exists competition in the field of independent arbitration,
too. That is, no arbitrator can be sure that in the next case of
arbitration, he again will be approached with the task of being an
arbitrator, but other people can be approached as well. And given the
fact that he can be removed from his position, his incentive is indeed
to come up with a solution that is regarded as a fair solution by the
clients of all companies involved in the dispute, because otherwise he
will most likely not be chosen again. Which again emphasises this
pressure of creating a body of law that is truly universal.
We would then have enhanced legal predictability, in contrast to
ever-changing and flexible legislation. We would have legal certainty
instead of flexible laws. And I think our private security and the
protection of our property rights would be taken care far better than
that is the case under the current, monopolist situations.
I know that these thoughts are familiar to some. To some they might
sound somewhat strange the first time you hear them. I make you aware
of the fact that I have written extensively on this subject, and of
course I urge you now to all buy my
book, if you don't already have it (laughter), and I am perfectly
willing to sign it. Thank you very much.
The above was delivered by Hans-Hermann Hoppe at the Mises
Circle in Southern California, 2006, and was transcribed from the
mp3 available at Mises.org.