Mises Wire

There Is Successful Governance Outside of State Power

Government and state are terms typically used synonymously these days. But if a state is an institution with a monopoly on the allowable use of aggression in a given territory, is a government always this as well? We know governing is needed in lots of private non-monopoly-wielding institutions, from large manufacturing corporations to local tennis clubs. So if we think outside the state, we can find ways that private governments can be established and developed to replace the status quo state version of current government rule.

The desire to interact and live among others arises due to the various economic, social, security, and spiritual benefits that accrue from doing so. Put another way, doing many things on your own is either much more expensive or simply not possible and often less fulfilling. But as people start interacting more and living in closer proximity, complexity increases as to how to live harmoniously so as to ensure net positive outcomes.

The practical solution to solving such complexity has generally been for communities of people to invest in and maintain certain infrastructure via a common effort rather than individually. The common infrastructure we are referring to here is very broadly conceived as goods and services that can benefit many people simultaneously and the regulations and rules relating to their common use. Think of everything from bridges to dress codes.

While common infrastructure can be supplied by the state with its taxing and regulating powers, it can also be established via voluntary collaboration. Historically we have seen this with the rise of free towns in medieval Europe that often took place either without or despite the efforts of the landed aristocracy. For contemporary examples one only has to look at modern property formations such as residential apartment complexes where many people can own and rent apartments while a contracted governing body administers to a range of common services and their use terms.

In the absence of state regulation and taxation, similar voluntary common infrastructure models could be used to provide for whole towns or districts of people. Using scale economies, the more people and businesses that are governed under a common body, the more goods and services can be provided while keeping the cost per resident to an appropriate level. Roads, above and below ground rail, nature reserves, parks, policing, defense, first aid and ambulance services, firefighting, daycare, building and development codes, and public behavior standards are just some examples of what could be provided depending on the demands and means of the target population.

It is also worth considering the possibility for overlapping governing bodies to exist alongside each other. For example, while one governing body may look after a specific complex of streets and their adjoining properties, another governing body could look after the broader city the street complex sits within, and still another governing body formed by a collection of cities could attend to regional infrastructure needs. Each governing body would be responsible for providing the services appropriate for its scale and capabilities.

Generally, services needing greater resources, say military defense, incentivize increased government size and coordination between governments. While greater scale brings greater capability, it is offset by reduced localization, a feature which may be more or less important depending on the circumstances.

Another possibility is for certain parcels of land to not be part of any broader governing bodies at all. For example, a family living on a country estate may be happy to independently and unilaterally pay for all security, utilities, and transport connections needed and exist entirely without participating in any common infrastructure solutions. Similarly, a large toll-charging highway system running between multiple towns, cities, and districts may not fall under any of the governments for these respective population centers and simply be a government unto itself.

Pulling all these ideas together, a region of land that is not ruled by a state, that has instead taken the libertarian option with respect to government, is therefore likely to be made up of a combination of many different sizes and varieties of private governments with densely populated city centers, having very active governments giving way to less active entities as density decreases, and finally certain land holdings being unencumbered by any governing body at all. Once-established governments that are most able to satisfy their stakeholders’ needs will be more successful and expand or be emulated while poorer performing arrangements will be deserted and ultimately replaced. Over time, they can also be expected to expand and contract the services they provide depending on changing circumstances, especially those arising from major events such as military threats, natural disasters, and demographic shifts.

Overall, we could expect the affordability and quality of the services residents receive from their private governments to be markedly superior to what citizens currently receive from their ruling state authorities simply given the dynamics of the relationships. Under a state each person is a subject forced to pay taxes and obey rules or risk aggression from the state’s enforcers, while for a private government its residents are either its customers or employers.

This distinction becomes all the more meaningful when governments fail, whether over something trivial such as a resident finding their garbage was not removed on schedule, or something quite serious such as the government intentionally violating the resident’s property rights. In each of these cases the options for recourse open to a resident under a state government are largely limited to complaining about one part of the state to another part of it.

They may be able to force the issue they have with their state government into a state court, then at great expense to themselves try to win their case against the near limitless resources available to the state to defend itself. However, in many cases the state does not operate under clearly contracted terms, and even if a blatant injustice has taken place, unless the resident is well connected, well financed, generally influential, or some combination of all three, they are typically left in a somewhat helpless, frustrated, impoverished, or even threatened position.

Under the libertarian private governance option, the resident is not limited to going to their private government to address a wrongdoing committed by that same private government as the government does not have a monopoly on legal determination and enforcement; it is not an aggression monopolist. If the government’s response is unsatisfactory, the resident could instead turn to independent institutions that specialize in providing justice for their customers. In this case the private government and the resident are just two free private entities with competing claims.

Exactly how such a free-market justice system would operate can be elaborated in great detail, but suffice to say that the likely success of one party in being able to enforce a claim over another party would be best ensured by having the moral backing of a widely recognized adjudicator delivering a judgment in their favor, the capabilities of a specialist enforcement agency acting on their behalf, and the financial means needed to pay for these services via an insurance contract payout.

Should a private government try to resist such a well-supported enforcement attempt from one of their residents, their reputation and authority would likely rapidly deteriorate. Counterparties such as employees, suppliers, debt and equity providers, banks, payments providers, insurers, and landlords may terminate relationships on the basis of a lack of trust in the government resulting in it being deprived of critical resources and capabilities. Also, other residents and landowners in the government’s territory could use procedures to remove and replace the government’s executive, not pay their fees, and even launch their own claims for compensation and retribution via their own independent justice institutions. Without general community support, the rogue government stands little chance.

Such confrontational outcomes, whether between residents and their governments or between different governments, would likely be rare in a libertarian society given the cost of conflict and the way people tend to only want to enter into contractual relationships with preagreed resolution processes in place.

As can be seen, the authority needed to govern in a free society would be supported by a web of contingent and mutually interdependent relationships rather than via a monopoly on the allowable use of aggression. The idea of a government is that it should improve the outcomes of its constituents, not just versus having no government at all but also versus alternative governing options that could also have been selected. Only via the free-market processes of voluntary association and private contract can continual government optimization take place.

In our current world, state governments are largely seen as something to be tolerated or worked around, with their often poor performance being expected and the chance of improvement deemed unlikely. Surely we owe it to ourselves to aim for better government outcomes for our future. Surely we should think outside the state.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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