Privatize It!

“Most people believe (incorrectly) that the government simply must provide law and defense services, lest civilization itself collapse.” – Chaos Theory

A well-known Twitter meme likes to show the irony of an event by comparing a recent outcome to an earlier time or earlier prediction.  For example:  How it started: American colonists fought a great war for their independence from Great Britain, with the express goal of self-rule.  How it’s going:  President Joe Biden’s approval rating hits a new low of 33 percent, with Congress chronically falling below 20, while a March 2022 NBC poll has found that 71 percent of respondents feel that America is on the wrong track. 

With this dismal news in mind, it might be a good time to conduct a thought experiment by imagining what would happen if we could make the government disappear.  First, there would no longer be police, armies, courts, or taxes.  All property would eventually shift to private ownership.  The marketplace would replace all necessary services currently provided by the government, while non-essential government services would cease to exist.  As the central force of society, “the market” would reflect the totality of all economic interactions. 

In Robert P. Murphy’s 2010 second edition book, “Chaos Theory”, Murphy provides two primers on how law and defense would be handled in a stateless society.  Backed by voluntary contracts and insurance, Murphy shows how the profit and loss system of the free market would make both law and defense more efficient and cost-effective.  In this introduction to anarcho-capitalist thinking, competition inherent in markets could replace the coercive monopoly of the existing government.   

In the absence of legislatures, laws would be drafted by legal specialists, not politicians.  The resulting system of private law would be founded on respect for property rights, with contracts backed by insurance covering all economic actions.  When conflicts arise, mediation and arbitration would be used to settle disputes.   

Insurance companies would be the central institution in a society free from the government.  Individuals already buy insurance for their homes, their property, and their lives.  Competing insurance companies would provide policies for all transactions including employment, marriage, business, crime, and defense.   With the market expanding to provide more choices, less expensive options would arise.  Since businesses would continue to have liabilities, they too would use both contracts and insurance.  The level of risk involved in each situation would determine the rate of premium.  Since a profit motive exists in the market, insurance companies would be incentivized to reduce inefficiencies and resolve conflicts quickly. 

In the arena of defense, private security would replace government police.  Competing firms would provide an array of services to cities, businesses, and other organizations needing protection.  Most crimes would be resolved by restitution from either the perpetrator or the insurance company, a significant departure from the current system.  Since only violent criminals would serve time in jail, there would likely be competing judicial firms along with specialized companies providing high-security facilities for violent criminals.  Insurance companies would cover the costs from premiums collected by individuals and corporations.

For protection against foreign invaders, defense companies would provide both security and prevention, with the potential for regional and international agencies.  Most premiums would be paid by large corporations protecting their property and employees.  Additional premiums could be amassed from high-risk entities such as cities, airports, shopping malls, etc.  Those with the most to lose would provide the bulk of the premiums, including the wealthy.  Competition among defense firms along with the profit motive would create an incentive to prevent wars and limit losses.   

A laissez-faire system and accountability will create efficiencies that are non-existent in government with profits and losses serving as the true checks and balances.  Fewer monopolies would exist as past monopolies were largely created and backed by government interference.  Markets, themselves, will more effectively weed out bad players using resources like Yelp, word of mouth, and industry ratings to identify and promote the best players.    

Despite claims that a lack of government would result in an outlaw society, Murphy begins to reveal the underlying structure possible for a peaceful transition to a private system of law and defense.  And while a stateless society would still have some of the same problems, the different incentives wrought by voluntary cooperation would be significantly more effective. 

The sooner we can acknowledge that government is not only unnecessary but itself creates much of the chaos we see today, the sooner we can begin to replace coercion with cooperation and establish a society that we can all be proud of.