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The Political Economy of Choice

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Anarchy and the law : the political economy of choice / Edward P. Stringham,
editor.
p. cm.
Includes bibliographical references and index.
ISBN 0-7658-0330-5 (cloth : alk. paper)
ISBN 1-4128-0579-1 (pbk. : alk. paper)
1. Anarchism. 2. Libertarianism. 3. State, The. 4. Social choice.
I. Stringham, Edward.

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Independent Studies in Political Economy
THE ACADEMY IN CRISIS
The Political Economy of Higher Education
Edited by John W. Sommer
Foreword by Nathan Glazer

AMERICAN HEALTH CARE

Government, Market Processes, and the Public Interest
Edited by Roger D. Feldman
Foreword by Mark V. Pauly

ANARCHY AND THE LAW

The Political Economy of Choice
Edited by Edward P. Stringham

CUTTING GREEN TAPE

Toxic Pollutants, Environmental Regulation, and the Law
Edited by Richard L. Stroup and Roger E. Meiners
Foreword by W. Kip Viscusi

MONEY AND THE NATION STATE

The Financial Regulation, Government, and
the World Monetary System
Edited by Kevin Dowd and Richard H. Timberlake Jr.

PRIVATE RIGHTS & PUBLIC ILLUSIONS

Tibor R. Machan
Foreword by Nicholas Rescher

STREET SMART
Competition, Entrepreneurship, and the Future of Roads
Edited by Gabriel Roth
Foreword by Mary E. Peters

TAXING CHOICE
The Predatory Politics of Fiscal Discrimination
Edited by William F. Shughart II
Foreword by Paul W. McCracken

WRITING OFF IDEAS

Taxation, Foundations, and Philanthropy in America
Randall G. Holcombe
 Contents

Acknowledgments xi

1. Introduction 1
Edward P. Stringham
Section I: Theory of Private Property Anarchism
2. Police, Law, and the Courts 18
Murray Rothbard
3. The Machinery of Freedom: 40
Guide to a Radical Capitalism (excerpt)
David Friedman
4. Market for Liberty (excerpt) 57
Morris and Linda Tannehill
5. Pursuing Justice in a Free Society: 75
Crime Prevention and the Legal Order
Randy Barnett
6. Capitalist Production and the Problem 107
of Public Goods (excerpt)
Hans Hoppe
7. National Defense and the Public-Goods Problem 127
Jeffrey Rogers Hummel and Don Lavoie
8. Defending a Free Nation 149
Roderick Long
9. The Myth of the Rule of Law 163
John Hasnas
Section II: Debate
10. The State 193
Robert Nozick
11. The Invisible Hand Strikes Back 218
Roy A. Childs, Jr.
12. Robert Nozick and the Immaculate Conception 232
of the State
Murray Rothbard
13. Objectivism and the State: 250
An Open Letter to Ayn Rand
Roy A. Childs, Jr.
14. Do We Ever Really Get Out of Anarchy? 259
Alfred G. Cuzán
15. Law as a Public Good: The Economics of Anarchy 268
Tyler Cowen
16. Law as a Private Good: 284
A Response to Tyler Cowen on the Economics of Anarchy
David Friedman
17. Rejoinder to David Friedman on the Economics 292
of Anarchy
Tyler Cowen
18. Networks, Law, and the Paradox of Cooperation 295
Bryan Caplan and Edward P. Stringham
19. Conflict, Cooperation and Competition in Anarchy 315
Tyler Cowen and Daniel Sutter
20. Conventions: Some Thoughts on the Economics 322
of Ordered Anarchy
Anthony de Jasay
21. Can Anarchy Save Us from Leviathan? 341
Andrew Rutten
22. Government: Unnecessary but Inevitable 354
Randall G. Holcombe
23. Is Government Inevitable? 371
Comment on Holcombe’s Analysis
Peter Leeson and Edward P. Stringham
Section III: History of Anarchist Thought

24. Gustave de Molinari and the Anti-statist 377

Liberal Tradition (excerpts)
David Hart
25. Vindication of Natural Society (excerpt) 399
Edmund Burke
26. The Production of Security 424
Gustave de Molinari
27. Individualist Anarchism in the U.S.: 437
Origins
Murray Rothbard
28. Anarchism and American Traditions 451
Voltairine de Cleyre
29. Civil Government: Its Origin, Mission, and Destiny, 461
and the Christian’s Relation to It (excerpt)
David Lipscomb
30. No Treason: The Constitution of No Authority (excerpt) 469
Lysander Spooner
31. Trial by Jury (excerpt) 484
Lysander Spooner
32. Relation of the State to the Individual 499
Benjamin Tucker
33. Freedom, Society, and the State: 504
An Investigation Into the Possibility of Society
without Government (excerpt)
David Osterfeld

Section IV: Historical Case Studies of Non-Government

Law Enforcement
34. Are Public Goods Really Common Pools? 538
Considerations of the Evolution of Policing and
Highways in England
Bruce L. Benson
35. Property Rights in Celtic Irish Law 565
 Joseph R. Peden
36. Private Creation and Enforcement of Law— 586
A Historical Case
David Friedman

37. The Role of Institutions in the Revival of Trade: 602

The Law Merchant, Private Judges, and the Champagne
Fairs
Paul Milgrom, Douglass North, and Barry Weingast
38. Legal Evolution in Primitive Societies 624
Bruce Benson
39. An American Experiment in Anarcho-Capitalism: 639
The Not So Wild, Wild West
Terry L. Anderson and P. J. Hill
40. Order without Law: 658
How Neighbors Settle Disputes (excerpt)
Robert C. Ellickson
About the Editor and Contributors 680
Index 683
 Acknowledgments
Chapter 2 from Murray Rothbard, “Police, Law, and the Courts,”
in For a New Liberty: Libertarian Manifesto (San Francisco: Fox and
Wilkes, 1996 [1973]), pp. 214-241. Copyright © 1973, 1978 by Mur-
ray N. Rothbard. Reprinted with permission of the Ludwig von Mises
Institute, Auburn, Alabama 36832.
Chapter 3 from David Friedman, The Machinery of Freedom: Guide
to a Radical Capitalism, second edition (La Salle, IL: Open Court,
1989), pp. 111-134. Reprinted by permission of Open Court Publishing
Company, a division of Carus Publishing Company, Peru, IL, copyright
© 1989.
Chapter 4 from Morris and Linda Tannehill, Market for Liberty (Lan-
sing, MI: Morris and Linda Tannehill, 1970); reprinted as Society without
Government (New York: Arno Press, 1972), pp. 88-108. Reprinted with
permission of the publisher, Laissez Fair Books, from Market for Liberty.
Copyright © 1970 by Morris and Linda Tannehill.
Chapter 5 from Randy Barnett, “Pursuing Justice in a Free Society:
Part II, Crime Prevention and the Legal Order,” Criminal Justice Eth-
ics 5, 1 (Winter/Spring 1986): 30-53. Reprinted by permission of The
Institute for Criminal Justice Ethics, 555 West 57th Street, Suite 607,
New York, NY, 10019-1029.
Chapter 6 from Hans Hoppe, “Capitalist Production and the Problem
of Public Goods,” in A Theory of Socialism and Capitalism (Boston:
Kluwer, 1989), pp. 199-210. Reprinted with permission of the author.
Chapter 7 from Jeffrey Rogers Hummel and Don Lavoie, “National
Defense and the Public-Goods Problem,” in Robert Higgs, ed., Arms,
Politics, and the Economy (New York: Holmes & Meier Publishers,
1990), pp. 37-60. Reprinted with permission of the Independent Institute,
Oakland, California 94621.
Chapter 8 from Roderick Long, “Defending a Free Nation,” Formula-
tions II, 6 (1994). Reprinted with permission of the author.
Chapter 9 from John Hasnas, “The Myth of the Rule of Law,” Wisconsin
Law Review (1995): 199-233. Copyright © 1995 by The Board of Regents

xi
xii Anarchy and the Law

of the University of Wisconsin System. Reprinted by permission of the

Wisconsin Law Review.
Chapter 10 from Robert Nozick, “The State,” in Anarchy, State, &
Utopia (New York: Basic Books, 1974), pp. 88-119. From Anarchy, State
& Utopia by Robert Nozick, ISBN: 0465097200, copyright © 1974 by
Basic Books, reprinted by permission of Basic Books, a member of
Perseus Books, L.L.C.
Chapter 11 from Roy A. Childs, Jr., “The Invisible Hand Strikes Back,”
Journal of Libertarian Studies 1 (1977): 22-33. Reprinted with permis-
sion of the Ludwig von Mises Institute, Auburn, Alabama 36832.
Chapter 12 from Murray Rothbard, “Robert Nozick and the Immacu-
late Conception of the State,” Journal of Libertarian Studies 1 (1977):
45-57. Reprinted with permission of the Ludwig von Mises Institute,
Auburn, Alabama 36832.
Chapter 13 from Roy A. Childs, Jr., “Objectivism and the State: An
Open Letter to Ayn Rand,” in Joan Kennedy Taylor, ed., Liberty Against
Power: Essays by Roy A. Childs, Jr. (San Francisco: Fox & Wilkes,
1994), pp. 145-156. Copyright © 1969 by the International Society for
Individual Liberty. All rights reserved. Reprinted with permission.
Chapter 14 from Alfred G. Cuzan, “Do We Ever Really Get Out of An-
archy?” Journal of Libertarian Studies 3 (1979): 151-158. Reprinted with
permission of the Ludwig von Mises Institute, Auburn, Alabama 36832.
Chapter 15 from Tyler Cowen, “Law as a Public Good: The Economics
of Anarchy,” Economics and Philosophy 8 (1992): 249-267. Copyright
© 1992 Cambridge University Press. Reprinted with the permission of
Cambridge University Press.
Chapter 16 from David Friedman, “Law as a Private Good: A Re-
sponse to Tyler Cowen on the Economics of Anarchy,” Economics and
Philosophy 10 (1994): 319-327. Copyright © 1994 Cambridge University
Press. Reprinted with the permission of Cambridge University Press.
Chapter 17 from Tyler Cowen, “Rejoinder to David Friedman on the
Economics of Anarchy,” Economics and Philosophy 10 (1994): 329-
332. Copyright © 1994 Cambridge University Press. Reprinted with
the permission of Cambridge University Press.
Chapter 18 from Bryan Caplan and Edward Stringham, “Networks,
Law, and the Paradox of Cooperation,” Review of Austrian Economics
16, 4 (2003): 309-326. Copyright © 2003 Kluwer Academic Publish-
ers. Reprinted with kind permission from Spriner Science and Business
Media.
 Acknowledgments xiii

Chapter 19 from Tyler Cowen and Daniel Sutter, “Conflict, Coop-

eration and Competition in Anarchy,” Review of Austrian Economics
18 (2005): 109-115. Copyright © 2005 Springer Science + Business
Media, Inc. Reprinted with kind permission from Spriner Science and
Business Media.
Chapter 20 from Anthony de Jasay, “Conventions: Some Thoughts
on the Economics of Ordered Anarchy,” in Against Politics: On Gov-
ernment, Anarchy, and Order (UK: Routledge, 1997), pp. 192-121.
Copyright © 1997 Routledge. Reproduced by permission of Taylor &
Francis Books UK.
Chapter 21 from Andrew Rutten, “Can Anarchy Save Us from
Leviathan?” The Independent Review 3, 4 (Spring 1999): 581-593.
Reprinted with permission of the Independent Institute, Oakland, Cali-
fornia 94621.
Chapter 22 from Randall G. Holcombe, “Government: Unnecessary
but Inevitable,” The Independent Review 8, 3 (Winter 2004): 325-342.
Reprinted with permission of the Independent Institute, Oakland, Cali-
fornia 94621.
Chapter 23 from Peter Leeson and Edward Stringham, “Is Government
Inevitable? Comment on Holcombe’s Analysis,” The Independent Review
9, 4 (2005): 543-549. Reprinted with permission of the Independent
Institute, Oakland, California 94621.
Chapter 24 from David Hart, portions of the three-part essay “Gustave
de Molinari and the Anti-statist Liberal Tradition,” Journal of Libertarian
Studies (1981/1982), 5: 263-273, 399-400, 402; 6: 83-88. Reprinted with
permission of the Ludwig von Mises Institute, Auburn, Alabama 36832.
Chapter 25 from Edmund Burke, Vindication of Natural Society,
edited by Frank N. Pagano (Indianapolis: Liberty Fund, 1982 [1757]),
pp. 38-96. Public domain.
Chapter 26 from Gustave de Molinari, “The Production of Security,”
translated by J. Huston McCulloch (New York: The Center for Libertar-
ian Studies, 1977 [1849]). Reprinted with permission of the Ludwig von
Mises Institute, Auburn, Alabama 36832.
Chapter 27 from Murray Rothbard, “Individualist Anarchism in the
U.S.: Origins,” Libertarian Analysis 1, 1 (Winter 1970): 14-28. Reprinted
with permission of the Ludwig von Mises Institute, Auburn, Alabama
36832.
Chapter 28 from Voltairine de Cleyre, “Anarchism and American
Traditions,” Mother Earth 3, 10-11 (December 1908/January 1909).
Public domain.
xiv Anarchy and the Law

Chapter 29 from David Lipscomb, Civil Government: Its Origin,

Mission, and Destiny, and the Christian’s Relation to It (Nashville: Mc-
Quiddy Printing Company, 1913 [1889]), pp. 133-147. Public domain.
Chapter 30 from Lysander Spooner, No Treason: “The Constitution
of No Authority” (1869). Public domain.
Chapter 31 from Lysander Spooner, Trial by Jury (1852). Public
domain.
Chapter 32 from Benjamin Tucker, “Relation of the State to the In-
dividual,” Liberty, November 15, 1890. Public domain.
Chapter 33 from David Osterfeld, Freedom, Society, and the State:
An Investigation Into the Possibility of Society without Government
(Lanham, MD: University Press of America, 1983), pp. 1-49. Published
by Cobden Press, San Francisco, 1986 and reprinted with permission.
Chapter 34 from Bruce Benson, “Are Public Goods Really Common
Pools? Considerations of the Evolution of Policing and Highways in
England,” Economic Inquiry XXXII (April 1994): 249-271. Copyright
© Western Economic Association International. Reprinted with permis-
sion of Oxford University Press and the Western Economic Association
International.
Chapter 35 from Joseph R. Peden, “Property Rights in Celtic Irish
Law,” Journal of Libertarian Studies 1 (1977): 81-95. Reprinted with per-
mission of the Ludwig von Mises Institute, Auburn, Alabama 36832.
Chapter 36 from David Friedman, “Private Creation and Enforcement
of Law—A Historical Case,” Journal of Legal Studies 8 (1979): 399-415.
Copyright © 1979 by the University of Chicago. All rights reserved. Re-
printed with permission of the Journal of Legal Studies, the University of
Chicago, and the author.
Chapter 37 from Paul Milgrom, Douglass North, and Barry Weingast,
“The Role of Institutions in the Revival of Trade: The Law Merchant,
Private Judges, and the Champagne Fairs,” Economics and Politics 2
(1990): 1-23. Reprinted with permission of Blackwell Publishing.
Chapter 38 from Bruce Benson, “Legal Evolution in Primitive Societ-
ies,” Journal of Institutional and Theoretical Economics 144, 5 (1988):
772-788. Reprinted with permission of the author.
Chapter 39 from Terry L. Anderson and P. J. Hill, “An American
Experiment in Anarcho-Capitalism: The Not So Wild, Wild West,” The
Journal of Libertarian Studies (1979): 9-29. Reprinted with permission
of the Ludwig von Mises Institute, Auburn, Alabama 36832.
 Acknowledgments xv

Chapter 40 from Robert C. Ellickson, Order without Law: How

Neighbors Settle Disputes (Cambridge, MA and London, UK: Harvard
University Press, 1991), pp. 40-64. Copyright © 1991 by the President
and Fellows of Harvard College. Reprinted with permission of Harvard
University Press.
 1
Introduction
Edward P. Stringham
“Political economy has disapproved equally of monopoly and communism in the various
branches of human activity, wherever it has found them. Is it not then strange and unreasonable
that it accepts them in the industry of security?”—Gustave de Molinari (1849)

Is coercive government necessary? Private-property anarchism—also known

as anarchist libertarianism, individualist anarchism, or anarcho-capitalism—is
a political philosophy and set of economic arguments that says that just as mar-
kets provide bread, so too should markets provide law. If someone agued that
because food is so important it must be supplied by government, most would
respond that government provision of food would be a disaster. Private-property
anarchism applies the same logic to law and argues that because protecting
property rights is so important, it is the last thing that should be left to the state.
Under private-property anarchy, individual rights and market forces would reign
supreme; there would just be no state. Security would be provided privately
as it is at colleges, shopping malls, hotels, and casinos, and courts would be
provided privately, as they are with arbitration and mediation today.
The current volume brings together a sampling of the major essays explain-
ing, debating, and giving historical examples of stateless orders. Led by econo-
mists and political theorists such as Murray Rothbard, Bruce L. Benson, and
David Friedman, the authors in this volume emphasize the efficacy of markets
and the shortfalls of government. To the libertarian, the state and its enforcement
apparatus is not a benign force in society—but where limited government lib-
ertarians argue in favor of political constraints, anarchist libertarians argue that
the only way to check government against abuse is to eliminate it completely.
Today, more and more scholars and general readers see private-property
anarchism as a viable and worthy alternative to the monopolistic and coercively
funded state. Individualist anarchism has a long history but most of the early
writing was published anonymously or in obscure places. Today, in contrast,

I thank Walter Block, Mark Brady, Bryan Caplan, David Hart, Jeffrey Rogers Hummel,
Benjamin Powell, Alex Tabarrok, and David Theroux for helpful comments and
suggestions. Andrew Neumann and Nick Curott provided excellent research assistance.

1
2 Anarchy and the Law

private-property anarchism is now discussed in top economics journals such as

the Journal of Political Economy (Hirshleifer, 1995; Dowd, 1997) and in 2002
George Mason University economist Vernon Smith became the first private-
property anarchist to win the Nobel Prize (Smith, 2003, pp. 484-6). In addition
to being a potentially important normative position, anarchist research helps
explain events and trends of historical and contemporary relevance. Consider,
for example, that private security guards now outnumber the public police, and
private arbitration—the so-called “rent-a-judge” business—is booming. Private-
property anarchism also sheds light on nineteenth-century Britain, where private
prosecution agencies tracked down criminals long before the public police
existed. Similarly, trade in Medieval Europe, like international trade today, was
governed for hundreds of years under competing systems of law.
The works in this volume are influential, yet many were published in rela-
tively obscure publications and are often difficult to track down. This editor
knows this first hand, having written a doctoral dissertation, and before that a
college senior thesis, on the topic. In college my professor liked my proposed
topic but he doubted whether enough material on the subject had been pub-
lished. Luckily, another economics professor was well read in private-property
anarchism, and he compiled a list of books and articles for me. Only through
that guidance, and a number of interlibrary loan requests, was I able to get a
representative overview of the subject. Many of these articles are reprinted here.
By compiling all of these important articles in one place, these works are now
accessible to more than just a handful of experts or fortunate students.
This book reprints articles about anarchism from many libertarian points
of view rather than attempt to present a unified vision of anarchy. Although
all anarchists agree that the state is unnecessary, many of the specifics are still
debated. For example, some authors support anarchy using arguments about
consequences, while others support anarchy using arguments about rights. Some
authors highlight how markets can function with private law enforcement, while
others highlight how markets can function without any formal law at all. The
articles in this volume will give the reader a sampling of some of the more
important works on the subject.
The book’s articles are organized in four categories: Section I presents the
major theoretical works that argue in favor of private-property anarchism; Sec-
tion II contains writings that debate the viability of private-property anarchism,
presenting articles and responses from the classical liberal and anarchist perspec-
tives; Section III contains some of the early works in individualist anarchism,
as well as modern articles on the history of individualist anarchist thought and
the different types of anarchism; Section IV presents case studies and historical
examples of societies that functioned without public law enforcement. The chap-
ters need not be read in order so one can skip around depending on one’s interests.
For example, if one wants an overview of the differences between libertarian and
non-libertarian anarchism, one can skip directly to the chapter by Osterfeld.
 Introduction 3

I. Theory of Private Property Anarchism

The articles in this first section criticize arguments for government law en-
forcement and discuss how the private sector can provide law. They critique the
very notion that a government monopoly over the use of force is needed. How
will a competitive system function? How will the provision of public goods or
the problem of free riders be dealt with under anarchy? Not all private-property
anarchists agree but many of the chapters in this section offer speculative vi-
sions about how various problems might be solved. Reading the articles in this
section will give an overview of some of the major anarchist visions.
The first chapter in Section I is Murray Rothbard’s important “Police, Law,
and the Courts,” from For a New Liberty (1973). Jerome Tuccille (1971) once
wrote a book about libertarianism entitled It Usually Begins with Ayn Rand
indicating how many libertarians became interested in freedom by reading Ayn
Rand. If one were to write a book about anarchist libertarianism one might entitle
it It Usually Begins with Murray Rothbard. In the late 1940s, Murray Rothbard
decided that that private-property anarchism was the logical conclusion of free-
market thinking and published his first work on it in 1954. Rothbard was the first
to merge modern economic thinking with nineteenth-century anarchists’ distaste
for the state (Powell and Stringham, forthcoming). Rothbard wrote dozens of
articles on anarchy but this, one of his most concise pieces, is reprinted here.
Rothbard argues that the way to figure out how much protection there should
be is to have a market for law enforcement. This chapter provides a speculative
account of how police and courts could be provided on the market and it offers
possible ways that people who subscribe to different protection agencies could
settle disputes. Under Rothbard’s vision each protection agency would be held
accountable to respect individual rights.
Along with Murray Rothbard, David Friedman is one of the founders of
anarcho-capitalist thinking. Friedman, too, has written many articles on this
subject but his earliest work on the subject appeared in his The Machinery of
Freedom (1973). This chapter reprints a portion of the second edition (1989) of
that book. Not content to believe that convincing people of anarchism requires
changing their moral precepts, Friedman argues that even non-libertarians
can embrace anarchism out of pure self-interest. Where Rothbard argues for
anarchism based on rights, Friedman argues for anarchism based on efficiency.
Friedman’s vision differs from that of Rothbard because Friedman believes that
anarchist laws need not be libertarian. Under a market for law people would
be free to choose any rules they wish and the resulting outcome would be
determined by net willingness to pay. Friedman describes how multiple police
might operate in each area and how they would have incentives to settle disputes
through bargaining rather than violence.
Another early work that provides many details on how a competitive sys-
tem might function was self-published by Morris and Linda Tannehill in 1970
and reprinted by Arno Press in 1972.1 This book certainly had less circulation
4 Anarchy and the Law

than Rothbard (1973) or Friedman (1973) but it clearly had influence on sub-
sequent writers such as Friedman, who refers to a fictional defense agency as
Tannehelp, Inc. These authors are concerned with any monopoly of the use of
force (regardless of whether it is agreed to) and so they offer a system where
multiple agencies compete in each geographic area. Some of the Tannehills’
discussion may appear as science fiction or less worked out than subsequent
writing, but their book deserves a place as being one of the pioneering pieces
to ponder how private police might work.
Subsequent writers have been able to expand or refine some of the early
anarchist arguments. Boston University Law Professor Randy Barnett has
contributed much to the subject (Barnett, 1998) and this volume reprints his
1986 article “Pursuing Justice in a Free Society: Crime Prevention and the Le-
gal Order.” Barnett discusses how much of our current crime is caused by the
fact that streets are publicly owned and not privately policed. Instead of having
government incarcerate people to produce order, Barnett argues that simple
exclusion would do much of the job. Once government monopoly is abolished
Barnett believes that competing police could pick up any remaining slack. He
offers a vision of how multiple law enforcers would operate in each geographic
area and how they might deal with unfair renegade enforcers of law.
The next chapter, “Capitalist Production and the Problem of Public Goods,”
is by Hans-Hermann Hoppe, a colleague of Rothbard who edited of the Journal
of Libertarian Studies from 1995-2005. Hoppe’s subsequent books, such as
Democracy—The God That Failed (2001), have had a much wider circulation,
but this chapter from A Theory of Socialism and Capitalism (1989) contains
one of Hoppe’s original contributions on the subject. Hoppe questions the public
goods justifications for government altogether by arguing that that police and
courts are excludable, rivalrous, and must be allocated in certain areas. They are
not abstract public goods as commonly presented in textbooks. The government
needs to decide whether to hire one judge and one policeman or 100,000 of each,
but without a market mechanism the government has little way of figuring out
how to allocate resources. Like authors before him, Hoppe describes arrange-
ments that competing protection agencies might use to enforce laws, and Hoppe
emphasizes the importance of public ideology towards maintaining liberty.
What about international conflict under anarchy? Jeffrey Rogers Hummel
and Don Lavoie address the issue in “National Defense and the Public-Goods
Problem.” Hummel and Lavoie have two responses to those who believe that
government militaries are necessary. First, they question whether creating a na-
tional military actually solves the free-rider problem, and second, they question
the extent to which the military is defending the public rather than defending
the state. Most supporters of national defense assume that the interests of the
public and the government coincide but Hummel and Lavoie question this as-
sumption. In fact, militaries often pose the greatest threats to the public. Hum-
mel and Lavoie believe that the true public good is defending liberty and they
 Introduction 5

argue that this does not depend on the state. The important constraint against
government must always be resistance on the part of the public.2
Roderick Long also discusses the problem of national defense in “Defend-
ing a Free Nation.” Like Hummel and Lavoie, Long argues that a nationalized
military actually provides more of a threat than a defense. Long discusses that
decentralized defense could be provided in at least four ways: first, by for-profit
firms that act in consortium to defend their clients; second, by private firms
that raise money through charitable means; third, by an armed populace who
defend themselves without centralization; or fourth, defense by civilians who
use non-violent resistance. Long discusses the possible benefits and possible
shortcomings of each and argues that defending a free society would require
some combination of all of the above.
The final chapter in Section I is by John Hasnas, who takes a different ap-
proach than anarchist predecessors such as the Tannehills, Rothbard, Friedman,
or Barnett. Where earlier theorists attempt to create a blueprint of how the market
would handle law, this legal philosopher argues that the law will evolve in ways we
cannot predict. He argues that there is no one right way to settle disputes and we
should not attempt to centrally plan the law. Attempting to create blueprints of how
all problems will be solved might even be counterproductive because the blueprints
will necessarily be incomplete. Hasnas argues that we need not have a crystal
ball yet we should be confident that market solutions will be discovered.
II. Debate
After presenting some of the arguments in favor of private-property an-
archism, the volume gets to the debate. The authors in this section are all
libertarians, although some support anarchism while others support limited
government. Early critics of anarchism argue that the only system consistent
with individual rights is a system with a government monopoly on the use of
force (Rand, 1964; Nozick, 1974). Later critics of anarchy often accept anarchy
as being morally superior yet they express doubts in the viability of the system
(Cowen, 1992; Rutten, 1999; Holcombe, 2004; Cowen and Sutter, 2005). All
of these authors argue that special characteristics of law enforcement make a
competitive system unlikely or impossible. This section includes some of the
major criticisms of anarchy and some anarchist responses.
Robert Nozick provided one of the most famous critiques of private-property
anarchism in Anarchy, State, and Utopia, which ended up winning the 1975
National Book Award for Philosophy and Religion. Nozick was a Harvard
philosopher who had become a libertarian after meeting one of Rothbard’s col-
leagues, and later Rothbard, in the early 1960s (Raico, 2002). Still, Nozick was
unconvinced of anarchist libertarianism, so he devoted the first third of his treatise
arguing against Rothbard’s views on law. Nozick attempts to rebut the anarchist
claim that all governments violate rights by positing an invisible hand theory of
government. He argues that out of a state anarchy, a dominant protection agency
would be justified in protecting their customers from potentially risky firms and
6 Anarchy and the Law

this dominant protection agency would be justified in becoming a state. Even

though the government would use force to prohibit competition, Nozick argues
that the government would not violate rights provided it compensated those who
wished to have an alternative arrangement. The best way of compensating those
injured parties, according to Nozick, would be to provide them with free police.
Not all libertarians were convinced. The inaugural issue of the Journal of
Libertarian Studies was devoted to analyzing Nozick’s theory of government;
two of the responses are reprinted here. Roy Childs takes on Nozick’s defense
of government in “The Invisible Hand Strikes Back” (1977). Childs criticizes
Nozick for arguing that smaller protection agencies might be risky but the
dominant protection agency would not. It might be the case that the govern-
ment is the riskiest agency of all. Nozick gives no reason for us expect that this
government would not become abusive itself. Childs also questions Nozick’s
proposed compensation for those who do not wish to have government. He
writes, “What is he willing to offer us as compensation?… He is generous to a
fault. He will give us nothing less than the State.” Does Nozick really believe
that compensating those who dislike police with more police will return them
to their original indifference curve?
In “Robert Nozick and the Immaculate Conception of the State,” Rothbard
argues that even if Nozick were correct in his logical reasoning, he fails to
provide a justification for any existing government. Because no government
was ever formed according to Nozick’s process or acts in a way that Nozick
wishes, Rothbard argues that Nozick should join the anarchists in opposing
government. At a more fundamental level, Rothbard questions Nozick’s logi-
cal justification for government. Where Nozick argues that prohibiting risky
behavior is just, Rothbard argues that such a position would lead to numerous
authoritarian laws. Many people have the potential to engage in dangerous be-
havior, but that does not justify prohibiting them from acting or locking them
up. Rothbard deals with many of Nozick’s claims, and in the end concludes:
“[E]very step of Nozick’s invisible hand process is invalid.”
Another famous supporter of minimal government was Ayn Rand. In “The
Nature of Government,” published in 1964, Rand argued that society requires a
respect for individual rights and argues that the government must enforce those
rights. She argued that the use of force—even in self-defense—cannot be left
to the discretion of individuals. Rand criticized libertarian anarchy by saying
that a system with private police would lack objective laws and will result in
conflict. She offered a hypothetical scenario where two neighbors hire differ-
ent police and then get in a dispute. According to Rand, the only result under
anarchy would be for the two parties to resort to arms and the only solution is
to have a government monopoly on the use of force.
Roy Childs first criticized her on this topic in “Objectivism and the State: An
Open Letter to Ayn Rand.” Childs argued that if one supports liberty one should
oppose the state in all forms. Although Rand says she is against the initiation
 Introduction 7

of the use of force, Childs points out that any government necessarily initiates
force when it prevents people from defending themselves. In this letter, Childs
takes on Rand’s specific claims maintaining that many of her arguments are not as
logical as Rand implies. He argues that just because people in society should abide
by objective rules it does not follow that a government monopoly is necessary. Her
argument is equivalent to saying that because one must follow objective procedures
to produce a ton of steel, government steel production is necessary. Childs points out
that Rand simply assumes that competing police will act violently and she assumes
that her benevolent government will not. Economists call this the Nirvana fallacy.
An upset Rand never wrote a written response and had Child’s subscription to The
Objectivist cancelled. Child’s letter made its rounds and, according to Jeffrey
Rogers Hummel, was one of the most influential writings in convincing Rand-
influenced libertarians to become full-fledged anarchists.
As the 1970s progressed, the number of people writing about anarchism in-
creased exponentially. In 1977 Murray Rothbard founded the Journal of Libertar-
ian Studies, which printed many articles on anarchy. One exemplary article from
an early issue is “Do We Ever Really Get Out of Anarchy?” by Alfred Cuzan. In
this article he questions some of the basic assumptions of government advocates
such as Rand. If a third party is required to settle disputes between individuals,
who settles a dispute between individuals and the state? Cuzan argues that creat-
ing government is simply replacing one form of anarchic relations with another.
Unenforceable relations between people or governments will always exist, so
Cuzan questions whether creating a government hierarchy is desirable.
Later critics of anarchy do not posit that the state is necessary or that the
state is just as in Rand or Nozick. Nevertheless, these critics of anarchy argue
that the state might be inevitable. In one of the more sophisticated criticisms of
libertarian anarchy, Tyler Cowen argues that a system with competing courts will
devolve into coercive government because law enforcement is a network industry
where firms must be interdependent on each other. Cowen’s article, “Law as a Public
Good: The Economics of Anarchy,” includes “Public Good” in the title, not because
the government is providing a good but because Cowen believes that a legal system
must apply to everyone in a geographic area. He argues that if firms are able to
cooperate to settle disputes that same mechanism will enable them to cooperate
to collude. Even if multiple firms exist, Cowen argues the result will be a de
facto monopoly that can use force to exact taxes just like government.
David Friedman responds to Cowen in “Law as a Private Good.” He agrees
that firms would have relationships with other firms, but he disagrees that the
industry must be a network industry that facilitates a cartel. He argues that a
situation with bilateral contracts between firms is quite different from a situa-
tion with one industry-wide contract. If the only relationships in the industry
are between pairs of firms, these relationships do nothing to enhance their
ability to collude. Friedman argues that the situation is akin to the contractual
relationships between grocery stores and suppliers. Cowen’s “Rejoinder to
8 Anarchy and the Law

David Friedman on the Economics of Anarchy” (1994) provides a brief response

arguing that analogies from regular industries do not apply. Cowen argues that
competing firms must cooperate to enforce laws and he argues that they will
be able to use force against those who do not comply. The number of firms is
unimportant because even though the world has many different police forces
and local governments they still collude. Cowen believes that often govern-
ments do terrible things, but he is pessimistic that libertarian anarchy offers a
viable alternative.
Caplan and Stringham, in “Networks, Law and the Paradox of Cooperation”
(2004), question Cowen’s argument that network industries facilitate collusion.
Although enforcement of law across multiple agencies would require some
cooperation, the ability to cooperate does not guarantee they will be able to col-
lude. Law enforcement may require some cooperation but the network need not
be all-powerful. They distinguish between self-enforcing and non-self-enforcing
agreements and argue that collusive agreements between firms would be harder to
enforce. For example, if firms attempt to collude to raise prices, each firm would
have an incentive to break the agreement. On the other hand, if firms coordinate
to boycott a bad business risk, each firm has an incentive to follow the agreement
lest it be cheated itself. Caplan and Stringham give historical examples of net-
work industries, such as banks and credit card companies, that have been able
to facilitate coordination but have been unable to facilitate collusion.
Cowen and Sutter reply in “Conflict, Cooperation and Competition in An-
archy” (2005), arguing that Caplan and Stringham’s analysis underestimates
the importance of the use of force. Cowen and Sutter argue that the interaction
between firms is a coordination game with multiple equilibria, not all of which
are libertarian. Although a situation of armed conflict may not occur, firms might
end up backing down to a coercive firm rather than defending their clients’
rights. Because membership in a network is valuable, the incumbents may be
able to exercise their market power at the expense of others. Such a situation
will enable members of an arbitration network to enact non-libertarian rules and
then refuse to deal with new entrants who do not agree. This sows the seeds for
the creation of government whether we like it or not. Perhaps the Hobbesian
dilemma may never be solved.
One economist who accepts many of the Hobbesian arguments yet still sup-
ports anarchy is Anthony de Jasay. In one of his many works on the subject,
“Conventions: Some Thoughts on the Economics of Ordered Anarchy” (1997),
de Jasay addresses the possibility that suboptimal outcomes will result in an
anarchist world. First de Jasay criticizes the advocates of limited government
who argue that the state has the ability to eliminate these suboptimal outcomes.
Just because a problem exists does not mean that government has the ability to
solve it. De Jasay argues that under anarchy individuals would have an incentive
to internalize some of the negative externalities that would result from conflict.
The key is to find market solutions to potential problems. He also addresses the
 Introduction 9

claim that people need government once people want to interact outside small
groups. He says that although any given transaction may appear to be a prisoners’
dilemma, transactions take place in the complex web of society where repeated
transactions and reputation create incentives for cooperation.
Andrew Rutten addresses de Jasay’s arguments in “Can Anarchy Save Us
from Leviathan?” (1999). Although Rutten accepts most of de Jasay’s criticisms
of government, he is unconvinced that anarchy, or any other system for that
matter, can eliminate the problem of force. Rutten accepts the argument that
government will always abuse its power and that constitutions are of little use;
he also accepts the argument prisoners’ dilemmas problems are not as ubiquitous
in the market as most supporters of government believe. Nevertheless, Rutten
argues that anarchists may be too optimistic in their outlook because the incentive
to abuse power and expropriate property will still remain. Anarchists, just like
governments, will have an incentive to act against the wishes of others. Ac-
cording to this pessimistic anarchist, property rights may never be secure.
Another author who holds a pessimistic view towards anarchism is Randall
Holcombe. In “Government: Unnecessary but Inevitable” (2004), Holcombe
agrees with libertarian anarchists that government is coercive and unneces-
sary for public goods, but he maintains that nothing can be done to prevent its
existence. Like Rutten, he argues that incentives for opportunistic behavior will
always exist and he argues that libertarian anarchy would either internally devolve
into government or be overtaken by force. Holcombe points out that the world
is ruled by governments, which shows that anarchy is not an option. Instead of
advocating government abolition, Holcombe argues that libertarians should seek
to find ways to make government as small as possible. Holcombe maintains that
the best course of action is preemptively creating a limited government that will
still expropriate, but will expropriate less than less limited governments.
Leeson and Stringham question Holcombe’s account in “Is Government
Inevitable?” (2005), maintaining that Holcombe is too pessimistic about the
possibility of stateless orders and too optimistic about the possibility of limited
government. They point to many historical examples of anarchist societies,
including modern-day Somalia, and argue that the evidence that most nations
are currently controlled by states says nothing about the long-term prospects
for anarchy. They also question the idea that society can create a more benign
government if all governments are created for the benefit of their creators. If
Holcombe’s Hobbesian assumptions are correct then nothing stops limited gov-
ernment from becoming unlimited government. Leeson and Stringham argue
that limiting government ultimately depends on ideological opposition to the
state, and argue that if limited government is possible so too is anarchy.
III. History of Anarchist Thought
The next section contains a sampling of early anarchist works as well as
modern commentary on the history of anarchist thought. Two chapters are by
10 Anarchy and the Law

eighteenth- and nineteenth-century Europeans, five chapters are by nineteenth-

century Americans, and three chapters are by contemporary writers who provide
overviews of anarchist thought. Anarchist sentiment has a long history but
its explicit formulation only came within the past couple centuries with the
vast majority of the work coming in the past three decades. How does private
property anarchism relate to other political philosophies and how did anarchists
arrive at their views?
David Hart provides an excellent history of how private-property anarchism
evolved. This chapter reprints portions of Hart’s three-part essay, “Gustave
de Molinari and the Anti-statist Liberal Tradition.” David Hart sees private-
property anarchism as originating from classical liberal philosophy, which
focused the importance private property rights and the need to constrain the
state. Eighteenth- and nineteenth-century anarchists and quasi-anarchists ended
up advancing the view to the logical extreme, concluding that government is
not needed at all. Private property anarchism was most explicitly spelled out
starting in the nineteenth century by authors such as Gustav de Molinari. David
Hart discusses the influence of these writers and how their ideas were passed
on to the anarchists who exist today.
One of the earliest works that is clearly anarchist is Edmund Burke’s “Vin-
dication of Natural Society.” Burke, who is often considered the father of new
conservatism, published this essay anonymously as a letter by “a late noble
writer” in 1757. Burke later had political aspirations, so when people discov-
ered he was the author Burke claimed that the piece was a satire. The issue
is debated in Pagano (1982), but Murray Rothbard (1958, p. 114) believed,
“Careful reading reveals hardly a trace of irony or satire. In fact, it is a very
sober and earnest treatise, written in his characteristic style.” Burke’s piece is
a scathing attack on government. He discusses how governments have killed
millions through wars and have enslaved their citizens. It does not matter if
governments are despotic, aristocratic, or democratic; they are still tyrannical.
Are not government laws created to protect the weak? Burke responds, “surely
no Pretence can be so ridiculous.” We may never know Burke’s true motivation
but this piece is an all time anarchist classic.
The first person to explicitly advocate competitive law enforcement was
Belgian economist Gustave de Molinari, who wrote “The Production of Se-
curity” in 1849. Molinari argues that, because competition better serves the
interests of consumers, there should be competition in all areas, including
law. He maintains that all monopolies are coercive and argues that the natural
consequence of monopoly over security is war. Governments war only because
they wish to wrest the monopoly over the use of force; if the monopoly over
the use of force could be eliminated so too would the incentives for aggression.
Molinari proposes letting individuals be clients of any enforcement agency of
their choice and provides a brief description of how such a system might work.
He believes that law enforcement would likely be territorially based but he says
 Introduction 11

that individuals should be able go to another protection agency in case of abuse.

The article was revolutionary in its day and can be considered the first piece to
explain how a system with private police might function.
In America, although the colonists were not writing economics treatises on
private-property anarchism, Murray Rothbard argues that anarchist sentiment has
a long history. In “Individualist Anarchism in the U.S.: The Origins,” Rothbard
describes how many seventeenth-century colonists opposed taxation or any form
of government, often on religious grounds. Rothbard discusses such people as
Anne Hutchinson, who left Massachusetts and ended up setting up communi-
ties that operated without a state. In seventeenth-century Pennsylvania, William
Penn did not intend to create an anarchist colony, but it ended up being de facto
anarchy for some years. Many of the Quakers believed that any participation in
government was a violation of Quaker principles, and when Penn tried to impose
a tax he was met with strong resistance. Eventually Penn and others created
government but the legacy of anarchist sentiment lived on.
Voltairine de Cleyre lived from 1866–1912 and wrote that the principles of
the American Revolution were anarchist. De Cleyre was one of the many nine-
teenth-century individualist anarchists in America and she wrote “Anarchism
and American Traditions” in 1908. In this chapter de Cleyre makes the case that
the principles of the American Revolution need to be reawakened. She outlines
the commonalities between the revolutionaries and the individualist anarchists
in their mistrust of government and their goal to create equal liberty for all. Un-
fortunately, after the Revolution the government has grown and the public has
not done enough to stop it. In the early 1800s Americans were concerned about
having a standing army of 3,000 and in de Cleyre’s day she was outraged that
the number had grown to 80,000. (In 2005 the U.S. government has a stand-
ing army of over 1.4 million people!3) Wishful thinking notwithstanding, the
Constitution appears to be ineffective against the growth of government.
Nineteenth-century Boston anarchist Lysander Spooner provides a scathing
analysis of the U.S. Constitution in “No Treason: The Constitution of No Author-
ity.” This chapter reprints a portion of his 1869 attack on the federal government of
the United States. How the times have changed: Whereas in modern times defend-
ers of Constitution are considered defenders of small government, in the nineteenth
century defenders of the Constitution were considered defenders of big government!
Spooner argues that the Constitution is an illegitimate social contract because
neither he nor anyone he knows actually signed the Constitution. Just because
thirty-nine men signed the Constitution in 1787 does not mean that it should hold
any moral weight on the other 3 million Americans at the time or the 300 million
Americans living today. Spooner likens the government to a highway robber but
argues that government is worse. After stealing your money the highway robber is
too much of a gentleman to follow you around and say he is protecting you!
Nineteenth-century Tennessee preacher David Lipscomb is also critical of the
idea that government is created for moral reasons. His 1889 Civil Government:
12 Anarchy and the Law

Its Origin, Mission, and Destiny, and the Christian’s Relation to It provides
an in-depth analysis of the morality government and a portion of this work is
reprinted here. He says that government is founded upon force and that moral
people should have nothing to do with it. He says that government only tries to
appear as if it is a force for good, but government’s tactics are deceitful like those
of the devil. He argues that Christianity and government are at odds, and that
supporters of the state are not true followers of God. He argues that Christians
should not participate in politics, vote, work in government administration,
or participate on juries. The methods of all government institutions including
courts are nothing more than the use of force.
Lysander Spooner also criticizes the government legal system in “Trial by
Jury” (1852). Spooner, a lawyer by training, wrote volumes defending liberty.
He argues that trial by jury was created so laws would be judged by citizens
rather than by government. He describes how government courts corrupt this
institution by creating the laws of evidence, deciding who will serve on juries,
and dictating the laws juries are to enforce. The government co-opts this bulwark
for liberty and replaces it with a trial by government. Spooner maintains that a
government legal system cannot be trusted because it is allowed to determine
the legality of its own acts. He argues that juries should be able to judge any
law to be illegitimate regardless of what government says.
Another nineteenth-century Boston anarchist was Benjamin Tucker, who
published the periodical Liberty from 1881–1908 (McElroy, 2003). Tucker wrote
many small contributions on anarchy and he also delved into philosophy and
economics. Subsequent writers, such as Rothbard (1974/2000), have criticized
Tucker for his old-fashioned economic views (and many libertarians will find
he also had some odd views on ethics), but Tucker was strong on the question
of anarchy. In his “Relation of the State to the Individual”4 (1890), Tucker
argues that people will be better off by cooperating without government. He
says that if one opposes the initiation of the use of force one must oppose the
state in all forms. He argues that defense is not an essential component of the
state but aggression is; defense was just an afterthought. In addition to violating
liberty, the state adds insult to injury by making its victims pay. These words
ring true today.
The final chapter in this section puts private-property anarchism into per-
spective by comparing it to other political and economic philosophies. David
Osterfeld gives a “Political and Economic Overview,” which is reprinted from
his book Freedom, Society, and State: An Investigation of the Possibility of
Society Without Government. He outlines how on the political spectrum one
can be anywhere from an anarchist to a hyperarchist and on the economic
spectrum one can be anywhere from a capitalist to a socialist. Osterfeld dis-
tinguishes between the various types of anarchism, from socialist to capitalist:
anarcho-communism, anarcho-collectivism, anarcho-syndicalism, mutualism,
Godwinism, egoism, philosophical anarchism, and individualist anarchism.
 Introduction 13

Many mistakenly lump all anarchists together, which might be one reason why
some conservatives and classical liberals get scared if they hear the suggestion
to get rid of government police. In addition, Osterfeld distinguishes between the
capitalist systems, from statist to anarchist: conservatism, classical liberalism,
objectivism, evolutionary individualist anarchism, minarchism, ultraminar-
chism, and individualist anarchism. Many people mistakenly lump all forms
of capitalism together, which might be one reason some critics of crony state
capitalism believe they must oppose capitalism altogether. Osterfeld’s chapter
provides a useful roadmap for thinking about the relationships between different
political and economic philosophies.
IV. Historical Case Studies of Non-Government Law Enforcement
The chapters in this section show that the idea that markets can function
without government law enforcement is not just science fiction. Theories or
speculative accounts about how an anarchist society might function are well and
good, but many people remain unconvinced until they see something in practice.
As the chapters in this section demonstrate, the world is replete with examples of
private law enforcement or markets that function without formal law enforcement
at all.5 These studies range from historical episodes from hundreds of years ago
to often-overlooked situations in modern society. Many of these research articles
have appeared in top ranked economics journals and they show that research on
private-property anarchism can be more than pure theorizing.
Bruce Benson has two books and dozens of articles on private law enforce-
ment; two of his articles are included here. The first, “Are Public Goods Really
Common Pools? Considerations of the Evolution of Policing and Highways in
England,” appeared in Economic Inquiry and documents how private parties in
medieval England solved disputes without relying on government. The system
was largely restitution based, so wrongdoers would have to compensate their
victims. Even though law enforcement requires coordination between many
people, Benson describes how people joined groups of one hundred to police
and settle disputes. The Anglo-Saxon kings, however, began centralizing the
law once they realized that they could use the legal system to collect revenue.
By declaring private torts to be violations of the king’s peace as well, they could
require wrongdoers to pay restitution to the king in addition to the actual victim.
By the time of the Norman invasion, the king declared that all of the restitution
must go directly to the king. Predictably, this eliminated the incentive for private
law enforcement and then created the “need” for public law enforcement. The
article shows that government law enforcement was not created to deal with
market failure and instead was created to enhance revenue for the state!
Another article that shows that government law enforcement is unnecessary
is Joseph Peden’s “Property Rights in Celtic Irish Law.” Peden’s article is impor-
tant because, along with Friedman (1979) and Anderson and Hill (1979), it was
one of the first to document how a system of private law enforcement actually
14 Anarchy and the Law

functioned. In medieval Ireland disputes were settled by private jurists called

brehons and law relied on the use of sureties rather than government coercion.
The legal system was based on restitution rather than punishment and people
could pledge property or their own personal labor as a bond. Peden provides
many specific details about the property rights system, which shows that our
contemporary government law enforcement system is not the only one.
Another historical case study of medieval times is David Friedman’s “Private
Creation and Enforcement of Law—A Historical Case” (1979), which docu-
ments how Iceland had a system of competing law enforcement for over three
hundred years. People had a choice of law enforcing bodies and they could
join another coalition at will. If someone committed an offense he would pay
restitution unless he wanted to be deemed an outlaw. Victims were given the
right of compensation or they could transfer that right to another party who
was more likely to collect the fine. Because people would have to pay if they
committed a wrong, the system created incentives to reduce conflict. Friedman
argues that this competitive system created relatively efficient law and it led to
a murder rate that was lower than in the current United States.
In addition to providing systems of criminal or tort law, private legal sys-
tems provided contract law as well. In the middle ages most disputes between
merchants were settled privately in courts developed by the merchants them-
selves. Paul Milgrom, Douglass North, and Barry Weingast document how this
system functioned in “The Role of Institutions in the Revival of Trade: The
Law Merchant, Private Judges, and the Champagne Fairs.”6 Milgrom, North,
and Weingast represent this situation using game theory, so for those interested
in formalizing some of the anarchist theories this paper offers a model. These
authors explain how merchants would bring their disputes to private courts,
and if a merchant refused listen to the court he would be blacklisted by the
remaining merchants. These private courts show that laws of commerce can
be enforced without resorting to government or the use of force.
Examples of non-government law enforcement occur throughout the globe.
Bruce Benson, in “Legal Evolution in Primitive Societies” (1988), documents
how many societies use voluntary customary law rather than government im-
posed law. If a legal rule is beneficial people will have an incentive to adopt
it and it need not be imposed by the state. He describes the legal system of
the Kapauku Papuans of West New Guinea in the twentieth century who had
no formal government yet had a private legal system that evolved to meet
ongoing needs. The Kapauku created reciprocal legal arrangements based on
kinship and based on the reputation of tonowi (wealthy men) who they trusted
to assist in legal matters. The legal system was mostly based on restitution or
public reprimand rather than punishment, and the system had a large respect
for individual property rights.
Non-government legal systems also have a history in America as Terry An-
derson and P. J. Hill document in “American Experiment in Anarcho-Capitalism:
 Introduction 15

The Not So Wild, Wild West” (1979). Governments were unestablished in much
of the frontier in nineteenth-century America, yet it turns out that the frontier
system was much more peaceful than the depictions in movies. Anderson and
Hill describe the enforcement methods in the West: Land clubs enabled people
to establish property rights even though the federal government had yet to sur-
vey the territory; cattlemen’s associations helped enforce property rights in the
open range, which had millions of cattle and lacked government police; mining
camps established ways of settling mining claims without the use of lawyers;
and wagon trains dealt with enforcement issues once people traveling West left
the jurisdiction of the federal government. Many think of systems of private law
enforcement as completely foreign to the American experience; Anderson and
Hill show otherwise. Anderson and Hill (1975) developed these ideas further in
the Journal of Law and Economics and a book published by Stanford in 2004,
but this 1979 Journal of Libertarian Studies article is a classic.
Another study of the American West is done by Yale University law professor
Robert Ellickson. This time, however, the study is about contemporary society.
This chapter reprints part of Ellickson’s Order Without Law, which shows that
examples of non-government law enforcement are alive and well today. While
many theorists assume that individuals respect property rights only because of
the threat of law, Ellickson’s case study of farmers and ranchers in rural Shasta
County, California shows nothing of the sort. Ellickson studied the official laws
to figure out how cattle trespass disputes “should” be settled, and then he went
to Shasta County to ask people how the disputes were actually settled. Ellickson
found that ranchers and farmers (and even town lawyers!) had little idea what the
laws actually said. Instead of relying on legalistic methods of dealing with disputes,
the ranchers and farmers relied on notions of what they considered right. Because
their norms often differed significantly from the law, their system of property rights
and means of settling disputes is clearly not a product of government.
Summary
The state has worked for years attempting to indoctrinate people of the neces-
sity of government law enforcement. The chapters in this volume suggest that
this government wisdom is wrong. Just because monopolization of law was a
convenient way for government to enhance revenue and exert control does not
mean that government law is necessary. The articles in this volume are important
from two perspectives. From an academic perspective they show that anarchism
might be a useful lens to help us analyze the world. Do people only cooperate
because of the threat of government law? Perhaps the answer is no. By taking a
more realistic perspective, the anarchists have the potential to shed light on many
situations that others cannot explain. The articles in this book, especially in the case
study section, represent the tip of the iceberg of possible articles about anarchy.
Like the farmers and ranchers in Shasta County, self-governance is all around
us, and this presents a tremendous opportunity for academic research.
16 Anarchy and the Law

From a normative perspective private-property anarchism may be impor-

tant for promoting liberty in both the short and long run. For those interested
in marginal change in the short run, private-property anarchism has practical
policy implications today. For example, should individuals be able to opt for
arbitration (if all parties agree), or should government regulate and overturn
arbitration decisions as it does today? Likewise, should landowners be allowed
to create gated communities with private security, or should government make
their streets open to the public and patrol them with government police? Pri-
vate-property anarchism sheds light on these issues.
Private-property anarchism is also important for the long-run prospects for
liberty. Markets have been a blessing wherever they have been implemented and
government has been a calamity wherever it has been implemented. Instead of
advocating a system that we know does not work, why not advocate a system
that might? Limited government appears to be inherently unstable and anarchism
might offer the libertarian the only alternative. In the past 250 years the world
has successfully thrown off the yoke of monarchism and in the past twenty-five
years the world has successfully thrown off the yoke of communism. Why not
continue and throw off the bonds of all government?
Notes
1. The 1972 volume also reprinted Wollstein’s (1969) short monograph Society Without
Coercion, which advocates anarchism but goes in less depth than the Tannehills.
2. These arguments are elaborated in greater detail in Hummel (1990) and Hummel
(2001).
3. From 1800 to 2005 the American population has increased fifty fold whereas the
number of people in the U.S. military has increased almost 500 fold.
4. This chapter reprints the majority of his article but leaves off the last few pages,
most of which is a long quote from Proudhon.
5. A lot of research analyzes private police or courts that operate within the context of
a government system (Foldvary, 1994; Mahoney, 1997; Romano, 1998; Stringham,
1999, 2002; and 2003), but the examples in this section focus on case studies where
government police and courts are largely absent.
6. Between these authors, two have appointments at Stanford and one has a Nobel Prize
and the article was published in a highly ranked journal. The article demonstrates
that anarchist research may have a place in mainstream outlets.

References
Anderson, Terry and Hill, P. J. (1975) “The Evolution of Property Rights: A Study of
the American West.” Journal of Law and Economics 18: 163-79.
Anderson, Terry and Hill, P. J. (2004) The Not So Wild, Wild West: Property Rights on
the Frontier. Stanford, CA: Stanford University Press.
Barnett, Randy (1998) The Structure of Liberty: Justice and the Rule of Law. Oxford:
Clarendon Press.
Cowen, Tyler (1992) “Law as a Public Good: The Economics of Anarchy.” Economics
and Philosophy 8: 249-267.
Cowen, Tyler, and Sutter, Daniel (2005) “Conflict, Cooperation and Competition in
Anarchy.” Review of Austrian Economics 18: 109-115.
 Introduction 17

Dowd, Kevin (1997) “Anarchy, Warfare, and Social Order: Comment on Hirshleifer.”
Journal of Political Economy 105: 648-51.
Foldvary, Fred (1994) Public Goods and Private Communities: The Market Provision
of Social Services. Aldershot, UK: Edward Elgar Publishing.
Friedman, David (1979) “Private Creation and Enforcement of Law—A Historical Case.”
Journal of Legal Studies 8: 399-415.
Hirshleifer, Jack (1995) “Anarchy and its Breakdown.” Journal of Political Economy
103: 26-52.
Holcombe, Randall (2004) “Government: Unnecessary but Inevitable.” The Independent
Review 8: 325-42.
Hoppe, Hans-Hermann (2001) Democracy—The God That Failed: The Economic and
Politics of Monarchy, Democracy, and Natural Order. New Brunswick, NJ: Trans-
action Publishers.
Hummel, Jeffrey Rogers (1990) “National Goods Versus Public Goods: Defense, Dis-
armament, and Free Riders.” Review of Austrian Economics 4: 88-122.
Hummel, Jeffrey Rogers (2001) “The Will to Be Free: The Role of Ideology in National
Defense.” Independent Review 5: 523–537.
Mahoney, Paul (1997) “The Exchange as Regulator.” Virginia Law Review 83: 1453-
1500.
McElroy, Wendy (2003) The Debates of Liberty: An Overview of Individualist Anarchism,
1881–1908. Lanham, Md.: Rowman and Littlefield.
Nozick, Robert (2004) Anarchy, State, and Utopia. New York: Basic Books.
Pagano, Frank (1982) “Introduction,” in Frank Pagano (ed.), A Vindication of Natural
Society. Indianapolis: Liberty Classics.
Powell, Benjamin and Stringham, Edward (forthcoming) “Economics in Defense of Lib-
erty: The Contribution of Murray Rothbard,” in Steven Horwitz (ed.), Biographical
Dictionary of Austrian Economists. Cheltenham, UK: Edward Elgar Publishing.
Raico, Ralph (2002) “Robert Nozick: A Historical Note.” LewRockwell.com February
5, 2002.
Rand, Ayn (1964) The Virtue of Selfishness. New York: New American Library.
Romano, Roberta (1998) “Empowering Investors: A Market Approach to Securities
Regulation.” Yale Law Journal 107: 2359-2430.
Rothbard, Murray (1958) “A Note on Burke’s Vindication of Natural Society.” Journal
of the History of Ideas 19: 114-118.
Rothbard, Murray (1974/2000) “The Spooner-Tucker Doctrine: An Economist’s View,” pp.
205-219 in Egalitarianism as a Revolt Against Nature. Auburn, AL: Mises Institute.
Rutten, Andrew (1999) “Can Anarchy Save Us from Leviathan?” The Independent
Review 3: 581-593.
Smith, Vernon (2003) “Constructivist and Ecological Rationality in Economics.” Ameri-
can Economic Review 93: 465-508.
Stringham, Edward (1999) “Market Chosen Law.” Journal of Libertarian Studies 14:
53-77.
Stringham, Edward (2002) “The Emergence of the London Stock Exchange as a Self-
Policing Club.” Journal of Private Enterprise 17:1-19.
Stringham, Edward (2003) “The Extralegal Development of Securities Trading in
Seventeenth Century Amsterdam.” Quarterly Review of Economics and Finance
43: 321-344.
Tuccille, Jerome (1971) It Usually Begins with Ayn Rand. San Francisco: Fox & Wilkes.
Wollstein, Jarret (1969) Society without Coercion: A New Concept of Social Organiza-
tion. Silver Spring, MD: Society for Individual Liberty.
18 Anarchy and the Law

Section I: Theory of Private Property Anarchism

2
Police, Law, and the Courts
Murray Rothbard
Police Protection

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, 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 agen-
cies? 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 alloca-
tions. The government only knows that it has a limited budget. Its allocations of

18
 Police, Law, and the Courts 19

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 al-
locate 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 protec-
tion 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 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 pro-
hibitive 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 consum-
ers, but from the taxpayers coercively.
In fact, as government police have become increasingly inefficient, consum-
ers have been turning more and more to private forms of protection. We have
already mentioned block or neighborhood protection. There are also private
20 Anarchy and the Law

guards, insurance companies, private detectives, and such increasingly sophis-

ticated 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 some-
how, 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 crimi-
nal; restoring the stolen 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 reason-
able 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 sup-
ply 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
 Police, Law, and the Courts 21

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 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 Metro-
politan, 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 today. (Legal aid societies voluntarily
supply free legal counsel to the indigent in trouble with the authorities.)
22 Anarchy and the Law

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 pri-
vate 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 govern-
ment, we would at least be spared the horror of interState 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 interState wars? There are good reasons for this. To avoid emo-
tionalism let us take two hypothetical countries: “Ruritania” 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 Ru-
ritanian 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 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
 Police, Law, and the Courts 23

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 “an-
archy” 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 driven 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 distur-
bances. 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 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 Courts
Suppose, then, that the judge or arbitrator decides Smith was in the wrong
in a dispute, and that he aggressed against Jones. If Smith accepts the verdict,
then, whatever damages or punishment is levied, there is no problem for the
24 Anarchy and the Law

theory of libertarian protection. But what if he does not accept it? Or suppose
another example: Jones is robbed. He sets his police company to do detective
work in trying to track down the criminal. The company decides that a certain
Brown is the criminal. Then what? If Brown acknowledges his guilt, then again
there is no problem and judicial punishment proceeds, centering on forcing the
criminal to make restitution to the victim. But, again, what if Brown denies
his guilt?
These cases take us out of the realm of police protection and into another
vital area of protection: judicial service, i.e., the provision, in accordance with
generally accepted procedures, of a method of trying as best as one can to de-
termine who is the criminal, or who is the breaker of contracts, in any sort of
crime or dispute. Many people, even those who acknowledge that there could
be privately competitive police service supplied on a free market, balk at the
idea of totally private courts. How in the world could courts be private? How
would courts employ force in a world without government? Wouldn’t eternal
conflicts and “anarchy” then ensue?
In the first place, the monopoly courts of government are subject to the same
grievous problems, inefficiencies, and contempt for the consumer as any other
government operation. We all know that judges, for example, are not selected
according to their wisdom, probity, or efficiency in serving the consumer, but
are political hacks chosen by the political process. Furthermore, the courts are
monopolies; if, for example, the courts in some town or city should become
corrupt, venal, oppressive, or inefficient, the citizen at present has no recourse.
The aggrieved citizen of Deep Falls, Wyoming, must be governed by the lo-
cal Wyoming court or not at all. In a libertarian society, there would be many
courts, many judges to whom he could turn. Again, there is no reason to assume
a “natural monopoly” of judicial wisdom. The Deep Falls citizen could, for
example, call upon the local branch of the Prudential Judicial Company.
How would courts be financed in a free society? There are many possibilities.
Possibly, each individual would subscribe to a court service, paying a monthly
premium, and then calling upon the court if he is in need. Or, since courts will
probably be needed much less frequently than policemen, he may pay a fee
whenever he chooses to use the court, with the criminal or contract-breaker
eventually recompensing the victim or plaintiff. Or, in still a third possibility,
the courts may be hired by the police agencies to settle disputes, or there may
even be “vertically integrated” firms supplying both police and judicial service:
the Prudential Judicial Company might have a police and a judicial division.
Only the market will be able to decide which of these methods will be most
appropriate.
We should all be more familiar with the increasing use of private arbitration,
even in our present society. The government courts have become so clogged,
inefficient, and wasteful that more and more parties to disputes are turning to
private arbitrators as a cheaper and far less time-consuming way of settling their
disputes. In recent years, private arbitration has become a growing and highly
 Police, Law, and the Courts 25

successful profession. Being voluntary, furthermore, the rules of arbitration can

be decided rapidly by the parties themselves, without the need for a ponderous,
complex legal framework applicable to all citizens. Arbitration therefore permits
judgments to be made by people expert in the trade or occupation concerned.
Currently, the American Arbitration Association, whose motto is “The Handclasp
is Mightier than the Fist,” has 25 regional offices throughout the country, with
23,000 arbitrators. In 1969, the Association conducted over 22,000 arbitrations.
In addition, the insurance companies adjust over 50,000 claims a year through
voluntary arbitration. There is also a growing and successful use of private
arbitrators in automobile accident claim cases.
It might be protested that, while performing an ever greater proportion of
judicial functions, the private arbitrators’ decisions are still enforced by the
courts, so that once the disputing parties agree on an arbitrator, his decision
becomes legally binding. This is true, but it was not the case before 1920, and
the arbitration profession grew at as rapid a rate from 1900 to 1920 as it has
since. In fact, the modern arbitration movement began in full force in England
during the time of the American Civil War, with merchants increasingly using
the “private courts” provided by voluntary arbitrators, even though the deci-
sions were not legally binding. By 1900, voluntary arbitration began to take
hold in the United States. In fact, in medieval England, the entire structure of
merchant law, which was handled clumsily and inefficiently by the government’s
courts, grew up in private merchants’ courts. The merchants’ courts were purely
voluntary arbitrators, and the decisions were not legally binding. How, then,
were they successful?
The answer is that the merchants, in the Middle Ages and down to 1920,
relied solely on ostracism and boycott by the other merchants in the area. In other
words, should a merchant refuse to submit to arbitration or ignore a decision,
the other merchants would publish this fact in the trade, and would refuse to
deal with the recalcitrant merchant, bringing him quickly to heel. Wooldridge
mentions one medieval example:
Merchants made their courts work simply by agreeing to abide by the results. The
merchant who broke the understanding would not be sent to jail, to be sure, but
neither would he long continue to be a merchant, for the compliance exacted by
his fellows, and their power over his goods, proved if anything more effective than
physical coercion. Take John of Homing, who made his living marketing wholesale
quantities of fish. When John sold a lot of herring on the representation that it con-
formed to a three-barrel sample, but which, his fellow merchants found, was actually
mixed with “sticklebacks and putrid herring,” he made good the deficiency on pain
of economic ostracism.3

In modern times, ostracism became even more effective, and it included the
knowledge that anyone who ignored an arbitrator’s award could never again
avail himself of an arbitrator’s services. Industrialist Owen D. Young, head of
General Electric, concluded that the moral censure of other businessmen was
a far more effective sanction than legal enforcement. Nowadays, modern tech-
26 Anarchy and the Law

nology, computers, and credit ratings would make such nationwide ostracism
even more effective than it has ever been in the past.
Even if purely voluntary arbitration is sufficient for commercial disputes,
however, what of frankly criminal activities: the mugger, the rapist, the bank
robber? In these cases, it must be admitted that ostracism would probably not
be sufficient—even though it would also include, we must remember, refusal
of private street owners to allow such criminals in their areas. For the criminal
cases, then, courts and legal enforcement become necessary.
How, then, would the courts operate in the libertarian society? In particular,
how could they enforce their decisions? In all their operations, furthermore,
they must observe the critical libertarian rule that no physical force may be
used against anyone who has not been convicted as a criminal—otherwise, the
users of such force, whether police or courts, would be themselves liable to
be convicted as aggressors if it turned out that the person they had used force
against was innocent of crime. In contrast to statist systems, no policeman or
judge could be granted special immunity to use coercion beyond what anyone
else in society could use.
Let us now take the case we mentioned before. Mr. Jones is robbed, his hired
detective agency decides that one Brown committed the crime, and Brown
refuses to concede his guilt. What then? In the first place, we must recognize
that there is at present no overall world court or world government enforcing its
decrees; yet while we live in a state of “international anarchy” there is little or
no problem in disputes between private citizens of two countries. Suppose that
right now, for example, a citizen of Uruguay claims that he has been swindled
by a citizen of Argentina. Which court does he go to? He goes to his own,
i.e., the victim’s or the plaintiff’s court. The case proceeds in the Uruguayan
court, and its decision is honored by the Argentinian court. The same is true if
an American feels he has been swindled by a Canadian, and so on. In Europe
after the Roman Empire, when German tribes lived side by side and in the
same areas, if a Visigoth felt that he had been injured by a Frank, he took the
case to his own court, and the decision was generally accepted by the Franks.
Going to the plaintiff’s court is the rational libertarian procedure as well, since
the victim or plaintiff is the one who is aggrieved, and who naturally takes the
case to his own court. So, in our case, Jones would go to the Prudential Court
Company to charge Brown with theft.
It is possible, of course, that Brown is also a client of the Prudential Court,
in which case there is no problem. The Prudential’s decision covers both par-
ties, and becomes binding. But one important stipulation is that no coercive
subpoena power can be used against Brown, because he must be considered
innocent until he is convicted. But Brown would be served with a voluntary
subpoena, a notice that he is being tried on such and such a charge and inviting
him or his legal representative to appear. If he does not appear, then he will be
tried in absentia, and this will obviously be less favorable for Brown since his
side of the case will not be pleaded in court. If Brown is declared guilty, then
 Police, Law, and the Courts 27

the court and its marshals will employ force to seize Brown and exact whatever
punishment is decided upon—a punishment which obviously will focus first
on restitution to the victim.
What, however, if Brown does not recognize the Prudential Court? What
if he is a client of the Metropolitan Court Company? Here the case becomes
more difficult. What will happen then? First, victim Jones pleads his case in
the Prudential Court. If Brown is found innocent, this ends the controversy.
Suppose, however, that defendant Brown is found guilty. If he does nothing, the
court’s judgment proceeds against him. Suppose, however, Brown then takes the
case to the Metropolitan Court Company, pleading inefficiency or venality by
Prudential. The case will then be heard by Metropolitan. If Metropolitan also
finds Brown guilty, this too ends the controversy and Prudential will proceed
against Brown with dispatch. Suppose, however, that Metropolitan finds Brown
innocent of the charge. Then what? Will the two courts and their arms-wielding
marshals shoot it out in the streets?
Once again, this would clearly be irrational and self-destructive behavior on
the part of the courts. An essential part of their judicial service to their clients is
the provision of just, objective, and peacefully functioning decisions—the best
and most objective way of arriving at the truth of who committed the crime. Arriv-
ing at a decision and then allowing chaotic gunplay would scarcely be considered
valuable judicial service by their customers. Thus, an essential part of any court’s
service to its clients would be an appeals procedure. 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. The Prudential court would then proceed to enforcement.
An appeals court! But isn’t this setting up a compulsory monopoly govern-
ment once again? No, because there is nothing in the system that requires any
one person or court to be the court of appeal. In short, in the United States at
present the Supreme Court is established as the court of final appeal, so the
Supreme Court judges become the final arbiters regardless of the wishes of
plaintiff or defendant alike. In contrast, in the libertarian society the various
competing private courts could go to any appeals judge they think fair, expert,
and objective. No single appeals judge or set of judges would be foisted upon
society by coercion.
How would the appeals judges be financed? There are many possible ways,
but the most likely is that they will be paid by the various original courts who
would charge their customers for appeals services in their premiums or fees.
But suppose Brown insists on another appeals judge, and yet another?
Couldn’t he escape judgment by appealing ad infinitum? Obviously, in any so-
ciety legal proceedings cannot continue indefinitely; there must be some cutoff
point. In the present statist society, where government monopolizes the judicial
function, the Supreme Court is arbitrarily designated as the cutoff point. In the
libertarian society, there would also have to be an agreed-upon cutoff point, and
28 Anarchy and the Law

since there are only two parties to any crime or dispute—the plaintiff and the
defendant—it seems most sensible for the legal code to declare that a decision
arrived at by any two courts shall be binding. This will cover the situation when
both the plaintiff’s and the defendant’s courts come to the same decision, as
well as the situation when an appeals court decides on a disagreement between
the two original courts.
The Law and the Courts
It is now clear that there will have to be a legal code in the libertarian society.
How? How can there be a legal code, a system of law without a government to
promulgate it, an appointed system of judges, or a legislature to vote on statutes?
To begin with, is a legal code consistent with libertarian principles?
To answer the last question first, it should be clear that a legal code is neces-
sary to lay down precise guidelines for the private courts. If, for example, Court
A decides that all redheads are inherently evil and must be punished, it is clear
that such decisions are the reverse of libertarian, that such a law would consti-
tute an invasion of the rights of redheads. Hence, any such decision would be
illegal in terms of libertarian principle, and could not be upheld by the rest of
society. It then becomes necessary to have a legal code which would be gener-
ally accepted, and which the courts would pledge themselves to follow. The
legal code, simply, would insist on the libertarian principle of no aggression
against person or property, define property rights in accordance with libertarian
principle, set up rules of evidence (such as currently apply) in deciding who
are the wrongdoers in any dispute, and set up a code of maximum punishment
for any particular crime. Within the framework of such a code, the particular
courts would compete on the most efficient procedures, and the market would
then decide whether judges, juries, etc., are the most efficient methods of pro-
viding judicial services.
Are such stable and consistent law codes possible, with only competing
judges to develop and apply them, and without government or legislature? Not
only are they possible, but over the years the best and most successful parts
of our legal system were developed precisely in this manner. Legislatures, as
well as kings, have been capricious, invasive, and inconsistent. They have only
introduced anomalies and despotism into the legal system. In fact, the govern-
ment is no more qualified to develop and apply law than it is to provide any
other service; and just as religion has been separated from the State, and the
economy can be separated from the State, so can every other State function,
including police, courts, and the law itself!
As indicated above, for example, the entire law merchant was developed,
not by the State or in State courts, but by private merchant courts. It was only
much later that government took over mercantile law from its development in
merchants’ courts. The same occurred with admiralty law, the entire structure
of the law of the sea, shipping, salvages, etc. Here again, the State was not
interested, and its jurisdiction did not apply to the high seas; so the shippers
 Police, Law, and the Courts 29

themselves took on the task of not only applying, but working out the whole
structure of admiralty law in their own private courts. Again, it was only later
that the government appropriated admiralty law into its own courts.
Finally, the major body of Anglo-Saxon law, the justly celebrated common
law, was developed over the centuries by competing judges applying time-hon-
ored principles rather than the shifting decrees of the State. These principles
were not decided upon arbitrarily by any king or legislature; they grew up over
centuries by applying rational—and very often libertarian—principles to the
cases before them. The idea of following precedent was developed, not as a
blind service to the past, but because all the judges of the past had made their
decisions in applying the generally accepted common law principles to specific
cases and problems. For it was universally held that the judge did not make law
(as he often does today); the judge’s task, his expertise, was in finding the law in
accepted common law principles, and then applying that law to specific cases or
to new technological or institutional conditions. The glory of the centuries-long
development of the common law is testimony to their success.
The common law judges, furthermore, functioned very much like private
arbitrators, as experts in the law to whom private parties went with their disputes.
There was no arbitrarily imposed “supreme court” whose decision would be
binding, nor was precedent, though honored, considered as automatically bind-
ing either. Thus, the libertarian Italian jurist Bruno Leoni has written:
…courts of judicature could not easily enact arbitrary rules of their own in England,
as they were never in a position to do so directly, that is to say, in the usual, sudden,
widely ranging and imperious manner of legislators. Moreover, there were so many
courts of justice in England and they were so jealous of one another that even the
famous principle of the binding precedent was not openly recognized as valid by
them until comparatively recent times. Besides, they could never decide anything
that had not been previously brought before them by private persons. Finally,
comparatively few people used to go before the courts to ask from them the rules
deciding their cases.4

And on the absence of “supreme courts”:

…it cannot be denied that the lawyers’ law or the judiciary law may tend to acquire
the characteristics of legislation, including its undesirable ones, whenever jurists or
judges are entitled to decide ultimately on a case…. In our time the mechanism of
the judiciary in certain countries where “supreme courts are established results in the
imposition of the personal views of the members of these courts, or of a majority of
them, on all the other people concerned whenever there is a great deal of disagree-
ment between the opinion of the former and the convictions of the latter. But…this
possibility, far from being necessarily implied in the nature of lawyers’ law or of
judiciary law, is rather a deviation from it….5

Apart from such aberrations, the imposed personal views of the judges were
kept to a minimum: (a) by the fact that judges could only make decisions when
private citizens brought cases to them; (b) each judge’s decisions applied only to
the particular case; and (c) because the decisions of the common-law judges and
30 Anarchy and the Law
lawyers always considered the precedents of the centuries. Furthermore, as Leoni
points out, in contrast to legislatures or the executive, where dominant majorities
or pressure groups ride roughshod over minorities, judges, by their very position,
are constrained to hear and weigh the arguments of the two contending parties
in each dispute. “Parties are equal as regards the judge, in the sense that they
are free to produce arguments and evidence. They do not constitute a group in
which dissenting minorities give way to triumphant majorities….” And Leoni
points out the analogy between this process and the free-market economy: “Of
course, arguments may be stronger or weaker, but the fact that every party can
produce them is comparable to the fact that everybody can individually compete
with everybody else in the market in order to buy and sell.”6
Professor Leoni found that, in the private law area, the ancient Roman judges
operated in the same way as the English common law courts:
The Roman jurist was a sort of scientist; the objects of his research were the solutions
to cases that citizens submitted to him for study, just as industrialists might today
submit to a physicist or to an engineer a technical problem concerning their plants or
their production. Hence, private Roman law was something to be described or to be
discovered, not something to be enacted—a world of things that were there, forming
part of the common heritage of all Roman citizens. Nobody enacted that law; nobody
could change it by any exercise of his personal will…. This is the long-run concept
or, if you prefer, the Roman concept, of the certainty of the law.7

Finally, Professor Leoni was able to use his knowledge of the operations of
ancient and common law to answer the vital question: In a libertarian society,
“who will appoint the judges…to let them perform the task of defining the law?”
His answer is: the people themselves, people who would go to the judges with
the greatest reputation of expertise and wisdom in knowing and applying the
basic common legal principles of the society:
In fact, it is rather immaterial to establish in advance who will appoint the judges, for,
in a sense, everybody could do so, as happens to a certain extent when people resort
to private arbiters to settle their own quarrels…. For the appointment of judges is not
such a special problem as would be, for example, that of “appointing” physicists or
doctors or other kinds of learned and experienced people. The emergence of good
professional people in any society is only apparently due to official appointments,
if any. It is, in fact, based on a widespread consent on the part of clients, colleagues,
and the public at large—a consent without which no appointment is really effective.
Of course, people can be wrong about the true value chosen as being worthy, but
these difficulties in their choice are inescapable in any kind of choice.8

Of course, in the future libertarian society, the basic legal code would not
rely on blind custom, much of which could well be antilibertarian. The code
would have to be established on the basis of acknowledged libertarian prin-
ciple, of nonaggression against the person or property of others; in short, on
the basis of reason rather than on mere tradition, however sound its general
outlines. Since we have a body of common law principles to draw on, however,
the task of reason in correcting and amending the common law would be far
easier than trying to construct a body of systematic legal principles de novo
out of the thin air.
 Police, Law, and the Courts 31

The most remarkable historical example of a society of libertarian law and

courts, however, has been neglected by historians until very recently. And this
was also a society where not only the courts and the law were largely libertar-
ian, but where they operated within a purely state-less and libertarian society.
This was ancient Ireland—an Ireland which persisted in this libertarian path for
roughly a thousand years until its brutal conquest by England in the seventeenth
century. And, in contrast to many similarly functioning primitive tribes (such
as the Ibos in West Africa, and many European tribes), preconquest Ireland
was not in any sense a “primitive” society: it was a highly complex society
that was, for centuries, the most advanced, most scholarly, and most civilized
in all of Western Europe.
For a thousand years, then, ancient Celtic Ireland had no State or anything
like it. As the leading authority on ancient Irish law has written: “There was
no legislature, no bailiffs, no police, no public enforcement of justice…. There
was no trace of State-administered justice.”9
How then was justice secured? The basic political unit of ancient Ireland was
the tuath. All “freemen” who owned land, all professionals, and all craftsmen,
were entitled to become members of a tuath. Each tuath’s members formed an
annual assembly which decided all common policies, declared war or peace on
other tuatha, and elected or deposed their “kings.” An important point is that, in
contrast to primitive tribes, no one was stuck or bound to a given tuath, either
because of kinship or of geographical location. Individual members were free
to, and often did, secede from a tuath and join a competing tuath. Often, two
or more tuatha decided to merge into a single, more efficient unit. As Professor
Peden states, “the tuath is thus a body of persons voluntarily united for socially
beneficial purposes and the sum total of the landed properties of its members
constituted its territorial dimension.”10 In short, they did not have the modern
State with its claim to sovereignty over a given (usually expanding) territorial
area, divorced from the landed property rights of its subjects; on the contrary,
tuatha were voluntary associations which only comprised the landed properties
of its voluntary members. Historically, about 80 to 100 tuatha coexisted at any
time throughout Ireland.
But what of the elected “king”? Did he constitute a form of State ruler?
Chiefly, the king functioned as a religious high priest, presiding over the wor-
ship rites of the tuath, which functioned as a voluntary religious, as well as a
social and political, organization. As in pagan, pre-Christian, priesthoods, the
kingly function was hereditary, this practice carrying over to Christian times.
The king was elected by the tuath from within a royal kin-group (the derbfine),
which carried the hereditary priestly function. Politically, however, the king had
strictly limited functions: he was the military leader of the tuath, and he presided
over the tuath assemblies. But he could only conduct war or peace negotiations
as agent of the assemblies; and he was in no sense sovereign and had no rights
of administering justice over tuath members. He could not legislate, and when
he himself was party to a lawsuit, he had to submit his case to an independent
judicial arbiter.
32 Anarchy and the Law

Again, how, then, was law developed and justice maintained? In the first
place, the law itself was based on a body of ancient and immemorial custom,
passed down as oral and then written tradition through a class of professional
jurists called the brehons. The brehons were in no sense public, or governmental,
officials; they were simply selected by parties to disputes on the basis of their
reputations for wisdom, knowledge of the customary law, and the integrity of
their decisions. As Professor Peden states:
…the professional jurists were consulted by parties to disputes for advice as to
what the law was in particular cases, and these same men often acted as arbitrators
between suitors. They remained at all times private persons, not public officials;
their functioning depended upon their knowledge of the law and the integrity of
their judicial reputations.11

Furthermore, the brehons had no connection whatsoever with the individual

tuatha or with their kings. They were completely private, national in scope, and
were used by disputants throughout Ireland. Moreover, and this is a vital point,
in contrast to the system of private Roman lawyers, the brehon was all there was;
there were no other judges, no “public” judges of any kind, in ancient Ireland.
It was the brehons who were schooled in the law, and who added glosses and
applications to the law to fit changing conditions. Furthermore, there was no
monopoly, in any sense, of the brehon jurists; instead, several competing schools
of jurisprudence existed and competed for the custom of the Irish people.
How were the decisions of the brehons enforced? Through an elaborate,
voluntarily developed system of “insurance,” or sureties. Men were linked
together by a variety of surety relationships by which they guaranteed one
another for the righting of wrongs, and for the enforcement of justice and the
decisions of the brehons. In short, the brehons themselves were not involved in
the enforcement of decisions, which rested again with private individuals linked
through sureties. There were various types of surety. For example, the surety
would guarantee with his own property the payment of a debt, and then join the
plaintiff in enforcing a debt judgment if the debtor refused to pay. In that case,
the debtor would have to pay double damages: one to the original creditor, and
another as compensation to his surety. And this system applied to all offences,
aggressions and assaults as well as commercial contracts; in short, it applied to
all cases of what we would call “civil” and “criminal” law. All criminals were
considered to be “debtors” who owed restitution and compensation to their
victims, who thus became their “creditors.” The victim would gather his sure-
ties around him and proceed to apprehend the criminal or to proclaim his suit
publicly and demand that the defendant submit to adjudication of their dispute
with the brehons. The criminal might then send his own sureties to negotiate
a settlement or agree to submit the dispute to the brehons. If he did not do so,
he was considered an “outlaw” by the entire community; he could no longer
enforce any claim of his own in the courts, and he was treated to the opprobrium
of the entire community.12
 Police, Law, and the Courts 33

There were occasional “wars,” to be sure, in the thousand years of Celtic

Ireland, but they were minor brawls, negligible compared to the devastating
wars that racked the rest of Europe. As Professor Peden points out, “without
the coercive apparatus of the State which can through taxation and conscrip-
tion mobilize large amounts of arms and manpower, the Irish were unable to
sustain any large scale military force in the field for any length of time. Irish
wars…were pitiful brawls and cattle raids by European standards.”13
Thus, we have indicated that it is perfectly possible, in theory and histori-
cally, to have efficient and courteous police, competent and learned judges, and
a body of systematic and socially accepted law—and none of these things being
furnished by a coercive government. Government—claiming a compulsory
monopoly of protection over a geographical area, and extracting its revenues
by force—can be separated from the entire field of protection. Government is
no more necessary for providing vital protection service than it is necessary for
providing anything else. And we have not stressed a crucial fact about govern-
ment: that its compulsory monopoly over the weapons of coercion has led it,
over the centuries, to infinitely more butcheries and infinitely greater tyranny
and oppression than any decentralized, private agencies could possibly have
done. If we look at the black record of mass murder, exploitation, and tyranny
levied on society by governments over the ages, we need not be loath to abandon
the Leviathan State and…try freedom.
Outlaw Protectors
We have saved for the last this problem: What if police or judges and courts
should be venal and biased—what if they should bias their decisions, for ex-
ample, in favor of particularly wealthy clients? We have shown how a libertar-
ian legal and judicial system could work on the purely free market, assuming
honest differences of opinion—but what if one or more police or courts should
become, in effect, outlaws? What then?
In the first place, libertarians do not flinch from such a question. In contrast
to such utopians as Marxists or left-wing anarchists (anarchocommunists or an-
archo-syndicalists), libertarians do not assume that the ushering in of the purely
free society of their dreams will also bring with it a new, magically transformed
Libertarian Man. We do not assume that the lion will lie down with the lamb,
or that no one will have criminal or fraudulent designs upon his neighbor. The
“better” that people will be, of course, the better any social system will work,
in particular the less work any police or courts will have to do. But no such
assumption is made by libertarians. What we assert is that, given any particular
degree of “goodness” or “badness” among men, the purely libertarian society
will be at once the most moral and the most efficient, the least criminal and the
most secure of person or property.
Let us first consider the problem of the venal or crooked judge or court. What
of the court which favors its own wealthy client in trouble? In the first place,
any such favoritism will be highly unlikely, given the rewards and sanctions
34 Anarchy and the Law

of the free market economy. The very life of the court, the very livelihood of a
judge, will depend on his reputation for integrity, fair-mindedness, objectivity,
and the quest for truth in every case. This is his “brand name.” Should word of
any venality leak out, he will immediately lose clients and the courts will no
longer have customers; for even those clients who may be criminally inclined
will scarcely sponsor a court whose decisions are no longer taken seriously
by the rest of society, or who themselves may well be in jail for dishonest and
fraudulent dealings. If, for example, Joe Zilch is accused of a crime or breach of
contract, and he goes to a “court” headed by his brother-in-law, no one, least of
all other, honest courts will take this “court’s” decision seriously. It will no longer
be considered a “court” in the eyes of anyone but Joe Zilch and his family.
Contrast this built-in corrective mechanism to the present-day government
courts. Judges are appointed or elected for long terms, up to life, and they are
accorded a monopoly of decision-making in their particular area. It is almost
impossible, except in cases of gross corruption, to do anything about venal deci-
sions of judges. Their power to make and to enforce their decisions continues
unchecked year after year. Their salaries continue to be paid, furnished under
coercion by the hapless taxpayer. But in the totally free society, any suspicion
of a judge or court will cause their customers to melt away and their “decisions”
to be ignored. This is a far more efficient system of keeping judges honest than
the mechanism of government.
Furthermore, the temptation for venality and bias would be far less for
another reason: business firms in the free market earn their keep, not from
wealthy customers, but from a mass market by consumers. Macy’s earns its
income from the mass of the population, not from a few wealthy customers.
The same is true of Metropolitan Life Insurance today, and the same would be
true of any “Metropolitan” court system tomorrow. It would be folly indeed
for the courts to risk the loss of favor by the bulk of its customers for the favors
of a few wealthy clients. But contrast the present system, where judges, like
all other politicians, may be beholden to wealthy contributors who finance the
campaigns of their political parties.
There is a myth that the “American System” provides a superb set of “checks
and balances,” with the executive, the legislature, and the courts all balancing
and checking one against the other, so that power cannot unduly accumulate
in one set of hands. But the American “checks and balances” system is largely
a fraud. For each one of these institutions is a coercive monopoly in its area,
and all of them are part of one government, headed by one political party at
any given time. Furthermore, at best there are only two parties, each one close
to the other in ideology and personnel, often colluding, and the actual day-to-
day business of government headed by a civil service bureaucracy that cannot
be displaced by the voters. Contrast to these mythical checks and balances the
real checks and balances provided by the free-market economy! What keeps
A&P honest is the competition, actual and potential, of Safeway, Pioneer, and
countless other grocery stores. What keeps them honest is the ability of the
 Police, Law, and the Courts 35

consumers to cut off their patronage. What would keep the free-market judges
and courts honest is the lively possibility of heading down the block or down
the road to another judge or court if suspicion should descend on any particular
one. What would keep them honest is the lively possibility of their customers
cutting off their business. These are the real, active checks and balances of the
free-market economy and the free society.
The same analysis applies to the possibility of a private police force becom-
ing outlaw, of using their coercive powers to exact tribute, set up a “protection
racket” to shake down their victims, etc. Of course, such a thing could happen.
But, in contrast to present-day society, there would be immediate checks and
balances available; there would be other police forces who could use their weap-
ons to band together to put down the aggressors against their clientele. If the
Metropolitan Police Force should become gangsters and exact tribute, then the
rest of society could flock to the Prudential, Equitable, etc., police forces who
could band together to put them down. And this contrasts vividly with the State.
If a group of gangsters should capture the State apparatus, with its monopoly of
coercive weapons, there is nothing at present that can stop them—short of the
immensely difficult process of revolution. In a libertarian society there would
be no need for a massive revolution to stop the depredation of gangster-States;
there would be a swift turning to the honest police forces to check and put down
the force that had turned bandit.
And, indeed, what is the State anyway but organized banditry? What is taxa-
tion but theft on a gigantic, unchecked, scale? What is war but mass murder
on a scale impossible by private police forces? What is conscription but mass
enslavement? Can anyone envision a private police force getting away with a
tiny fraction of what States get away with, and do habitually, year after year,
century after century?
There is another vital consideration that would make it almost impossible
for an outlaw police force to commit anything like the banditry that modern
governments practice. One of the crucial factors that permits governments to
do the monstrous things they habitually do is the sense of legitimacy on the part
of the stupefied public. The average citizen may not like—may even strongly
object to—the policies and exactions of his government. But he has been
imbued with the idea—carefully indoctrinated by centuries of governmental
propaganda—that the government is his legitimate sovereign, and that it would
be wicked or mad to refuse to obey its dictates. It is this sense of legitimacy
that the State’s intellectuals have fostered over the ages, aided and abetted by
all the trappings of legitimacy: flags, rituals, ceremonies, awards, constitutions,
etc. A bandit gang—even if all the police forces conspired together into one
vast gang—could never command such legitimacy. The public would consider
them purely bandits; their extortions and tributes would never be considered
legitimate though onerous “taxes,” to be paid automatically. The public would
quickly resist these illegitimate demands and the bandits would be resisted
and overthrown. Once the public had tasted the joys, prosperity, freedom, and
36 Anarchy and the Law

efficiency of a libertarian, State-less society, it would be almost impossible

for a State to fasten itself upon them once again. Once freedom has been fully
enjoyed, it is no easy task to force people to give it up.
But suppose—just suppose—that despite all these handicaps and obstacles,
despite the love for their newfound freedom, despite the inherent checks and
balances of the free market, suppose anyway that the State manages to reestablish
itself. What then? Well, then, all that would have happened is that we would
have a State once again. We would be no worse off than we are now, with our
current State. And, as one libertarian philosopher has put it, “at least the world
will have had a glorious holiday.” Karl Marx’s ringing promise applies far more
to a libertarian society than to communism: In trying freedom, in abolishing
the State, we have nothing to lose and everything to gain.
National Defense
We come now to what is usually the final argument against the libertarian
position. Every libertarian has heard a sympathetic but critical listener say: “All
right, I see how this system could be applied successfully to local police and
courts. But how could a libertarian society defend us against the Russians?”
There are, of course, several dubious assumptions implied in such a ques-
tion. There is the assumption that the Russians are bent upon military invasion
of the United States, a doubtful assumption at best. There is the assumption
that any such desire would still remain after the United States had become
a purely libertarian society. This notion overlooks the lesson of history that
wars result from conflicts between nation-states, each armed to the teeth, each
direly suspicious of attack by the other. But a libertarian America would clearly
not be a threat to anyone, not because it had no arms but because it would be
dedicated to no aggression against anyone, or against any country. Being no
longer a nation-state, which is inherently threatening, there would be little
chance of any country attacking us. One of the great evils of the nation-state
is that each State is able to identify all of its subjects with itself; hence in any
inter-State war, the innocent civilians, the subjects of each country, are subject
to aggression from the enemy State. But in a libertarian society there would be
no such identification, and hence very little chance of such a devastating war.
Suppose, for example, that our outlaw Metropolitan Police Force has initiated
aggression not only against Americans but also against Mexicans. If Mexico
had a government, then clearly the Mexican government would know full well
that Americans in general were not implicated in the Metropolitan’s crimes,
and had no symbiotic relationship with it. If the Mexican police engaged in a
punitive expedition to punish the Metropolitan force, they would not be at war
with Americans in general—as they would be now. In fact, it is highly likely that
other American forces would join the Mexicans in putting down the aggressor.
Hence, the idea of inter-State war against a libertarian country or geographical
area would most likely disappear.
 Police, Law, and the Courts 37

There is, furthermore, a grave philosophical error in the very posing of

this sort of question about the Russians. When we contemplate any sort of
new system, whatever it may be, we must first decide whether we want to see
it brought about. In order to decide whether we want libertarianism or com-
munism, or left-wing anarchism, or theocracy, or any other system, we must
first assume that it has been established, and then consider whether the system
could work, whether it could remain in existence, and just how efficient such
a system would be. We have shown, I believe, that a libertarian system, once
instituted, could work, be viable, and be at once far more efficient, prosperous,
moral, and free than any other social system. But we have said nothing about
how to get from the present system to the ideal; for these are two totally sepa-
rate questions: the question of what is our ideal goal, and of the strategy and
tactics of how to get from the present system to that goal. The Russian question
mixes these two levels of discourse. It assumes, not that libertarianism has been
established everywhere throughout the globe, but that for some reason it has
been established only in America and nowhere else. But why assume this? Why
not first assume that it has been established everywhere and see whether we
like it? After all, the libertarian philosophy is an eternal one, not bound to time
or place. We advocate liberty for everyone, everywhere, not just in the United
States. If someone agrees that a world libertarian society, once established, is
the best that he can conceive, that it would be workable, efficient, and moral,
then let him become a libertarian, let him join us in accepting liberty as our ideal
goal, and then join us further in the separate—and obviously difficult—task of
figuring out how to bring this ideal about.
If we do move on to strategy, it is obvious that the larger an area in which
liberty is first established the better its chances for survival, and the better
its chance to resist any violent overthrow that may be attempted. If liberty is
established instantaneously throughout the world, then there will of course be
no problem of “national defense.” All problems will be local police problems.
If, however, only Deep Falls, Wyoming, becomes libertarian while the rest
of America and the world remain statist, its chances for survival will be very
slim. If Deep Falls, Wyoming, declares its secession from the United States
government and establishes a free society, the chances are great that the United
States—given its historical ferocity toward secessionists—would quickly invade
and crush the new free society, and there is little that any Deep Falls police force
could do about it. Between these two polar cases, there is an infinite continuum
of degrees, and obviously, the larger the area of freedom, the better it could
withstand any outside threat. The “Russian question” is therefore a matter of
strategy rather than a matter of deciding on basic principles and on the goal
toward which we wish to direct our efforts.
But after all this is said and done, let us take up the Russian question anyway.
Let us assume that the Soviet Union would really be hell-bent on attacking a
libertarian population within the present boundaries of the United States (clearly,
there would no longer be a United States government to form a single nation-
38 Anarchy and the Law

state). In the first place, the form and quantity of defense expenditures would
be decided upon by the American consumers themselves. Those Americans
who favor Polaris submarines, and fear a Soviet threat, would subscribe toward
the financing of such vessels. Those who prefer an ABM system would invest
in such defensive missiles. Those who laugh at such a threat or those who are
committed pacifists would not contribute to any “national” defense service at
all. Different defense theories would be applied in proportion to those who
agree with, and support, the various theories being offered. Given the enormous
waste in all wars and defense preparations in all countries throughout history, it
is certainly not beyond the bounds of reason to propose that private, voluntary
defense efforts would be far more efficient than government boondoggles.
Certainly these efforts would be infinitely more moral.
But let us assume the worst. Let us assume that the Soviet Union at last
invades and conquers the territory of America. What then? We have to realize
that the Soviet Union’s difficulties will have only just begun. The main reason
a conquering country can rule a defeated country is that the latter has an exist-
ing State apparatus to transmit and enforce the victor’s orders onto a subject
population. Britain, though far smaller in area and population, was able to rule
India for centuries because it could transmit British orders to the ruling Indian
princes, who in turn could enforce them on the subject population. But in those
cases in history where the conquered had no government, the conquerors found
rule over the conquered extremely difficult. When the British conquered West
Africa, for example, they found it extremely difficult to govern the Ibo tribe
(later to form Biafra) because that tribe was essentially libertarian, and had no
ruling government of tribal chiefs to transmit orders to the natives. And perhaps
the major reason it took the English centuries to conquer ancient Ireland is that
the Irish had no State, and that there was therefore no ruling governmental struc-
ture to keep treaties, transmit orders, etc. It is for this reason that the English
kept denouncing the “wild” and “uncivilized” Irish as “faithless,” because they
would not keep treaties with the English conquerors. The English could never
understand that, lacking any sort of State, the Irish warriors who concluded
treaties with the English could only speak for themselves; they could never
commit any other group of the Irish population.14
Furthermore, the occupying Russians’ lives would be made even more dif-
ficult by the inevitable eruption of guerrilla warfare by the American population.
It is surely a lesson of the twentieth century—a lesson first driven home by the
successful American revolutionaries against the mighty British Empire—that no
occupying force can long keep down a native population determined to resist.
If the giant United States, armed with far greater productivity and firepower,
could not succeed against a tiny and relatively unarmed Vietnamese population,
how in the world could the Soviet Union succeed in keeping down the American
people? No Russian occupation soldier’s life would be safe from the wrath of a
resisting American populace. Guerrilla warfare has proved to be an irresistible
 Police, Law, and the Courts 39

force precisely because it stems, not from a dictatorial central government, but
from the people themselves, fighting for their liberty and independence against a
foreign State. And surely the anticipation of this sea of troubles, of the enormous
costs and losses that would inevitably follow, would stop well in advance even
a hypothetical Soviet government bent on military conquest.
Notes
1. See William C. Wooldridge, Uncle Sam the Monopoly Man (New Rochelle, NY:
Arlington House), pp. 111ff.
2. Cf. Gustave de Molinari, The Production of Security (New York: Center for Lib-
ertarian Studies, 1977).
3. Wooldridge, op. cit., p. 96. Also see pp. 94–110.
4. Bruno Leoni, Freedom and the Law (Los Angeles: Nash Publishing Co., 1972), p.
87.
5. Ibid., pp. 23–24.
6. Ibid., p. 188.
7. Ibid., pp. 84–85.
8. Ibid., p. 183.
9. Quoted in the best introduction to ancient, anarchistic Irish institutions, Joseph
R. Pedea, “Property Rights in Celtic Irish Law,” Journal of Libertarian Studies
I (Spring 1977), p. 83; see also pp. 81–95. For a summary, see Peden, “Stateless
Societies: Ancient Ireland,” The Libertarian Forum (April 1971), pp. 3–4.
10. Peden, “Stateless Societies,” p. 4.
11. Ibid.
12. Professor Charles Donahue of Fordham University has maintained that the secular
part of ancient Irish law was not simply haphazard tradition; that it was consciously
rooted in the Stoic conception of natural law, discoverable by man’s reason. Charles
Donahue, “Early Celtic Laws” (unpublished paper, delivered at the Columbia
University Seminar in the History of Legal and Political Thought, Autumn, 1964),
pp. 13ff.
13. Peden, “Stateless Societies,” p. 4.
14. Peden, “Stateless Societies,” p. 3; also see Kathleen Hughes, introduction to A.
Jocelyn Otway-Ruthven, A History of Medieval Ireland (New York: Barnes &
Noble, 1968).
 3
The Machinery of Freedom:
Guide to a Radical Capitalism (excerpt)
David Friedman
Is Government, then, useful and necessary? So is a doctor. But suppose the dear
fellow claimed the right every time he was called in to prescribe for a bellyache
or a ringing in the ears, to raid the family silver, use the family toothbrushes, and
execute the droit de seigneur upon the housemaid?
—H.L. Mencken
Anarchism: the theory that all forms of government are undesirable.—Webster’s New
World Dictionary of the American Language

In Part 1, I described myself as an anarchist and asserted that government

has no legitimate functions. In this part, I shall attempt to justify that statement.
Conceivably I could do so by listing all the things the government does and
explaining why each either should not be done or could be done better by private
individuals cooperating voluntarily. Unfortunately, paper and ink are scarce
resources; the list alone would fill this book. Instead, I will discuss in the next
few chapters how private arrangements could take over the most fundamental
government functions—police, courts, and national defense. When I finish,
some readers will object that the institutions that provide these “governmental”
functions are by definition governments, that I am therefore not an anarchist at
all. I merely want a different kind of government.
They will be wrong. An anarchist is not, except in the propaganda of his
enemies, one who desires chaos. Anarchists, like other people, wish to be pro-
tected from thieves and murderers. They wish to have some peaceful way of
settling disagreements. They wish, perhaps even more than other people, to be
able to protect themselves from foreign invasion. What, after all, is the point
of abolishing your own government if it is immediately replaced by someone
else’s? What anarchists do not want is to have these useful services—the services
now provided by police, courts and national defense—provided by the kind of
institution that now provides them: government.
Before I proceed with my argument, I must define what I mean by “gov-
ernment.” A government is an agency of legitimized coercion. I define “coer-
cion,” for the purposes of this definition, as the violation of what people in a

40
 The Machinery of Freedom: Guide to a Radical Capitalism (excerpt) 41

particular society believe to be the rights of individuals with respect to other

individuals.
For instance, people in this society believe that an individual has the right to
turn down a job offer; the denial of that right is a form of coercion called enslave-
ment. They believe that an individual has the right to turn down a request for money
or an offered trade. The denial of that right is called robbery or extortion.
Government is an agency of legitimized coercion. The special characteristic
that distinguishes governments from other agencies of coercion (such as ordi-
nary criminal gangs) is that most people accept government coercion as normal
and proper. The same act that is regarded as coercive when done by a private
individual seems legitimate if done by an agent of the government.
If I yell “Stop, thief!” at a stickup man escaping with my wallet, the bystand-
ers may or may not help, but they will at least recognize the reasonableness of
my act. If I yell “Stop, thief!” at an employee of the Internal Revenue Service,
leaving my house after informing me that he has just frozen my bank account,
my neighbors will think I’m crazy. Objectively, the IRS is engaged in the same
act as the thief. It seizes my resources without my permission. True, it claims to
provide me with services in exchange for my taxes, but it insists on collecting
the taxes whether or not I want the services. It is, perhaps, a fine point whether
that is robbery or extortion. In either case, if it were the act of a private party,
everyone would agree that it was a crime.
Suppose that a private employer, offering low wages for long hours of un-
pleasant work, failed to find enough workers and solved the problem by picking
men at random and threatening to imprison them if they refused to work for
him. He would be indicted on charges of kidnapping and extortion and acquit-
ted on ground of insanity. This is exactly how the government hires people to
fight war or sit on a jury.
It is often argued that government, or at least some particular government, is
not merely legitimized but legitimate, that its actions only appear to be coercive.
Such arguments often involve social contract theories—claims that the citizen
is somehow contractually bound to obey the government. To those interested
in that argument and its refutation I recommend “No Treason: The Constitution
of No Authority” by Lysander Spooner.
Government is distinguished from other criminal gangs by being legitimized.
It is distinguished from legitimate nongovernmental groups which may serve
some of the same functions by the fact that it is coercive. Governments build
roads. So, occasionally, do private individuals. But the private individuals must
first buy the land at a price satisfactory to the seller. The government can and
does set a price at which the owner is forced to sell.
Government is an agency of legitimized coercion. If the institutions which
replace government perform their functions without coercion, they are not
governments. If they occasionally act coercively but, when they do so, their
actions are not regarded as legitimate, they are still not governments.
42 Anarchy and the Law

Police, Courts, and Laws—On the Market

How, without government, could we settle the disputes that are now settled
in courts of law? How could we protect ourselves from criminals?
Consider first the easiest case, the resolution of disputes involving contracts
between well-established firms. A large fraction of such disputes are now settled
not by government courts but by private arbitration of the sort described in
Chapter 18. The firms, when they draw up a contract, specify a procedure for
arbitrating any dispute that may arise. Thus they avoid the expense and delay
of the courts.
The arbitrator has no police force. His function is to render decisions, not
to enforce them. Currently, arbitrated decisions are usually enforceable in the
government courts, but that is a recent development; historically, enforcement came
from a firm’s desire to maintain its reputation. After refusing to accept an arbitrator’s
judgment, it is hard to persuade anyone else to sign a contract that specifies arbitra-
tion; no one wants to play a game of “heads you win, tails I lose.”
Arbitration arrangements are already widespread. As the courts continue
to deteriorate, arbitration will continue to grow. But it only provides for the
resolution of disputes over preexisting contracts. Arbitration, by itself, provides
no solution for the man whose car is dented by a careless driver, still less for
the victim of theft; in both cases the plaintiff and defendant, having different
interests and no prior agreement, are unlikely to find a mutually satisfactory
arbitrator. Indeed, the defendant has no reason to accept any arbitration at all;
he can only lose—which brings us to the problem of preventing coercion.
Protection from coercion is an economic good. It is presently sold in a va-
riety of forms—Brinks guards, locks, burglar alarms. As the effectiveness of
government police declines, these market substitutes for the police, like market
substitutes for the courts, become more popular.
Suppose, then, that at some future time there are no government police, but
instead private protection agencies. These agencies sell the service of protecting
their clients against crime. Perhaps they also guarantee performance by insuring
their clients against losses resulting from criminal acts.
How might such protection agencies protect? That would be an economic
decision, depending on the costs and effectiveness of different alternatives. On
the one extreme, they might limit themselves to passive defenses, installing
elaborate locks and alarms. Or they may take no preventative action at all, but
make great efforts to hunt down criminals guilty of crimes against their clients.
They might maintain foot patrols or squad cars, like our present government
police, or they might rely on electronic substitutes. In any case, they would be
selling a service to their customers and would have strong incentive to provide
as high a service as possible, at the lowest possible cost. It is reasonable to sup-
pose that the quality of service would be higher and the cost lower than with
the present governmental protective system.
 The Machinery of Freedom: Guide to a Radical Capitalism (excerpt) 43

Inevitably, conflicts would arise between one protective agency and another;
how might they be resolved?
I come home one night and find my television set missing. I immediately call
my protection agency, Tannahelp Inc., to report the theft. They send an agent.
He checks the automatic camera which Tannahelp, as part of their service, in-
stalled in my living room and discovers a picture of one Joe Bock lugging the
television set out the door. The Tannahelp agent contacts Joe, informs him that
Tannahelp has reason to believe he is in possession of my television set, and
suggests he return it, along with an extra ten dollars to pay for Tannahelp’s time
and trouble in locating Joe. Joe replies that he has never seen my television set
in his life and tells the Tannahelp agent to go to hell.
The agent points out that until Tannahelp is convinced there has been a mis-
take, he must proceed on the assumption that the television set is my property.
Six Tannahelp employees, all large and energetic, will be at Joe’s door next
morning to collect the set.
Joe, in response, informs the agent that he also has a protection agency, Dawn
Defense, and that his contract with them undoubtedly requires them to protect
him if six goons try to break into his house and steal his television set.
The stage seems set for a nice little war between Tannahelp and Dawn De-
fense. It is precisely such a possibility that has led some libertarians who are
not anarchists, most notably Ayn Rand, to reject the possibility of competing
free-market protection agencies.
But wars are very expensive, and Tannahelp and Dawn Defense are both
profit-making corporations, more interested in saving money than face. I think
the rest of the story would be less violent than Miss Rand supposed.
The Tannahelp agent calls up his opposite number at Dawn Defense. “We’ve
got a problem….” After explaining the situation, he points out that if Tannahelp
sends six men and Dawn eight, there will be a fight. Someone might even get
hurt. Whoever wins, by the time the conflict is over it will be expensive for
both sides. They might even have to start paying their employees higher wages
to make up for the risk. Then both firms will be forced to raise their rates. If
they do, Murbard Ltd., an aggressive new firm which has been trying to get
established in the area, will undercut their prices and steal their customers.
There must be a better solution.
The man from Tannahelp suggests that the better solution is arbitration. They
will take the dispute over my television set to a reputable local arbitration firm. If
the arbitrator decides that Joe is innocent, Tannahelp agrees to pay Joe and Dawn
Defense an indemnity to make up for their time and trouble. If he is found guilty,
Dawn Defense will accept the verdict; since the television set is not Joe’s, they have
no obligation to protect him when the men from Tannahelp come to seize it.
What I have described is a very makeshift arrangement. In practice, once
anarcho-capitalist institutions were well established, protection agencies would
anticipate such difficulties and arrange contracts in advance, before specific
conflicts occurred, specifying the arbitrator who would settle them.
44 Anarchy and the Law

In such an anarchist society, who would make the laws? On what basis would
the private arbitrator decide what acts were criminal and what their punishments
should be? The answer is that systems of law would be produced for profit on
the open market, just as books and bras are produced today. There could be
competition among different brands of law, just as there is competition among
different brands of cars.
In such a society there might be many courts and even many legal systems.
Each pair of protection agencies agrees in advance on which court they will use
in case of conflict. Thus the laws under which a particular case is decided are
determined implicitly by advance agreement between the protection agencies
whose customers are involved. In principle, there could be a different court and
a different set of laws for every pair of protection agencies. In practice, many
agencies would probably find it convenient to patronize the same courts, and
many courts might find it convenient to adopt identical, or nearly identical,
systems of law in order to simplify matters for their customers.
Before labeling a society in which different people are under different laws
chaotic and unjust, remember that in our society the law under which you are
judged depends on the country, state, and even city in which you happen to be.
Under the arrangements I am describing, it depends instead on your protective
agency and the agency of the person you accuse of a crime or who accuses
you of a crime.
In such a society law is produced on the market. A court supports itself by
charging for the service of arbitrating disputes. Its success depends on its reputa-
tion for honesty, reliability, and promptness and on the desirability to potential
customers of the particular set of laws it judges by. The immediate customers
are protection agencies. But the protection agency is itself selling a product to
its customers. Part of that product is the legal system, or systems, of the courts
it patronizes and under which its customers will consequently be judged. Each
protection agency will try to patronize those courts under whose legal system
its customers would like to live.
Consider, as a particular example, the issue of capital punishment. Some
people might feel that the risk to themselves of being convicted, correctly or
incorrectly, and executed for a capital crime outweighed any possible advan-
tages of capital punishment. They would prefer, where possible, to patronize
protection agencies that patronized courts that did not give capital punishment.
Other citizens might feel that they would be safer from potential murderers if
it were known that anyone who murdered them would end up in the electric
chair. They might consider that safety more important than the risk of ending
up in the electric chair themselves or of being responsible for the death of an
innocent accused of murder. They would, if possible, patronize agencies that
patronized courts that did give capital punishment.
If one position or the other is almost universal, it may pay all protection
agencies to use courts of the one sort or the other. If some people feel one way
 The Machinery of Freedom: Guide to a Radical Capitalism (excerpt) 45

and some the other, and if their feelings are strong enough to affect their choice
of protection agencies, it pays some agencies to adopt a policy of guarantee-
ing, whenever possible, to use courts that do not recognize capital punishment.
They can then attract anti-capital-punishment customers. Other agencies do
the opposite.
Disputes between two anti-capital-punishment agencies will, of course, go to
an anti-capital-punishment court; disputes between two pro-capital-punishment
agencies will go to a pro-capital-punishment court. What would happen in a
dispute between an anti-capital-punishment agency and a pro-capital-punish-
ment agency? Obviously there is no way that if I kill you the case goes to one
court, but if you are killed by me it goes to another. We cannot each get exactly
the law we want.
We can each have our preferences reflected in the bargaining demands
of our respective agencies. If the opponents of capital punishment feel more
strongly than the proponents, the agencies will agree to no capital punishment;
in exchange, the agencies that want capital punishment will get something else.
Perhaps it will be agreed that they will not pay court costs or that some other
disputed question will go their way.
One can imagine an idealized bargaining process, for this or any other dis-
pute, as follows: Two agencies are negotiating whether to recognize a pro- or
anti-capital-punishment court. The pro agency calculates that getting a pro-
capital-punishment court will be worth $20,000 a year to its customers; that is
the additional amount it can get for its services if they include a guarantee of
capital punishment in case of disputes with the other agency. The anti-capital-
punishment agency calculates a corresponding figure of $40,000. It offers the
pro agency $30,000 a year in exchange for accepting an anti-capital-punishment
court. The pro agency accepts. Now the anti-capital-punishment agency can
raise its rates enough to bring in an extra $35,000. Its customers are happy, since
the guarantee of no capital punishment is worth more than that. The agency is
happy; it is getting an extra $5,000 a year profit. The pro agency cuts its rates
by an amount that costs it $25,000 a year. This lets it keep its customers and
even get more, since the savings is more than enough to make up to them for
not getting the court of their choice. It, too, is making $5,000 a year profit on
the transaction. As in any good trade, everyone gains.
If you find this confusing, it may be worth the trouble of going over it again;
the basic principle of such negotiation will become important later when I discuss
what sort of law an anarcho-capitalist society is likely to have.
If, by some chance, the customers of the two agencies feel equally strongly,
perhaps two courts will be chosen, one of each kind, and cases allocated ran-
domly between them. In any case, the customer’s legal preference, his opinion
as to what sort of law he wishes to live under, will have been a major factor in
determining the kind of law he does live under. It cannot completely determine
it, since accused and accuser must have the same law.
46 Anarchy and the Law

In the case of capital punishment, the two positions are directly opposed.
Another possibility is that certain customers may want specialized law, suited
to their special circumstances. People living in desert areas might want a system
of law that very clearly defines property rights in water. People in other areas
would find such detailed treatment of this problem superfluous at best. At worst,
it might be the source of annoying nuisance suits. Thus the desert people might
all patronize one protection agency, which had a policy of always going to a
court with well-developed water law. Other agencies would agree to use that
court in disputes with that agency but use other courts among themselves.
Most differences among courts would probably be more subtle. People
would find that the decisions of one court were prompter or easier to predict
than those of another or that the customers of one protection agency were better
protected than those of another. The protection agencies, trying to build their
own reputations, would search for the “best” courts.
Several objections may be raised to such free-market courts. The first is that
they would sell justice by deciding in favor of the highest bidder. That would be
suicidal; unless they maintained a reputation for honesty, they would have no
customers—unlike our present judges. Another objection is that it is the busi-
ness of courts and legislatures to discover laws, not create them; there cannot
be two competing laws of gravity, so why should there be two competing laws
of property? But there can be two competing theories about the law of gravity
or the proper definition of property rights. Discovery is as much a productive
activity as creation. If it is obvious what the correct law is, what rules of human
interaction follow from the nature of man, then all courts will agree, just as all
architects agree about the laws of physics. If it is not obvious, the market will
generate research intended to discover correct laws.
Another objection is that a society of many different legal systems would be
confusing. If this is found to be a serious problem, courts will have an economic
incentive to adopt uniform law, just as paper companies have an incentive to
produce standardized sizes of paper. New law will be introduced only when the
innovator believes that its advantages outweigh the advantages of uniformity.
The most serious objection to free-market law is that plaintiff and defendant
may not be able to agree on a common court. Obviously, a murderer would
prefer a lenient judge. If the court were actually chosen by the disputants after
the crime occurred, this might be an insuperable difficulty. Under the arrange-
ments I have described, the court is chosen in advance by the protection agencies.
There would hardly be enough murderers at any one time to support their own
protective agency, one with a policy of patronizing courts that did not regard
murder as a crime. Even if there were, no other protective agency would accept
such courts. The murderers’ agency would either accept a reasonable court or
fight a hopeless war against the rest of society.
Until he is actually accused of a crime, everyone wants laws that protect him
from crime and let him interact peacefully and productively with others. Even
 The Machinery of Freedom: Guide to a Radical Capitalism (excerpt) 47

criminals. Not many murderers would wish to live under laws that permitted
them to kill—and be killed.
The Stability Problem
Anyone with a little imagination can dream up a radical new structure for
society, anarcho-capitalist or otherwise. The question is, will it work? Most
people, when they hear my description of anarcho-capitalism for the first time,
immediately explain to me two or three reasons why it won’t. Most of their argu-
ments can be reduced to two: The system will be at the mercy of the mafia, which
can establish its own “protection agency” or take over existing ones and convert
them into protection rackets. Or else the protection agencies will realize that theft
is more profitable than business, get together, and become a government.
The main defensive weapon of organized crime is bribery. It works because
policemen have no real stake in doing their job well and their “customers”
have no standard of comparison to tell them if they are getting their money’s
worth. What is the cost to the chief of a police department of letting his men
accept bribes to permit crime? In most cases, nothing. The higher crime rate
might even persuade the voters to vote more money and higher salaries to the
police department.
If the employees of a private protection agency accept such bribes, the situa-
tion is rather different. The worse the job the protection agency does, the lower
the fee it can charge. If the customers of one agency find they lose, on aver-
age, ten dollars a year more to thieves than the customers of another, they will
continue to do business with the inferior agency only if it is at least ten dollars
a year cheaper. So every dollar stolen from the customer comes, indirectly, out
of the revenue of the protection agency. If the agency is one that guarantees
performance by insuring its customers against losses, the connection is more
direct. Either way, it is very much in the interest of the men running a protec-
tion agency to see that their employees do not take bribes. The only bribe it
would pay the agency to take would be one for more than the value of the goods
stolen—a poor deal for the thief.
This does not mean that employees of protection agencies will never take
bribes. The interests of the employee and of the agency are not identical. It
does mean that the men running the agencies will do their best to keep their
men honest. That is more than you can say for a police force. Organized crime,
if it continues to exist under anarcho-capitalism, should be in a much weaker
position than it now is. In addition, as I shall argue later, most of the things that
organized crime now makes money on would be legal in an anarcho-capitalist
society. Thus both its size and its popularity would be greatly reduced.
What about the possibility of the mafia getting its own protection agency?
In order for such a firm to provide its clients with the service they want—pro-
tection against the consequences of their crimes—it must either get the other
protection agencies to agree to arbitration by a court that approves of crime or
48 Anarchy and the Law

refuse to go to arbitration at all. In order to do the first, it must offer the other
agencies terms so good that their customers are willing to be stolen from; as
in the previous case, this reduces to the thief bribing the victim by more than
the amount stolen, which is improbable. If it refuses to accept arbitration, then
the mafia’s protection agency finds itself constantly in conflict with the other
protection agencies. The victims of theft will be willing to pay more to be
protected than the thieves will pay to be able to steal (since stolen goods are
worth less to the thief than to the victim). Therefore the noncriminal protection
agencies will find it profitable to spend more to defeat the criminal agency than
the criminal agency could spend to defeat them. In effect, the criminals fight a
hopeless war with the rest of society and are destroyed.
Another and related argument against anarcho-capitalism is that the “stron-
gest” protection agency will always win, the big fish will eat the little fish,
and the justice you get will depend on the military strength of the agency you
patronize.
This is a fine description of governments, but protection agencies are not
territorial sovereigns. An agency which settles its disputes on the battlefield
has already lost, however many battles it wins. Battles are expensive—also
dangerous for clients whose front yards get turned into free-fire zones. The
clients will find a less flamboyant protector.
No clients means no money to pay the troops. Perhaps the best way to see
why anarcho-capitalism would be so much more peaceful than our present
system is by analogy. Consider our world as it would be is the cost of mov-
ing from one country to another were zero. Everyone lives in a housetrailer
and speaks the same language. One day, the president of France announces
that because of troubles with neighboring countries, new military taxes
are being levied and conscription will begin shortly. The next morning the
president of France finds himself ruling a peaceful but empty landscape, the
population having been reduced to himself, three generals, and twenty-seven
war correspondents.
We do not all live in housetrailers. But if we buy our protection from a pri-
vate firm instead of from a government, we can buy it from a different firm as
soon as we think we can get a better deal. We can change protectors without
changing countries.
The risk of private protection agencies throwing their weight—and lead—
around is not great, provided there are lots of them. Which brings us to the
second and far more serious argument against anarcho-capitalism.
The protection agencies will have a large fraction of the armed might of the
society. What can prevent them from getting together and using that might to
set themselves up as a government?
In some ultimate sense, nothing can prevent that save a populace possessing
arms and willing, if necessary, to use them. That is one reason I am against
gun-control legislation.
 The Machinery of Freedom: Guide to a Radical Capitalism (excerpt) 49

But there are safeguards less ultimate than armed resistance. After all, our
present police departments, national guard, and armed forces already possess
most of the armed might. Why have they not combined to run the country for
their own benefit? Neither soldiers nor policemen are especially well paid;
surely they could impose a better settlement at gunpoint.
The complete answer to that question comprises nearly the whole of politi-
cal science. A brief answer is that people act according to what they perceive
as right, proper, and practical. The restraints which prevent a military coup are
essentially restraints interior to the men with guns.
We must ask, not whether an anarcho-capitalist society would be safe from
a power grab by the men with the guns (safety is not an available option), but
whether it would be safer than our society is from a comparable seizure of
power by the men with the guns. I think the answer is yes. In our society, the
men who must engineer such a coup are politicians, military officers, and
policemen, men selected precisely for the characteristic of desiring power
and being good at using it. They are men who already believe that they have
a right to push other men around—that is their job. They are particularly well
qualified for the job of seizing power. Under anarcho-capitalism the men in
control of protection agencies are selected for their ability to run an efficient
business and please their customers. It is always possible that some will turn
out to be secret power freaks as well, but it is surely less likely than under
our system where the corresponding jobs are labeled “non-power freaks need
not apply.”
In addition to the temperament of potential conspirators, there is another
relevant factor: the number of protection agencies. If there are only two or
three agencies in the entire area now covered by the United States, a conspiracy
among them may be practical. If there are 10,000 then when any group of them
start acting like a government, their customers will hire someone else to protect
them against their protectors.
How many agencies there are depends on what size agency does the most
efficient job of protecting its clients. My own guess is that the number will be
nearer 10,000 than 3. If the performance of present-day police forces is any
indication, a protection agency protecting as many as one million people is far
above optimum size.
My conclusion is one of guarded optimism. Once anarcho-capitalist institu-
tions are established with widespread acceptance over a large area, they should
be reasonably stable against internal threats.
Are such institutions truly anarchist? Are the private protection agencies I
have described actually governments in disguise? No. Under my definition of
government—which comes closer than any other, I think, to describing why
people call some things governments and not others—they are not governments!
They have no rights which individuals do not have, and they therefore cannot
engage in legitimized coercion.
50 Anarchy and the Law

Most people, myself included, believe that an individual has the right to use
force to prevent another from violating his rights—stealing from him, say, or
murdering him. Most agree that the victim has a right to take back what the
thief has stolen and to use force to do so. Social contract theories start from
the premise that individuals have these rights and delegate them to the govern-
ment. In order for such a government to be legitimate, it must be established
by unanimous consent, otherwise it has no special rights over those who refuse
to sign the “social contract.” Under a system of private protection agencies,
the actual agencies, like the ideal government, are merely acting as agents for
willing clients who have employed the agencies to enforce their own rights.
They claim no rights over non-clients other than the right to defend their clients
against coercion—the same right every individual has. They do nothing that a
private individual cannot do.
This does not mean that they will never coerce anyone. A protection agency,
like a government, can make a mistake and arrest the wrong man. In exactly
the same way, a private citizen can shoot at what he thinks is a prowler and
bag the postman instead.
In each case, coercion occurs, but it occurs by accident and the coercer is
liable for the consequences of his acts. The citizen can be indicted for post-
man-slaughter and the protection agency sued for false arrest. Once the facts
that make an act coercive are known, it is no longer regarded as having been
legitimate.
This is not true of government actions. In order to sue a policeman for false
arrest I must prove not merely that I was innocent but that the policeman had
no reason to suspect me. If I am locked up for twenty years and then proven
innocent, I have no legal claim against the government for my lost time and
mental anguish. It is recognized that the government made a mistake, but the
government is allowed to make mistakes and need not pay for them like the
rest of us. If, knowing that I am innocent, I try to escape arrest and a policeman
shoots me down, he is entirely within his rights and I am the criminal. If, to
keep him from, shooting me, I shoot him in self-defense, I am guilty of murder,
even after it is proved that I was innocent of the theft and so doing no more than
defending myself against the government’s (unintentional) coercion.
This difference between the rights claimed by a private protection agency
and those claimed by a government affects more than the semantic question
of what is or is not anarchy. It is one of the crucial reasons why a government,
however limited, can more easily grow into a tyranny than can a system of
private protection agencies. Even the most limited government has the sort of
special rights I have described; everything I said in the previous paragraph was
true of this country in its earliest and (for white males) freest days.
Such special rights allow a government to kill off its opponents and then
apologize for the mistake. Unless the evidence of criminal intent is very clear,
the murderers are immune from punishment. Even when the evidence is over-
 The Machinery of Freedom: Guide to a Radical Capitalism (excerpt) 51

whelming, as in the case of the 1969 Chicago Black Panther raid, there is no
question of trying those responsible for their actual crime. The Cook County
state attorney responsible for the raid, in which two men were killed, and the
police officers who executed it, were eventually charged not with conspiracy
to commit murder but with obstruction of justice—not, in other words, with
killing people but with lying about it afterwards.
This is not an isolated instance of the miscarriage of justice; it is the inevi-
table result of a system under which the government has certain special rights,
above and beyond the rights of ordinary individuals—among them the right
not to be held responsible for its mistakes. When these rights are taken away,
when the agent of government is reduced to the status of a private citizen and
has the same rights and responsibilities as his neighbors, what remains is no
longer a government.
…a policeman…is protected by the legislative and judicial arms in the peculiar
rights and prerogatives that go with his high office, including especially the right to
judge the laity at his will, to sweat and mug them, and to subdue their resistance by
beating out their brains.—H.L. Mencken, Prejudices

(State attorney Hanrahan and his codefendants were eventually acquitted,

but in 1982, thirteen years after the raid, a civil case by the survivors and the
mothers of the two men who were killed was settled for $1.85 million, paid by
the city, county, and federal governments.)

Is Anarcho-Capitalism Libertarian?
A man who wants protection will fire patrolmen who waste their time
harassing minorities… No private policeman has ever spent many hours
at a restroom peephole in hopes of apprehending deviates.
—William Woodldridge

I have described how a private system of courts and police might function,
but not the laws it would produce and enforce; I have discussed institutions, not
results. That is why I have used the term anarcho-capitalist, which describes
the institutions, rather than libertarian. Whether these institutions will produce
a libertarian society—a society in which each person is free to do as he likes
with himself and his property as long as he does not use either to initiate force
against others—remains to be proven.
Under some circumstances they will not. If almost everyone believes strongly
that heroin addiction is so horrible that it should not be permitted anywhere
under any circumstances, anarcho-capitalist institutions will produce laws
against heroin. Laws are being produced for a market, and that is what the
market wants.
But market demands are in dollars, not votes. The legality of heroin will be
determined, not by how many are for or against but by how high a cost each
side is willing to bear in order to get its way. People who want to control other
people’s lives are rarely eager to pay for the privilege; they usually expect to
52 Anarchy and the Law

be paid for the “services” they provide for their victims. And those on the re-
ceiving end—whether of laws against drugs, laws against pornography, or laws
against sex—get a lot more pain out of the oppression than their oppressors
get pleasure. They are willing to pay a much higher price to be left alone than
anyone is willing to pay to push them around. For that reason the laws of an
anarcho-capitalist society should be heavily biased toward freedom.
So compulsory Puritanism—“crimes without victims”—should be much
rarer under anarcho-capitalism than under political institutions. We can get
some idea of how rare by considering the costs such laws now impose on their
victims and the value of such laws to their supporters. If the value of a law to
its supporters is less than its cost to its victims, that law, by the logic of the
previous chapter, will not survive in an anarcho-capitalist society.
Heroin addicts pay over $2 billion a year for heroin. If heroin were legal, its
cost would be very low. Almost all of the $2 billion now spent for heroin is the
cost of the law, not the habit; addicts bear additional costs in prison sentences,
overdoses caused by the poor quality control typical of illegal products, and
other side effects of the laws against heroin. Heroin addicts would therefore
be willing, if necessary, to bear a cost of $2 billion or more in order to have the
drug legal. It would cost the nonaddicts about ten dollars per capita or forty
dollars per family, per year, to match that.
If the choice had to be made on an all-or-nothing basis, public opinion is
probably so strongly against heroin that people would be willing to bear that
cost. But one of the advantages of a market system of laws is its ability to tai-
lor its product to its customers geographically, as well as in other ways. If the
maximum return comes from having heroin illegal in some places and legal in
others, that is what will happen.
Most of the population lives in areas where there are very few heroin addicts.
For those people the cost of having heroin made illegal locally would be very
small; there would be no one on the other side bidding to have it legal, except
perhaps a few New York addicts who wanted to vacation away from the big
city and bring their habit with them. In those areas protection agencies would
accept arbitration agencies that viewed using or selling heroin as a crime. But
people in those areas would have little to gain by paying a much higher price
to have heroin illegal in New York as well.
That leaves 8 million New York nonaddicts bidding against 100,000 New
York addicts, raising the cost to the nonaddicts of keeping heroin illegal in
New York to over $100 a year per person. I predict that, if anarcho-capitalist
institutions appeared in this country tomorrow, heroin would be legal in New
York and illegal in most other places. Marijuana would be legal over most of
the country.
By now the reader may be getting confused. This is natural enough; I am
describing lawmaking in economic terms, and you are used to thinking of it in
political terms. When I talk of bidding for one law or another, I do not mean
 The Machinery of Freedom: Guide to a Radical Capitalism (excerpt) 53

that we will have a legislature that literally auctions off laws. I mean that each
person’s desire for the kinds of laws he believes in will be reflected in the dif-
ferent rates he is willing to pay his protection agency according to how good a
job it does of getting him the law he wants. This set of “demands” for laws will
be reconciled through the sort of bargaining described in the previous chapter.
The process is analogous to the way you and I “bid” to have a piece of private
land used the way we want it used. Our demands—for the food that can be
grown on it, the buildings that can be built on it, possible recreational uses, or
whatever—determine how it eventually gets used.
What I have been saying is that, just as the market allocates resources to
producing illegal drugs in response to the demands of those who want to use
them, it would make use of those drugs legal in response to the same demand.
The obvious question is why the same argument does not hold for making
murder legal. The answer is that murder hurts someone, and it is worth much
more to the victim not to be shot than to the murderer to shoot him. There is
a market demand from me for a law saying that you cannot kill me. “Crimes
without victims” do not hurt anyone, except in the vague sense of arousing
moral indignation in people upset over their neighbors’ sins. There is little
market demand for laws against them.
The same geographical effect that I described for drug laws would apply to
other laws as well. Under present institutions the areas over which laws apply
are determined by historical accident. If a majority of the population of a state
supports one kind of law, everyone in the state gets it. Under anarcho-capitalism,
insofar as it would be possible, everyone would have his own law. Diversity of
law cannot be unlimited, since the same law must cover both parties to a dispute.
But it is possible to have much more diversity than our present system allows.
Where the majority and minority, or minorities, are geographically separate, the
majority is mainly concerned with having the laws it wants for itself; it is only
our political system that imposes those laws on the minority as well.
At this point in the argument, the question of poor people is often raised.
Since dollars vote, won’t the poor lose out?
Yes and no. The more money you are willing to spend for protection, the
better quality you can get and the better you will be able to get the details of
law the way you want them. This is notoriously true now. Our political system
of police and courts provides much better service to those with higher incomes.
Here, as elsewhere, although the market will not bring equality, it will greatly
improve the position of the poor.
Why? Because the market allows people to concentrate their resources on
what is most important to them. I discussed this point earlier, in the context of
the poor man buying a necessity outbidding the rich man who wants the same
good for a luxury. Protection from crime is not a luxury.
Currently, government expenditures on police and courts run about forty
dollars a year per capita. According to Friedman’s law, that means that private
54 Anarchy and the Law

protection of the same average quality would cost about twenty dollars. There
are many inhabitants of the ghetto who would be delighted to pay twenty dol-
lars a year if in exchange they actually got protection; many of them have more
than that stolen every year as a result of the lousy protection they get from our
government-run protection system. They would be even happier if at the same
time they were relieved of the taxes that pay for the protection that the govern-
ment police do not give them.
In spite of popular myths about capitalism oppressing the poor, the poor
are worst off in those things provided by government, such as schooling, po-
lice protection, and justice. There are more good cars in the ghetto than good
schools. Putting protection on the market would mean better protection for the
poor, not worse.
And, as a Free Bonus
If I was running for office, I’d change me name, and have printed on me
cards: “Give him a chanst; he can’t be worse.”—Mr. Doodley

A system of private courts and police has certain special advantages over
our present government system, advantages associated with the political is-
sues of freedom and stability discussed in the previous two chapters. Private
courts and police have, in addition, the same advantages over the corresponding
government institutions that market arrangements usually have over socialist
arrangements.
When a consumer buys a product on the market, he can compare alterna-
tive brands. In the case of protection, he can compare how good a job different
agencies do and their prices. His information is imperfect, as it is in making
most decisions; he may make a mistake. But at least alternatives exist; they
are there to be looked at. He can talk with neighbors who patronize different
protection agencies, examine the contracts and rates they offer, study figures
on the crime rates among their customers.
When you elect a politician, you buy nothing but promises. You may know
how one politician ran the country for the past four years, but not how his com-
petitor might have run it. You can compare 1968 Fords, Chryslers, and Volkswa-
gens, but nobody will ever be able to compare the Nixon administration of 1968
with the Humphrey and Wallace administrations of the same year. It is as if we
had only Fords from 1920 to 1928, Chryslers from 1928 to 1936, and then had
to decide what firm would make a better car for the next four years. Perhaps an
expert automotive engineer could make an educated guess as to whether Ford
had used the technology of 1920 to satisfy the demands of 1920 better than
Chrysler had used the technology of 1928 to satisfy the demands of 1928. The
rest of us might just as well flip a coin. If you throw in Volkswagen or American
Motors, which had not made any cars in America but wanted to, the situation
becomes still worse. Each of us would have to know every firm intimately in
order to have any reasonable basis for deciding which we preferred.
 The Machinery of Freedom: Guide to a Radical Capitalism (excerpt) 55

In the same way, in order to judge a politician who has held office, one
must consider not only how his administration turned out but the influence of
a multitude of relevant factors over which he had no control, ranging from the
makeup of Congress to the weather at harvest time. Judging politicians who
have not yet held office is still more difficult.
Not only does a consumer have better information than a voter, it is of more
use to him. If I investigate alternative brands of cars or protection, decide which
is best for me, and buy it, I get it. If I investigate alternative politicians and vote
accordingly, I get what the majority votes for. The chance that my vote will be
the deciding factor is negligible.
Imagine buying cars the way we buy governments. Ten thousand people
would get together and agree to vote, each for the car he preferred. Whichever
car won, each of the ten thousand would have to buy it. It would not pay any of
us to make any serious effort to find out which car was best; whatever I decide,
my car is being picked for me by the other members of the group. Under such
institutions, the quality of cars would quickly decline.
That is how I must buy products on the political marketplace. I not only
cannot compare the alternative products; it would not be worth my while to do
so even if I could. This may have something to do with the quality of the goods
sold on that market. Caveat emptor.
Socialism, Limited Government, Anarchy, and Bikinis
Most varieties of socialism implicitly assume unanimous agreement on goals.
Everyone works for the glory of the nation, the common good, or whatever,
and everyone agrees, at least in some general sense, on what that goal means.
The economic problem, traditionally defined as the problem of allocating
limited resources to diverse ends, does not exist; economics is reduced to the
“engineering” problem of how best to use the available resources to achieve
the common end. The organization of a capitalist society implicitly assumes
that different people have different ends and that the institutions of the society
must allow for that difference.
This is one of the things behind the socialist claim that capitalism emphasizes
competition whereas socialism emphasizes cooperation; it is one of the reasons
why socialism seems, in the abstract, to be such an attractive system. If we all
have different ends, we are, in a certain sense, in conflict with each other; each
of us wishes to have the limited resources available used for his ends. The in-
stitution of private property allows for cooperation within that competition; we
trade with each other in order that each may best use his resources to his ends,
but the fundamental conflict of ends remains. Does this mean that socialism
is better? No more than the desirability of sunny weather means that women
should always wear bikinis or that men should never carry umbrellas.
There is a difference between what institutions allow and what they require.
If in a capitalist society everyone is convinced of the desirability of one common
56 Anarchy and the Law

goal, there is nothing in the structure of capitalist institutions to prevent them

from cooperating to attain it. Capitalism allows for a conflict of ends; it does
not require it. Socialism does not allow for it. This does not mean that if we set
up socialist institutions everyone will instantly have the same ends.
The experiment has been tried; they do not. It means rather that a socialist
society will work only if people do have the same ends. If they do not it will
collapse or, worse, develop, as did the Soviet Union, into a monstrous parody
of socialist ideals. The experiment has been done many times on a more modest
scale in this country. Communes that survive start with a common end, whether
provided by a strong religion or a charismatic leader. Others do not.
I have encountered precisely the same error among libertarians who prefer
limited government to anarcho-capitalism. Limited government, they say, can
guarantee uniform justice based on objective principles. Under anarcho-capital-
ism, the law varies from place to place and person to person, according to the
irrational desires and beliefs of the different customers that different protection
and arbitration agencies must serve.
This argument assumes that the limited government is set up by a population
most or all of whose members believe in the same just principles of law. Given
such a population, anarcho-capitalism will produce that same uniform, just law;
there will be no market for any other. But just as capitalism can accommodate
to a diversity of individual ends, so anarcho-capitalism can accommodate to a
diversity of individual judgments about justice.
An ideal objectivist society with a limited government is superior to an
anarcho-capitalist society in precisely the same sense that an ideal socialist
society is superior to a capitalist society. Socialism does better with perfect
people than capitalism does with imperfect people; limited government does
better with perfect people than anarcho-capitalism with imperfect. And it is
better to wear a bikini with the sun shining than a raincoat when it is raining.
That is no argument against carrying an umbrella.
 4
Market for Liberty (excerpt)
Morris and Linda Tannehill
Throughout history, the means of dealing with aggression (crime) has been
punishment. Traditionally, it has been held that when a man commits a crime
against society, the government, acting as the agent of society, must punish him.
However, because punishment has not been based on the principle of righting
the wrong but only of causing the criminal “to undergo pain, loss, or suffering,”
it has actually been revenge. This principle of vengeance is expressed by the old
saying, “An eye for an eye, a tooth for a tooth,” which means: “When you destroy
a value of mine, I’ll destroy a value of yours.” Present day penology no longer
makes such demands; instead of the eye or the tooth, it takes the criminal’s life
(via execution), or a part of his life (via imprisonment), and/or his possessions
(via fines). As can be readily seen, the principle—vengeance—is the same,
and it inevitably results in a compound loss of value, first the victim’s, then the
criminal’s. Because destroying a value belonging to the criminal does nothing to
compensate the innocent victim for his loss but only causes further destruction,
the principle of vengeance ignores, and in fact opposes, justice.
When an aggressor causes the loss, damage, or destruction of an innocent
man’s values, justice demands that the aggressor pay for his crime, not by forfeit-
ing a part of his life to “society,” but by repaying the victim for his loss, plus all
expenses directly occasioned by the aggression (such as the expense of apprehend-
ing the aggressor). By destroying the victim’s values, the aggressor has created
a debt which he owes to the victim and which the principle of justice demands
must be paid. With the principle of justice in operation, there is only one loss of
value; and, while this loss must initially be sustained by the victim, ultimately it
is the aggressor—the one who caused the loss—who must pay for it.
There is a further fallacy in the belief that when a man commits a crime
against society, the government, acting as the agent of society, must punish him.
This fallacy is the assumption that society is a living entity and that, therefore,
a crime can be committed against it. A society is no more than the sum of all
the individual persons of which it is composed: it can have no existence apart
from, or in contradistinction to, those individual persons. A crime is always
committed against one or more persons; a crime cannot be committed against
that amorphous non-entity known as “society.” Even if some particular crime

57
58 Anarchy and the Law

injured every member of a given society, the crime would still have been com-
mitted against individuals, not society, since it is only the individuals who are
distinct, separate, independent, living entities. Since a crime can only be com-
mitted against individuals, a criminal cannot be rationally regarded as “owing
a debt to society”; nor can he “pay his debt to society”: the only debt he owes
is to the injured individual(s).
Every dispute is between aggressor(s) and victim(s): neither society nor its
members as a group have any direct interest in the matter. It is true that all hon-
est members of a society have a general interest in seeing aggressors brought
to justice in order to discourage further aggression. This interest, however,
applies not to specific acts of aggression but to the total social structure which
either encourages or discourages acts of aggression. An interest in maintaining
a just social structure does not constitute a direct interest in the solution of any
particular dispute involving aggression.
Because crimes cannot be committed against society, it is fallacious to re-
gard government as an agent of society for the punishment of crime. Nor can
government be considered be the agent of the individual members of society,
since these individuals have never signed a contract naming the government as
their agent. There is, therefore, no valid reason for government officials to be
designated the arbiters of disputes and rectifiers of injustice.
Granted, we are used to the governmental punishment-of-crime, so that to many
people it seems “normal” and “reasonable,” and any other means of dealing with
aggression seems suspicious and strange; but an unbiased examination of the facts
shows that this governmental system is actually traditional rather than rational.
Since neither “society” nor government can have any rational interest in
bringing a specific aggressor to justice, who is interested? Obviously, the vic-
tim—and secondarily, those to whom the victim’s welfare is a value, such as his
family, friends, and business associates. According to the principle of justice,
those who have suffered the loss from an aggressive act should be compensated
(at the aggressor’s expense), and, therefore, it is those who have suffered the
loss who have an interest in seeing the aggressor brought to justice.
The steps which the victim may morally take to bring the aggressor to
justice and exact reparations from him rest on the right to property, which, in
turn, rests on the right to life. A man’s property is his property, and this fact
of ownership is not changed if the property comes into the possession of an
aggressor by means of an act of force. The aggressor may be in possession of
the property, but only the owner has a moral right to it. To illustrate: Suppose
that as you come out of a building you see a stranger in the driver’s seat of
your car, preparing to drive it away. Would you have the moral right to push
him out and thus regain possession of your car by force? Yes, since the thief’s
temporary possession does not alter the fact that it is your property. The thief
used a substitute for initiated force when he attempted to steal your car, and
you are morally justified in using retaliatory force to regain it.
 Market for Liberty (excerpt) 59

Suppose that instead of catching the thief immediately you are forced to chase
him and your car for two blocks and only catch up with him as he’s stopped by a
train. Do you still have the right to push him out and regain your car? Yes, since
the passage of time does not erode your right to possess your property.
Suppose instead that the thief gets away, but that two months later you spot
him downtown getting out of your car. You verify by serial number that it is,
indeed, your car. Do you have the moral right to drive it away? Yes; again the
passage of time makes no difference to your property rights.
Suppose that instead of yourself it is the detective you have hired to recover
the car who spots the thief getting out of it. The detective, acting as your agent,
has the right to repossess your car, just as you would.
You find that a front fender and headlight of your car are smashed in, due to
the aggressor’s careless driving. Repairs cost you $150. Do you have the right
to collect this amount from the aggressor? Yes, you were the innocent victim
of an act of aggression; it is the thief, not the victim, who is morally obligated
to pay all costs occasioned by his aggression.
To summarize: the ownership of property is not changed if the property is
stolen, nor is it eroded by the passage of time. The theft, damage, or destruction
of another person’s property constitutes an act of coercion, and the victim has
a moral right to use retaliatory force to repossess his property. He also has a
right to collect from the aggressor compensation for any costs occasioned by
the aggression. If he wishes, the victim may hire an agent or agents to perform
any of these actions in his place.
It should be noted that aggression often harms not only the victim but also
those who are closely associated with him. For example, when a man is as-
saulted and seriously injured, his family may be caused expense, as well as
anxiety. If he is a key man in his business, his employer or his partners and/or
his company may suffer financial loss. All this destruction of value is a direct
result of the irrational behavior of the aggressor and, since actions do have
consequences, the aggressor has the responsibility of making reparations for
these secondary losses, as well as for the primary loss suffered by the victim.
There are practical limits to the amount of these secondary reparations. First,
no one would bother to make such a claim unless the reparations he hoped to
be paid were substantial enough to offset the expense, time, and inconvenience
of making the claim. Second, the total amount of reparations which can be
collected is limited by the aggressor’s ability to pay, and first consideration
goes to the victim. For the sake of simplicity, only the victim’s loss will be
dealt with here, but all the principles and considerations which apply to him
apply as well to any others who have suffered a direct and serious loss as a
result of the aggression.
In the process of collecting from the aggressor, the victim (or his agents)
may not carelessly or viciously destroy values belonging to the aggressor or
take more from him than the original property (or an equivalent value) plus
60 Anarchy and the Law

costs occasioned by the aggression. If the victim does so, he puts himself in
debt to the aggressor (unless, of course, the aggressor has made the destruction
inevitable by refusing to give up the victim’s property without a fight).
If the accused aggressor claims he is innocent or that the amount of repara-
tions claimed by the victim is excessive, a situation of dispute exists between
them which may require arbitration. The conditions of such arbitration, the
forces impelling both parties to accept it as binding, and the market guarantees
of its justice will now be examined.
In a laissez-faire society, insurance companies would sell policies covering
the insured against loss of value by aggression (the cost of the policy based
on the worth of the values covered and the amount of risk). Since aggressors
would, in most instances, pay the major costs of their aggression, the insur-
ance companies would lose only when the aggressor could not be identified
and/or apprehended, when he died before making full reparations, or when the
reparations were too great for him to be able to pay in his lifetime. Since the
companies would recover most of their losses and since aggression would be
much less common in a free-market society, costs of aggression insurance would
be low, and almost all individuals could afford to be covered. For this reason,
we shall deal primarily with the case of an insured individual who becomes
the victim of aggression.
Upon suffering the aggression (assuming that immediate self-defense was
either impossible or inappropriate), the victim would, as soon as possible, call
his insurance company. The company would immediately send an investigator to
determine the validity of his claim and the extent of the loss. When the amount
was ascertained, the company would fully compensate the victim within the
limits of the terms of the insurance policy. It would also act where feasible to
minimize his inconvenience—e.g., lend him a car until his stolen one is recov-
ered or replaced—in order to promote customer good will and increase sales
(anyone ever heard of a government police department doing this?).
When the terms of the policy had been fulfilled, the insurance company,
exercising its right of subrogation, would attempt to identify and apprehend
the aggressor in order to recover its losses. At this point, the victim would be
relieved of any further responsibilities in the case, except possibly appearing
as a witness at any arbitration hearings.
If necessary, the insurance company would use detectives to apprehend the
aggressor. Whether it used its own company detectives or hired an independent
defense service would depend on which course was more feasible under the
circumstances. Obviously, a competitive private enterprise defense agency,
whether an auxiliary of a particular insurance company or an independent firm
hired by several insurance companies (as are some claims adjusting companies
today) would be far more efficient at the business of solving crimes and ap-
prehending aggressors than are the present governmental police departments.
In a free market, competition impels toward excellence.
 Market for Liberty (excerpt) 61

Upon apprehending the aggressor, the insurance company’s representatives

would present him with a bill covering all damages and costs. Their first ap-
proach would be as peaceful as the situation permitted, since force is a non-
productive expenditure of energy and resources and is, therefore, avoided by
the market whenever possible. First, the insurance company’s representatives
would attempt a voluntary settlement with the accused aggressor. If he was
obviously guilty and the amount of reparations requested was just, it would
be in his interest to agree to this settlement and avoid involving an arbitration
agency, since the cost of any arbitration would be added on to his bill if he lost
in his attempt to cheat justice.
If the accused aggressor claimed innocence or wished to contest the amount
of the bill and he and the insurance company’s representatives could come to
no agreement, the matter would have to be submitted to binding arbitration,
just as would a contractual dispute. Legislation forcing the parties to submit to
binding arbitration would be unnecessary, since each party would find arbitration
to be in his own self-interest. Nor would it be necessary to have legal protec-
tion for the rights of all involved, because the structure of the market situation
would protect them. For example, the insurance company would not dare to
bring charges against a man unless it had very good evidence of his guilt, nor
would it dare to ignore any request he made for arbitration. If the insurance
company blundered in this manner, the accused, especially if he were innocent,
could bring charges against the company, forcing it to drop its original charges
and/or billing it for damages. Nor could it refuse to submit to arbitration on his
charges against it, for it would do serious damage to its business reputation if it
did; and in a free-market context, in which economic success is dependent on
individual or corporate reputation, no company can afford to build a reputation
of carelessness, unreliability, and unfairness.
It is worthy of note here that the notion of always presuming a man innocent
until he is proved guilty by a jury trial can be irrational and sometimes down-
right ridiculous. For instance, when a man commits a political assassination in
plain sight of several million television viewers, many of whom can positively
identify him from the films of the incident, and is arrested on the spot with
the gun still in his hand, it is foolish to attempt to ignore the facts and pretend
he is innocent until a jury can rule on the matter. Though the burden of proof
always rests on the accuser and the accused must always be given the benefit
of the doubt, a man should be presumed neither innocent nor guilty until there
is sufficient evidence to make a clear decision, and when the evidence is in he
should be presumed to be whatever the facts indicate he is. An arbiter’s decision
is necessary only when the evidence is unclear and/or there is a dispute which
cannot be resolved without the help of an unbiased third party.
The accused aggressor would desire arbitration if he wanted to prove his in-
nocence or felt that he was being overcharged for his aggression, since without
arbitration the charges against him would stand as made and he would have to
62 Anarchy and the Law

pay the bill. By means of arbitration, he could prove his innocence and thus
avoid paying reparations or if guilty he would have some say about the amount
of reparations.
If innocent, he would be especially eager for arbitration, not only to confirm
his good reputation, but to collect damages from the insurance company for the
trouble it had caused him (and thereby rectify the injustice against him).
A further guarantee against the possibility of an innocent man being rail-
roaded is that every individual connected with his case would be fully responsible
for his own actions, and none could hide behind legal immunity as do govern-
mental police and jailers. If you knew that a prisoner put into your custody to
work off his debt could, if innocent, demand and get reparations from you for
holding him against his will, you would be very reluctant to accept any prison-
ers without being fully satisfied as to their guilt.
Thus, the unhampered market would, in this area as in any other, set up a
situation in which irrationality and injustice were automatically discouraged
and penalized without any resort to statutory law and government.
The insurance company and the accused aggressor, as disputing parties,
would mutually choose an arbitration agency (or agencies, in case they wished
to provide for an appeal) and contractually bind themselves to abide by its deci-
sion. In the event they were unable to agree on a single arbitration agency, each
could designate his own agency preference and the two agencies would hear
the case jointly, with the prior provision that if they disagreed on the decision
they would submit the case to a third agency previously selected by both for
final arbitration. Such a course might be more expensive.
The insurance company could order its defense agency to incarcerate the
accused aggressor before and during arbitration (which would probably be
only a matter of a few days, since the market is always more efficient than the
bumbling government), but in doing so they would have to take two factors
into consideration. First, if the accused were shown to be innocent, the insur-
ance company and defense agency would owe him reparations for holding
him against his will. Even if he were judged guilty, they would be responsible
to make reparations if they had treated him with force in excess of what the
situation warranted; not being government agents, they would have no legal
immunity from the consequences of their actions. Second, holding a man is
expensive—it requires room, board, and guards. For these reasons, the defense
company would put the accused aggressor under no more restraint than was
deemed necessary to keep him from running off and hiding.
It would be the job of the arbitration agency to ascertain the guilt or innocence
of the accused and to determine the amount of reparations due. In settling the
reparations payment, the arbiters would operate according to the principle that
justice in a case of aggression consists of requiring the aggressor to compen-
sate the victim for his loss insofar as is humanly possible. Since each case of
aggression is unique—involving different people, actions, and circumstances,
 Market for Liberty (excerpt) 63

reparations payments would be based on the circumstances of each case, rather

than on statutory law and legal precedent. Although cases of aggression vary
widely, there are several expense factors which, in varying combinations, de-
termine the amount of loss and, thus, the size of the reparations.
A basic expense factor is the cost of any property stolen, damaged, or de-
stroyed. The aggressor would be required to return any stolen property still
in his possession. If he had destroyed a replaceable item, such as a television
set, he would have to pay the victim an amount of money equal to its value so
that the victim could replace it. If the aggressor had destroyed an item which
couldn’t be replaced but which had a market value (for example, a famous art
work like the Mona Lisa), he would still have to pay its market value, even
though another one couldn’t be bought. The principle here is that, even though
the value can never be replaced, the victim should at least be left no worse off
financially than if he had sold it instead of losing it to a thief. Justice requires
the aggressor to compensate the victim insofar as is humanly possible, and
replacing an irreplaceable value is impossible.
In addition to the basic expense of stolen and destroyed property, an act of
aggression may cause several additional costs, for which the aggressor would
be responsible to pay. An aggressor who stole a salesman’s car might cause the
salesman to lose quite a bit of business—an additional financial cost. A rapist
who attacked and beat a woman would be responsible not only for paying medi-
cal bills for all injuries he had caused her and reparations for time she might lose
from work, but he would also owe his victim compensation for her pain and suf-
fering, both mental and physical. Besides all debts owed to the primary victim,
the aggressor might also owe secondary reparations to others who had suffered
indirectly because of his actions (for example, the victim’s family). In addition
to these expenses, occasioned by the aggression itself, the aggressor would also
be responsible for any reasonable costs involved in apprehending him and for the
cost of arbitration (which would probably be paid by the loser in any case).
Since the arbitration agency’s service would be the rendering of just deci-
sions, and since justice is the basis on which they would compete in the market,
the arbiters would make every attempt to fix reparations at a fair level, in ac-
cordance with market values. For instance, if the defense company had run up
an excessively high bill in apprehending the aggressor, the arbiters would refuse
to charge the aggressor for the excessive expense. Thus, the defense company
would be forced to pay for its own poor business practices instead of “passing
the buck” to someone else.
In case the reparations amounted to more than the aggressor could possibly
earn in his lifetime (for example, an unskilled laborer who set a million dollar fire),
the insurance company and any other claimants would negotiate a settlement for
whatever amount he could reasonably be expected to pay over time. This would
be done because it would be no profit to them to set the reparations higher than
the aggressor could ever hope to pay and thus discourage him from working to
64 Anarchy and the Law

discharge his obligation. It is worth noting here that quite a large percentage of a
worker’s pay can be taken for a long period of time without totally removing his
incentive to live and work. At present the average American pays out well over a
third of his income in taxes and expects to do so for the rest of his life, yet those
who go on the government “welfare” dole are still in the minority.
Many values which can be destroyed or damaged by aggression are not only
irreplaceable, they are also non-exchangeable—that is, they can’t be exchanged
in the market, so no monetary value can be placed on them. Examples of non-
exchangeable values are life, a hand or eye, the life of a loved one, the safety of
a kidnapped child, etc. When confronted with the problem of fixing the amount
of reparations for a non-exchangeable value, many people immediately ask,
“But how can you set a price on a human life?” The answer is that when an
arbitration agency sets the reparations for a loss of life it isn’t trying to put a
monetary price on that life, any more than is an insurance company when it sells
a $20,000 life insurance policy. It is merely trying to compensate the victim (or
his survivors) to the fullest extent possible under the circumstances.
The problem in fixing reparations for loss of life or limb is that the loss oc-
curred in one kind of value (non-exchangeable) and repayment must be made in
another kind (money). These two kinds of values are incommensurable—neither
can be measured in terms of the other. The value which has been destroyed not
only can’t be replaced with a similar value, it can’t even be replaced with an
equivalent sum of money, since there is no way to determine what is equivalent.
And yet, monetary payment is the practical way to make reparations.
It is useful to remember here that justice consists of requiring the aggressor
to compensate his victims for their losses insofar as is humanly possible, since
no one can be expected to do the impossible. Even a destroyed item which
has a market value can’t always be replaced (e.g., the Mona Lisa). To demand
that justice require the impossible is to make justice impossible. To reject the
reparations system because it can’t always replace the destroyed value with an
equivalent value is like rejecting medicine because the patient can’t always be
restored to as good a state of health as he enjoyed before his illness. Justice,
like medicine, must be contextual—it must not demand what is impossible in
any given context. The question, then, is not how arbiters can set a price on life
and limb; it is, rather, “How can they see that the victim is fairly compensated,
insofar as is humanly possible, without doing injustice to the aggressor by
requiring overcompensation?”
In attempting to reach a fair compensation figure, the arbitration agency
would act, not as a judge handing down a sentence, but as a mediator resolving a
conflict which the disputants can’t settle themselves. The highest possible limit
on the amount of reparations is, obviously, the aggressor’s ability to pay, short
of killing his incentive to live and earn. The lowest limit is the total amount of
economic loss suffered (with no compensation. for such non-exchangeables as
anxiety, discomfort, and inconvenience). The reparations payment must be set
 Market for Liberty (excerpt) 65

somewhere in the broad range between these two extremes. The function of the
arbitration agency would be to aid the disputants in reaching a reasonable figure
between these extremes, not to achieve the impossible task of determining the
monetary value of a non-exchangeable.
Although the limits within which the reparations payment for a non-ex-
changeable would be set are very broad, the arbitration agency could not ca-
priciously set the amount of reparations at any figure it pleased. An arbitration
agency would be a private business competing in a free market, and the action of
the market itself would provide guidelines and controls regarding the “price” of
aggression, just as it does with any other price. Any free-market business, includ-
ing an arbitration agency, can survive and prosper only as customers choose to
patronize it instead of its competitors. An arbitration agency must be chosen by
both (or all) disputants in a case, which means that its record of settling previous
disputes of a similar nature must be more satisfactory, to both complainant and
defendant, than the records of its competitors. Any agency which consistently
set reparations too high or too low in the opinion of the majority of its custom-
ers and potential customers would lose business rapidly. It would have to either
adjust its payments to fit consumer demand…or go out of business. In this way,
arbitration agencies whose levels of reparation displeased consumers would be
weeded out (as would any other business which failed to satisfy customers).
Arbitration agencies which wanted to stay in business would adjust reparation
levels to meet consumer demand. In a relatively short time, reparations payments
for various non-exchangeable losses would become pretty well standardized,
just as are charges for various kinds and amounts of insurance protection.
The manner in which the amount of reparations for a non-exchangeable value
would be set by the action of the free market is very similar to the way in which
the market sets any price. No good or service has an intrinsic monetary value
built into it by the nature sellers are willing to take for it. “Value” means value
to the people who trade that commodity in the market. All the traders determine
what the price will be. In a similar way, the people who bought the services of
arbitration agencies would determine the levels of reparations payments—the
levels they considered just and fair compensation for various kinds of losses.
It is impossible for us to foresee, in advance of the actual market situation, just
where these levels would be set. But we can see, from a knowledge of how
a free market operates, that the market would determine them in accordance
with consumer desires.
Each reparation claim would be a complex combination of compensations
for losses of various kinds of exchangeable and non-exchangeable values. For
example, if a hoodlum beat a man and stole $100 from him, the aggressor would
be required not only to return the $100 but also to pay the victim’s medical bills,
his lost earnings, compensation for pain and suffering, and reparations for any
permanent injuries sustained. If the victim were a key man in his business, the
aggressor would also have to pay the business for the loss of his services. Each
66 Anarchy and the Law

reparation claim is also a highly individual matter, because the destruction of

the same thing may be a much greater loss to one man than to another. While
the loss of a finger is tragic for anyone, it is a much more stunning blow to a
professional concert pianist than to an accountant. Because of the complexity
and individuality of reparations claims, only a system of competing free-market
arbitration agencies can satisfactorily solve the problem of what constitutes just
payment for losses caused by aggression.
Murder poses a special problem in that it constitutes an act of aggression
which, by its very nature, renders the victim incapable of ever collecting the
debt owed by the aggressor. Nevertheless, the aggressor did create a debt,
and the death of the creditor (victim) does not cancel this debt or excuse him
from making payment. This point can be easily seen by supposing that the
aggressor did not kill, but only critically injured the victim, in which case the
aggressor would owe reparations for injuries sustained, time lost from work,
physical disability, etc. But if the victim then died from his injuries before the
debt could be paid, the debtor obviously would not be thereby released from
his obligation.
In this connection, it is useful to recall what a debt actually is. A debt is
property which morally belongs to one person but which is in the actual or
potential possession of another. Since the debt occasioned by the attack on
the victim would have been his property had he survived that attack, his death
places it, together with the rest of his property, in his estate to become the
property of his heirs. In addition to the primary debt owed to the estate of the
victim, the aggressor also owes debts to all those whom the victim’s death has
caused a direct and major loss of value (such as his family), even though such
people may also be his heirs. (Not to pay reparations to heirs simply because
they will also inherit the reparations which would have been paid the victim
had he survived, would be like refusing to pay them because they would inherit
any other part of the victim’s property.)
But suppose an aggressor murdered a grouchy old itinerant fruit picker who
had neither family, friends, nor aggression insurance. Would the aggressor “get
off scott free” just because his victim was of value to no one but himself and left
no heirs to his property? No, the aggressor would still owe a debt to the fruit
picker’s estate, just as he would if there were an heir. The difference is that,
without an heir, the estate (including the debt occasioned by the aggression)
becomes unowned potential property. In our society, such unowned potential
property is immediately expropriated by the government, as is much other
unowned wealth. Such a practice can be justified only if one assumes that the
government (or “the public”) is the original and true owner of all property, and
that individuals are merely permitted to hold property by the grace and at the
pleasure of the government. In a free-market society, unowned wealth would
belong to whatever person first went to the trouble of taking possession of it. In
regard to the debt owed by an aggressor to the estate of his victim, this would
 Market for Liberty (excerpt) 67

mean that anyone who wished to go to the trouble and expense of finding the
aggressor and, if necessary, proving him guilty before professional arbiters,
would certainly deserve to collect the debt. This function could be performed
by an individual, by an agency specially constituted for this purpose (though it
seems unlikely that there would be enough situations of this nature to support
such an agency), or by a defense agency or an insurance company. Insurance
companies would be most likely to take care of this kind of aggression in order
to deter violence and gain customer good will.
Before taking up the means by which an aggressor would be forced to pay
reparations (if force were necessary), the position of an uninsured victim of
aggression will be examined briefly. Whenever a demand for a service exists,
the market moves to fill it. For this reason, a man who was uninsured would
also have access to defense services and arbitration agencies. But, although he
would have a similar recourse to justice, the uninsured man would find that his
lack of foresight had put him at a disadvantage in several ways. The uninsured
victim would not receive immediate compensation but would have to wait
until the aggressor paid reparations (which might involve a span of years if the
aggressor didn’t have the money to discharge the debt immediately and had to
pay it off in installments). Similarly, he would run the risk of being forced to
forgo all or most of his compensation if the aggressor were not caught, died
before being able to complete payment, or had incurred a debt too large to pay
during his life. Also, the uninsured victim would have to bear all costs of ap-
prehending the aggressor and, if necessary, of arbitration, until the aggressor
was able to pay them back.
In addition to these monetary disadvantages, he would be put to extra in-
convenience. If he wished to collect reparations, he would have to detect and
apprehend the aggressor himself or (more likely) hire a defense agency to do it
for him. He would also have to make his own arrangements for arbitration. Tak-
ing everything into consideration, a man would find aggression insurance well
worth the expense, and there is little doubt that most people would have it.
***
Since aggression would be dealt with by forcing the aggressor to repay his
victim for the damage caused (whenever the use of force was required), rather
than by destroying values belonging to the aggressor, the free market would
evolve a reparations-payment system vastly superior to and different from the
present governmental prisons.
If the aggressor had the money to make his entire reparations payment im-
mediately or could sell enough property to raise the money, he would do so and
be free to go his way with no more than a heavy financial loss. Situations of this
kind, however, would probably be very rare, because aggression is expensive.
Even a small theft or destruction can quickly pile up a fairly large debt when
related expenses, secondary payments to others who suffered because of the
68 Anarchy and the Law

victim’s loss, cost of defense and arbitration, etc., are taken into account. In
a totally free society, men tend to be financially successful according to their
merit. Few successful men would desire to commit aggression. Few unsuccess-
ful men could afford to make immediate payment for it.
Assuming the aggressor could not make immediate payment of his entire
debt, the method used to collect it would depend on the amount involved, the
nature of the aggression, the aggressor’s past record and present attitude, and
any other pertinent variables. Several approaches suggest themselves.
If the aggression was not of a violent nature and the aggressor had a record
of trustworthiness, it might be sufficient to leave him free and arrange a regular
schedule of payments, just as would be done for any ordinary debt. If the ag-
gressor could not be trusted to make regular payments, a voluntary arrangement
could be made between the insurance company, the aggressor, and his employer,
whereby the employer would be compensated for deducting the reparations
payment from the aggressor’s earnings each pay period.
If the aggressor were unable to find or hold a job because employers were
unwilling to risk hiring him, he might have to seek employment from a com-
pany which made a practice of accepting untrustworthy workers at lower than
market wages. (In an economy of full employment, some companies would
be motivated to adopt such a practice in order to reach new sources of labor.
Although the price of their product would remain close to that of their com-
petitors, as prices are determined by supply and demand, the wages they paid
would necessarily be lower to compensate for the extra risk involved in hiring
employees of dubious character.) If the facts indicated that the aggressor was
of an untrustworthy and/or violent nature, he would have to work off his debt
while under some degree of confinement. The confinement would be provided
by rectification companies—firms specializing in this field, who would maintain
debtors workhouses (use of the term “prison” is avoided here because of the
connotations of value-destruction attached to it). The labor of the men confined
would be furnished to any companies seeking assured sources of labor, either
by locating the debtors workhouses adjacent to their plants or by transporting
the debtors to work each day. The debtors would work on jobs for wages, just
as would ordinary employees, but the largest part of their earnings would be
used to make reparations payments, with most of the rest going for their room
and board, maintenance of the premises, guards, etc. To insure against refusal
to work, the reparations payment would be deducted from each pay before
room and board costs, so that if a man refused to work he would not eat, or at
most would eat only a very minimal diet. There would be varying degrees of
confinement to fit various cases. Many debtors workhouses might provide a
very minimum amount of security, such as do a few present-day prison farms
where inmates are told, “There are no fences to keep you here; however, if you
run away, when you are caught you will not be allowed to come back here but
will be sent to a regular prison instead.” Such workhouses would give the debtor
 Market for Liberty (excerpt) 69

a weekly allowance out of his pay, with opportunities to buy small luxuries or,
perhaps, to rent a better room. Weekend passes to visit family and friends, and
even more extended vacations, might be arranged for those who had proved
themselves sufficiently trustworthy.
Other workhouses would provide facilities of greater security, ranging up
to a maximum security for individuals who had proved themselves extremely
violent and dangerous. A man whose actions had forced his confinement in such
a workhouse would find himself at a disadvantage in several ways. He would
find he had less liberty, less luxuries, limited job opportunities, and a longer
period of confinement because, with more of his earnings spent on guards and
security facilities, it would take him longer to pay off his debt. Since there
will be cases of mental imbalance even in the most rational of cultures, it is
probable that there will be an occasional individual who will refuse to work
and to rehabilitate himself, regardless of the penalties and incentives built into
the system. Such an individual would be acting in a self-destructive manner
and could properly be classified as insane. Obviously, neither the rectification
company, the defense service that brought him to justice, nor the insurance
company or other creditor has any obligation to go to the expense of support-
ing him (as victims are forced through taxation to do today). Nor would they
wish to turn him loose to cause further destruction. And if they allowed him to
die, they would cut off all hope of recouping the financial loss he had caused.
What, then, could they do?
One solution that suggests itself is to sell his services as a subject of study by
medical and psychiatric doctors who are doing research on the causes and cures
of insanity. This should provide enough money to pay for his upkeep, while
at the same time advancing psychological knowledge and ultimately offering
hope of help for this aggressor and his fellow sufferers. If such an arrangement
were made, it would be in the interests of all concerned to see that the aggressor
received no ill treatment. In a rational culture, severe mental illness would be
much rarer than it is in ours, and the medical-psychiatric team would not wish
to damage such a valuable specimen. The rectification company in charge of
the aggressor would be even more eager to protect him from harm, since no
arbitration agency could afford the reputation of sending aggressors to a debtors
workhouse where there was ill treatment of the inmates. This free-market system
of debtors workhouses would have numerous practical advantages over the Dark
Ages barbarity of the present governmental prison system. These advantages are a
necessary consequence of the fact that the system would be run for profit—from
the standpoint of both the insurance companies and the rectification companies
operating the workhouses. In a laissez-faire economy, it is impossible to make
consistent profits over a long-range period unless one acts with maximum
rationality, which means: with maximum honesty and fairness.
A practical example of this principle can be seen in the results of the insur-
ance company’s desire to recoup its loss quickly. Because it would be in the
70 Anarchy and the Law

insurance company’s interest to have the aggressor’s reparations installments

as large as possible, it would have him confined to no greater degree than his
own actions made necessary, since closer confinement means greater expense,
which means less money left for reparations payments. Thus, it would be the
aggressor himself who would determine, by his character and his past and
present behavior, the amount of freedom he would lose while repaying his
debt, and, to a certain degree, the length of time it would take him to pay it.
Furthermore, at any time during his confinement, should the aggressor-debtor
show himself to be a good enough risk, the insurance company would find it
in their interest to gradually decrease his confinement—an excellent incentive
to rational behavior.
Because both the insurance companies and the rectification companies would
want to run their businesses profitably, it would be in their interest to have debtors
be as productive as possible. In an industrialized society, a laborer’s productivity
depends not on his muscles but on his mind, his skills. So the debtor would be
allowed to work in an area as close to the field of his aptitudes as possible and
encouraged to develop further productive skills by on-the-job training, night
school courses, etc. All this would help prepare him for a productive and honest
life once his debt was paid. Thus, the application of free-market principles to
the problem of aggression provides a built-in rehabilitation system. This is in
sharp contrast to government-run prisons, which are little more than “schools
for crime,” where young first offenders are caged with hardened criminals and
there is no incentive or opportunity for rehabilitation.
A system of monetary repayment for acts of aggression would remove a
great deal of the “profit” incentive for aggressors. A thief would know that if
he were caught he would have to part with all his loot (and probably quite a bit
of his own money, too). He could never just stash the booty, wait out a five-year
prison term, and come out a rich man.
The insurance company’s desire for speedy repayment would be the aggres-
sor-debtor’s best guarantee against mistreatment. Earning power depends on
productivity, and productivity depends on the use of the mind. But a man who
is physically mistreated or mentally abused will be unwilling and even unable
to use his mind effectively. A mistreated man is good for little more than brute
physical labor—a situation of prohibitively low productivity.
Another strong guarantee of good treatment for the aggressor-debtor is that, in
a laissez-faire society, every man would be fully responsible for his own actions.
No guard in a debtors workhouse could beat a debtor and get away with it. The
mistreated debtor could complain to a defense service agent or to the insurance
company to whom he was making reparations. If he could prove his assertion
of mistreatment, the guilty guard would soon find himself paying a debt to his
former prisoner. Furthermore, the guard’s employers would never dare to support
their guard if the debtor had a good case, because if they knowingly permitted
the guard’s sadism the debtor could bring charges against them, too.
 Market for Liberty (excerpt) 71

A guard in a government prison can treat the prisoners as less than animals
and never be brought to account for it, because he is protected by his status as part
of the policing arm of the government. But a guard in a debtors workhouse couldn’t
hide behind the skirts of the rectification company which employed him, the way
the prison guard hides behind the skirts of the government. The debtors workhouse
guard would be recognized as an individual, responsible for his own actions. If
he mistreated a debtor in his custody, he would be held personally responsible,
and he couldn’t wriggle out of it by putting the blame on “the system.”
A free-market system of dealing with aggression would operate with a maxi-
mum of justice precisely because it was based on the principle of self-interest.
The entirety of a man’s self-interest consists of rational thought and action
and the rewards of such behavior; the irrational is never in man’s self-inter-
est. As long as a man is behaving rationally, he cannot intentionally harm any
other noncoercive person. One of the reasons for the success of a laissez-faire
society is that the free-market system impels men to act in their own rational
self-interest to the extent that they wish to successfully participate in it. It thus
rewards honesty and justice and penalizes dishonesty and the initiation of force.
This principle would work just as well if the market were free to deal with the
problem of aggression as it does when the market deals with the supply of food
or the building of computers.
There have been several questions and objections raised concerning the
proposal that payment for aggression be made in monetary terms. For instance,
it has been objected that a thief could “get off the hook” simply by voluntarily
returning the stolen item. But this is to overlook two important facts—additional
expenses and loss of reputation. First, as long as the thief held the item in his
possession he would be causing its owner inconvenience and expense, plus
the ever-mounting cost involved in the owner’s attempt to recover the item, all
of which would be part of the debt created by the thief’s act of aggression. In
aggressive acts of any seriousness at all, it would be almost impossible for the
aggressor to return the stolen item quickly enough to avoid incurring additional
costs. For example, suppose a man stole $20,000 at gunpoint from a bank, but
regretting his action a few minutes later, came back and returned the money. Could
he get by without paying any further reparations? No, because his irrational actions
interrupted the bank’s business and may have caused a financial loss, for which he
is directly responsible. In order to get the money, he had to threaten force against
the teller and possibly other bank employees and customers, so he would owe
them reparations for endangering their lives and safety. Also, as soon as he left
the bank, the teller undoubtedly tripped an alarm, summoning the bank’s de-
fense agency, so the aggressor is responsible for paying the cost of the defense
agency’s coming to answer the call, plus any other related expenses.
But the second factor, loss of reputation, would be even more damaging to
the aggressor. Just as specialized companies would keep central files, listing
poor contractual risks, they would also list aggressors so that anyone wishing
72 Anarchy and the Law

to do business with a man could first check his record. Insurance companies
in particular would make use of this service. So our bank robber would find
insurance companies listing him as a very poor risk and other firms reluctant
to enter into contracts with him. Thus, if a man were foolish enough to engage
in such a whim-motivated action as this bank robbery, he would find that he
had caused himself considerable expense and loss of valuable reputation but
had gained absolutely nothing.
In a similar vein, it has been objected that a very rich man could afford to
commit any number of coercive acts, since all he would lose would be a little of
his vast fortune. It is a bit difficult to imagine such a mentally ill person being
able to continue existing uncured and unchallenged in a predominantly rational
culture, but, assuming that he did, he would immediately find that money was
hardly the only loss his actions cost him. As soon as his career of aggression
was recognized for what it was, no honest man would take the chance of hav-
ing anything to do with him. The only individuals who would not avoid him
like the Plague would be those who felt they were tougher or craftier than he,
and their only purpose in risking an association with him would be to part
him from as large a share of his money as possible. Furthermore, he would
run an immense risk of being killed by some victim acting in self-defense.
Considering his reputation for aggression, a man would probably be justified
in shooting him for any threatening gesture. So, in spite of his ability to pay,
his life would be miserable and precarious, and his fortune would probably
dwindle rapidly.
Again, it has been said that if a man confined himself to thefts so petty that
the recoverable amount would be smaller than the cost of recovering it, thus
making prosecution of the case economically unfeasible, he could get away with
a career of aggression (of sorts). But such a “bubblegum thief’ would lose much
more than he could possibly gain, because he would lose his good reputation
as his acts of aggression were discovered and recorded.
In each of these incidents, it is obvious that the aggressor’s loss of reputation
would be at least as damaging as his financial loss and that his lost reputation
could not be regained unless he made reparations for his aggressive act and
showed a determination to behave more reasonably in the future. He might
shrug off the financial loss, but the loss of a good reputation would force him
to live a substandard life, cut off from insurance protection, credit, reputable
business dealings, and the friendship of all honest persons.
All the foregoing objections to a monetary payment assume that it would
not be sufficiently costly to deter aggression, or, in other words, that it is se-
verity of punishment which deters aggression. The untruth of this assumption
should be evident from an examination of such historical eras as Elizabethan
England, in which punishments of extreme severity prevailed, including physi-
cal mutilation and hanging for petty theft. Yet in spite of the great loss of value
imposed on criminals, crime rates were very high. The reason for this is that
 Market for Liberty (excerpt) 73

it is not severity, but justice, which deters aggression. To punish the aggressor
with more severity than his actions warrant—that is, to impose on him a greater
loss of value than that which is necessary for him to make reasonable repara-
tions to the victim—is to commit an injustice against him. Injustice cannot be
a deterrent to injustice.
The aggressor who is treated with such excessive severity feels, quite rightly,
that he has been victimized. Seeing little or no justice in his punishment, he
feels a vast resentment, and often forms a resolve to “get even with society” as
soon as possible. Thus, in dealing with aggression, excessive severity, as much
as excessive laxity, can provoke further aggressive acts. The only valid answer
to injustice, is justice. Justice cannot be served by excessive severity or by
taking revenge against the aggressor, or by pacifism, but only by requiring the
aggressor to pay the debt which he has created by his coercive action.
Dealing with a man justly helps him to improve himself and his life by
inducing him to act in his own self-interest. In the case of an aggressor, justice
induces him to want to, and be able to, live a productive, honest, non-coercive
life, both while he is paying the debt he owes to his victim, and afterwards.
Justice helps a man get on the right track by sending him the right signals. It
penalizes him for his misdeeds—but only as much as he actually deserves. It
also rewards him when he does the right thing. Injustice sends out incorrect
signals which lead men astray. The injustice of letting an aggressor get away
without paying for his aggressions teaches him to believe that “crime pays,”
which induces him to commit more and bigger crimes. The injustice of pun-
ishing an aggressor by making him pay more than he really owes the victim
teaches the aggressor that he can’t expect justice from others, so there’s little
point in his trying to treat them justly. He concludes that this is a dog-eat-dog
world and that his best course is to “do it unto others before they do it unto
him.” Only justice sends the aggressor the right signals, so only justice can be
a satisfactory deterrent to aggression.
It may be objected that some men will attempt to take advantage of a free-
market system of dealing with aggression. This is true, as it is true of any other
social system. But the big advantage of any action of the free market is that
errors and injustices are self-correcting. Because competition creates a need for
excellence on the part of each business, a free-market institution must correct its
errors in order to survive. Government, on the other hand, survives not by excel-
lence but by coercion; so an error or flaw in a governmental institution can (and
usually will) perpetuate itself almost indefinitely, with its errors usually being
“corrected” by further errors. Private enterprise must, therefore, always be su-
perior to government in any field, including that of dealing with aggressors.
***
Some opponents of a laissez-faire society have contended that, because a
governmentless society would have no single, society-wide institution able to
74 Anarchy and the Law

legitimately wield superior force to prevent aggression, a state of gang warfare

between defense agencies would arise. Then (as they argue), brute force, rather
than justice, would prevail and society would collapse in internecine conflict.
This contention assumes that private defense service entrepreneurs would find
it to their advantage, at least in some circumstances, to use coercive, rather than
market, means to achieve their ends. There is a further, unstated assumption
that governmental officials would not only prevent coercion but would them-
selves consistently refrain from initiating force (or that the force they initiated
would be somehow preferable to the chaos it is feared would result from an
unhampered market).
The second of these assumptions is obviously groundless, since (as was
shown in Chapter 4) government is a coercive monopoly which must initiate
force in order to survive, and which cannot be kept limited. But what of the
first assumption? Would a free-market system of value-protection lead to gang
warfare between the competing defense companies?
The “gang warfare” objection has been raised in regard to theories advocating
a system of competing governments. When applied to any type of governments,
the objection is a valid one. A government, being a coercive monopoly, is al-
ways in the position of initiating force simply by the fact of its existence, so it
is not surprising that conflicts between governments frequently take the form
of war. Since a government is a coercive monopoly, the notion of more than
one government occupying the same area at the same time is ridiculous. But
a laissez-faire society would involve, not governments, but private businesses
operating in a free market.
 5
Pursuing Justice in a Free Society: Crime
Prevention and the Legal Order
Randy Barnett
In the first installment of this article,1 the substantive rights and remedies
of the Liberty Approach were identified and evaluated. The substantive rights
of individuals involve claims they make on the use of resources in the world,
beginning with their bodies and ending in the use of external resources. Those
claims which are justified are called property rights. Adherents to a Liberty
Approach contend that each individual has moral and legal jurisdiction over his
or her person and possessions. This means that they have discretion as to how
their property is used unless this use threatens to violate the rights of another.
Should someone interfere with the use and enjoyment of another’s property or
threaten to do so, the person whose rights are being violated or threatened may
justifiably employ self-defense and also is entitled to restitution2 for the forced
appropriation of rights that has occurred.
What remains to be discussed, in this second installment, is the form that
a legal order should take to secure these rights and remedies without itself in-
fringing upon them. Before considering this question, however, it is important
to see how the Liberty Approach can deal with the problem of crime in ways
that do not directly involve the legal system.
Preventing Crime in a Free Society
It may be argued that in a society governed solely by the individual rights of
the Liberty Approach, coupled with self-defense actions and a restitutive remedy
for those rights violations that occur, there would be “too much” crime. Three
observations need to be made before directly responding to this criticism.
First, the criticism assumes that a quantitative scale of evaluation exists by
which we can assess how much crime is too much. No one believes that any
legal system will eliminate all crime. Moreover, we know that we might have
far less crime today, except for the value we place on features of a free society
that would be lost in the unbridled pursuit of lower crime rates. Unless the critic
who raises this point is more specific (and few ever are), we cannot know what
it would take to satisfy the criticism. Just how much crime need we demonstrate
will exist in a free society to rebut the claim that it will be “too much”?

75
76 Anarchy and the Law

Second, it would be improper to compare a society governed by the Liberty

Approach against some absolute scale of perfection, assuming one was offered
by the critic. No society is or ever will be perfect, and I have been careful to
avoid criticizing the Power Principle for simply being imperfect.3 The relevant
method of comparison is, therefore, a comparative one.4 The likely practical
effects of a Liberty Approach need to be compared with the practical effects of
the known alternatives—particularly the form of legal system we have today—to
see which approach is likely to prevent crime more effectively.
Third, and perhaps most important, in comparing the Power Principle with
a Liberty Approach, it would be improper simply to compare the respective
remedies of each approach—for example, punishment vs. restitution—while
controlling for all other social variables. Each remedy is but a component of
a comprehensive legal approach to social problem solving. In other words,
when either approach is actually adopted, the form or severity of the remedy
for criminal conduct would never be the only variable that would account for
differential rates of crime.
For example, the severity of a remedy affects the certainty of its imposition.5
The more severe you make a penalty, the more resistance is offered against its
imposition, and the more reluctant are people to impose it. Similarly, punish-
ment requires government prosecutions and government penitentiaries, which
in turn require taxes to be levied and heads of government bureaus somehow
to be selected and reselected. Each of these institutions and practices has its
own effects on crime prevention efforts. It is, therefore, highly misleading to
evaluate in isolation the respective severity of two remedies while assuming that
all other variables—such as the certainty of imposition or the legal structure
needed for implementation—remain constant. Instead, we need to compare as
best we can the social structure of a society governed by a Liberty Approach
(including restitutive criminal sanctions) with one governed by a Power Principle
(including punitive sanctions).
Crime Prevention as a Social Goal
The goal of crime prevention must be viewed in the same light as all other
important social goals, such as health, education, and economic well-being. For
a society to survive and flourish, it must strive to achieve each of these goals,
but not every means can be permitted in this quest. Individual rights, the pre-
requisite of individual survival and fulfillment, must at all times be recognized
and respected. Rights are what Nozick calls “side-constraints” on our pursuit
of various social (and other) goals.6 These constraints do not evaporate simply
because the ultimate goal is the protection of individual rights themselves.
Any failure to adequately define or respect individual rights in organizing
law enforcement institutions has three adverse effects. First, the example of
community leaders disregarding individual rights in pursuit of goals thought
to be socially desirable encourages the violation of rights by others in pursuit
 Pursuing Justice in a Free Society 77

of their goals. Second, a principal benefit of respecting property rights is that

it makes possible a free market in goods and services with its unique ability
to efficiently allocate resources.7 In the next section, we shall see that when
property rights are overridden in pursuit of crime prevention, this vital social
mechanism is unavailable to allocate resources in the most efficient manner.
Finally, to the extent that we place security and the “defense of a free society”
above individual rights, we may obtain the security we seek, but we are unlikely
to preserve the freedom that makes security worth having.

Law Enforcement as a “Commons” Problem

When property rights are ill-defined, misallocations of resources will occur. If
a particular resource is thought to be held in common—that is, if all are thought
to have an equal right to exploit the use of this property—then no person has the
right to exclude others from using the resource. Without the right to exclude, it is
unlikely that the benefits accruing to persons who privately invest in the care or
improvement of a resource will exceed the costs of their efforts. Indeed, the over-
riding incentive for resource users lacking a right to exclude others is to maximize
their own consumption lest others consume the resource first. For this reason,
commonly held resources are typically overused and undermaintained.
The depletion of vital resources in the face of a universal consensus as to
the importance of their continued maintenance is known as the “tragedy of the
commons.”8 In the case of grazing land, for example, the historical solution to
the problem of depletion is to recognize property rights in land. This does not
prevent all depletion, nor would the prevention of all depletion be desirable.9 It
does, however, permit the owner of the land to benefit enough from any effort to
conserve the usefulness of the land to make conservation worthwhile. In this way,
when the benefits of conservation exceed those of the alternative uses available
for a particular piece of land, there exists a powerful incentive to conserve.
While this analysis of the use and consumption of farmland and other
resources is well known, it has seldom been applied to the problem of crime
prevention. If the traditional economic assessment of the “commons” problem
is valid, it is reasonable to suggest that at least part of the problem of “crime
in the streets” may stem from the belief that the streets must be owned in com-
mon. The fact that public parks and streets are held in common adversely affects
crime prevention in two important ways.
First, when little incentive exists for individuals to commit their private re-
sources to prevent rights-violating conduct on so-called “public” property, there
appears no choice but to create an inherently inefficient coercive monopoly to
provide “public” police protection. Second, when property is owned and admin-
istered by a central government, constitutional constraints on the government’s
power to exclude citizens from using public property is needed to minimize
abuses of power. Such unavoidable limitations on the proper management of
public property can be shown to seriously inhibit crime prevention.
78 Anarchy and the Law

1. Some Inefficiencies of Public Law Enforcement. Just as a parent will not

invest in playground equipment to be put in a public park for the use of his
children, neither will individuals voluntarily pay for private security patrols to
protect themselves or their children while they use the public parks and streets
unless, as is sometimes the case, the provision of this service can be limited to
those who are paying for it. Security guards may be hired to patrol a govern-
ment owned street if conditions become so dangerous that most residents of
that street are induced to contribute. Or guards may be employed to escort a
sufficiently valuable shipment of property that is being conveyed on public
streets if the risk of loss is great enough to justify the costs.
Normally, however, because private investors in protective services on public
property cannot adequately benefit from their investment, such services are un-
likely to be privately provided. As a result, all responsibility for such protection
must fall upon the governmental agency that has assumed jurisdiction over
the property in question. Taxes must be raised and government employees
hired to protect the users of the property. Here, as elsewhere, defining
a package of goods and services—in this case protective services—as a
“public good” and then attempting to provide that good by government
agencies is inherently less responsive to the needs and demands of consumers
than defining property rights in such a manner as to allow both private invest-
ment and consumption.
The reasons for this need not be elaborated here. It should suffice to say
that the practical accountability of government law enforcement agencies to
the consumer will at best be indirect and at worst nonexistent. Government
police agencies, especially those in large cities, are beholden first to the political
establishment that dictates their funding, and second—if at all—to individual
members of the general public. Tax-financed government agencies are protected
from competition and need not obtain the actual consent of their “customers.”
Unlike market institutions, which must rely on consensual agreements and pay-
ments, government police agencies lack both the motivation and the ability to
discover and respond to shifting and diverse consumer preferences.10 They are
plagued by what has been called the “knowledge problem.”11 Ever inefficient,
often counterproductive, and occasionally abusive, police services are among
the more easily anticipated results of such an approach.
2. Public Property and the Right to Exclude. The unwillingness and inability
of public law enforcement to allocate resources so as to efficiently respond to
the needs of consumers is only part of the problem. Perhaps the defining char-
acteristic of private property is the right of a property owner to control its use.
You need not admit into your house any person who knocks on your door; nor
must you wait for a guest on your property to commit an aggressive act before
you may ask that person to leave. Being a private property owner gives you the
right to consent to its use by others, and such a right is meaningless unless you
have the right to withhold consent as well.12
 Pursuing Justice in a Free Society 79

When governments assume control over streets, parks, and other common
resources, they are acting in the capacity of property owners. For sound theoreti-
cal and practical reasons, however, governments in a free society will be denied
many of the rights accorded private individuals and institutions. Democratic
theory specifies that government exists at the pleasure and for the benefit of
the general public. Public property is said to belong to all the people and is
merely “held in trust” by the government. A governmental right to limit the
access of citizens to public property without some acceptable reason would be
inconsistent with this theoretical premise. As a practical matter, a free society
would not remain free for long if its government, which coercively maintained
its monopoly control over all streets, sidewalks, and parks, were accorded the
same rights and discretion enjoyed by private property owners.
For these reasons, governments must be prevented by constitutional con-
straints from denying access to public property, which is (in theory) held for
the use and benefit of all citizens, unless good cause can be shown. But restrict-
ing the right of governments to control public property unavoidably creates
intractable problems of “social” control. Requiring only a mere suspicion or
“reasonable belief” that someone might commit a crime to justify governmental
exclusion would not adequately protect citizens from government abuses. Such
a standard would be too easy for the government to meet and too hard for the
citizen to contest. But requiring probable cause before government can arrest
a suspect, and proof beyond a reasonable doubt before it can use incarceration
to deny access to public areas by those who have already committed crimes
leaves considerable opportunity for criminal profit.
Any society that chooses to be organized by the Power Principle is therefore
faced with what might be called a dilemma of vulnerability. Since governments
enjoy privileges denied their citizens and are subject to few of the economic
constraints of private institutions, their citizens are forever vulnerable to gov-
ernmental tyranny. Therefore, freedom can only be preserved by denying
government police agencies the right to regulate public property with the same
discretion accorded private property owners. Yet steps taken to protect society
from the government also serve to make citizens more vulnerable to criminally
inclined persons by providing such persons with a greater opportunity for a safe
haven on the public streets and sidewalks and in the public parks.
The Power Principle’s dilemma of vulnerability creates an ever-present temp-
tation to trade liberty for security—that is, to compensate for the inefficiency of
government—provided law enforcement by unjustly restricting individual rights
in one of two ways: by prior restraints on conduct (preventive detention) or by
increasing the punishment of those few criminals who are caught in the hopes of
deterring the many whom the government police cannot catch or the government
courts cannot convict. Either tactic risks the serious consequences of “overpunish-
ment.” And, as was just discussed, to compensate for the inefficiency of monopoly
law enforcement and public property by increasing the severity of punishment
80 Anarchy and the Law

decreases still further the certainty of its imposition. In this manner, pursuing the
social goal of crime prevention by means of the Power Principle creates a serious
social instability that is always threatening a free society from within.
3. Comparing Private and Public Property. In those areas where private
property rights are well defined or where government officials can act much
like private owners, crime problems are reduced.13
In relatively well-to-do areas, where large shopping centers and office
complexes are the most common forms of commercial activity, roads, parking
lots, sidewalks, and security patrols are all privately provided. In contrast to
governmentally administered shopping districts in big cities, the owners of
private developments can control access to the common areas between stores
and offices. Any failure to effectively curtail criminal conduct will carry with it
serious economic costs since increased crime causes rent receipts to decline. By
the same token, discourtesy and overly restrictive crime control efforts can also
cause lost business and bad will. These consumer-oriented incentives also exist
for owners of larger private residential developments. These incentives impel law
enforcement efforts that are responsive to the needs of both the property owner
and the consumer to whom the property owner is attempting to appeal.
Similarly, in smaller communities where values are relatively homogeneous,
informal social pressure is more effective in inhibiting disapproved behavior
and government officials can more easily exert control over governmental police
agencies and public property akin to the control of private property owners.
Consequently, the problem of crime control will be diminished in these settings
for much the same reason that it is on truly private property.14
The brunt of today’s crime problem occurs in older, predominantly poor
areas, where commercial, residential, and recreational activity must depend
most heavily on traditional forms of public property management, and in those
places where the diversity of the population prevents a monopolistic system
from approximating a market solution (as might be achieved in smaller, more
insular, and more homogeneous communities). It is not surprising, then, to find
the problem of “crime in the streets” at its worst where property rights are the
least well defined. If the reliance on public property and public law enforcement
is reduced, those who cannot now afford the benefits of private property and
efficient law enforcement will obtain access to the types of services presently
confined to other segments of society.
4. The Role of Imprisonment. Thinking of the provision of law enforcement
as a “public good” that must be provided by “society” can lead some to view
society as a rights-bearing entity. Crimes may, in this view, be seen as offenses
against society or the “state.” The victim’s right to reparations is thought to be
civil in nature and, in practice, is treated as secondary to a criminal charge (the
sanction for which is rarely reparations to the victim). By subordinating indi-
vidual rights to “the rights of society,” this “organistic” conception of society
undermines both justice and crime prevention.
 Pursuing Justice in a Free Society 81

The practice of incarcerating criminals in public prisons stems directly from

the twin imperatives of the Power Principle: to punish offenders and to exclude
them from public property. Imprisonment effectively deprives victims of their
right to reparations in those cases where the greatest rights violations have oc-
curred. Victims of the most serious crimes and their families are thereby twice
victimized: once by the rights violator and again by the enforcement agencies
that require victims to participate at some considerable risk and cost while deny-
ing to them any effective ability to obtain reparations from the offender.
Public prisons as they now exist are both unjust to victims and largely un-
necessary to accomplish any other purpose. Imprisonment can at best be viewed
as a crude approximation of a market response to criminal conduct. Just as private
citizens may individually or collectively ban others from their property, the govern-
ment uses the penitentiary system to keep dangerous individuals out of public (and
private) property. But public imprisonment has several significant drawbacks.
First, because a complete deprivation of liberty is such a severe sanction,
one must be proved guilty beyond a reasonable doubt of a most serious crime
before imprisonment is permitted. Many guilty persons, therefore, escape the
sanction and remain free. Second, imprisonment is a blunt instrument. Although
sentence lengths can vary, you are either in prison or you are out. As a result
criminal sanctions for many offenders admit of only two degrees of severity:
onerous or virtually nonexistent. Third, imprisonment is expensive. While scarce
resources are expended to confine, prisoners are prevented from producing
anything of value to others.
Finally, because only the worst offenders are incarcerated, prisons become
very dangerous places. Dangerousness is thereby added to the deprivation of
liberty to heighten still further the severity of imprisonment. As a result, judges
become even more reluctant to sentence a person to prison for fear of a very
real risk of overpunishment. Where they have discretion, judges become even
more inclined to give even serious felons the benefit of the doubt by sentencing
them to a period of probation until they have established a sufficiently serious
criminal record. Actions speak louder than words, and repeat offenders soon
come to rely upon the legal system’s reluctance to incarcerate them. No one is
more surprised than they are when the prison gates finally close behind them
for the first time. By this time it is too late for deterrence.
The Logic of Public Crime Prevention
Most people—including most criminal justice professionals—adhere to the
Power Principle, and for this reason they cannot see any fundamental alterna-
tive to the “public” approach to crime prevention. Their vision is limited to
ad hoc “reforms” of the present system that fail to address the fundamental
obstacles placed in the path of crime prevention by public property, public law
enforcement, and public imprisonment. Each of these institutions results from
the internal logic of the Power Principle.
82 Anarchy and the Law

Step one: start with public streets, sidewalks, and parks where every citizen
must be permitted unless proved guilty of a crime. Step two: rely on an inher-
ently inefficient public bureaucracy to catch, prosecute, and try those criminals
against whom enough evidence of guilt exists. Step three: should they be con-
victed, subject them to the dangerous and sometimes uncontrollable setting of
public prisons to prevent them from engaging in further misconduct. Step four:
periodically release most prisoners back into the community and then return to
step one and repeat the cycle. Each step follows from the preceding step, and
each step unavoidably leaves considerable room for criminal conduct to thrive.
If we set out deliberately to design a system that encouraged criminal conduct
and nurtured hardened career criminals, we could hardly do a better job. (And I
have omitted any discussion of the bizarre legal system which attempts to deal
with those criminals who are defined as “juveniles.”)
A Liberty Approach promises a way to break free of this vicious cycle. Pri-
vate social control and crime prevention become feasible as the institution of
public property is supplanted by a more extensive recognition of private prop-
erty rights. Such a shift promises significantly more effective law enforcement
efforts. First, private efforts can be truly preventative. In contrast to the public
response, which must await the commission of a crime before taking action,15
private owners who will directly suffer from a crime can directly benefit from
truly preventative measures. Their interest is in seeing that the crime not take
place at all. Second, as was discussed above, ownership rights and free contracts
both enable and compel private law enforcement agencies to allocate their
resources more efficiently than public police departments do.
Third, in contrast to a penitentiary system, where one is either in prison
or out, exclusion from private property is a far more decentralized process of
individual decisions. Suspicious persons can be excluded from some “public”
places and not others, resulting in a far more gradated response to the threat of
crime than imprisonment. Fourth, in a society where the rights of victims to
restitution were fully protected, any firm which confined convicted criminals
would be legally obliged to provide them with productive work at market wages
(reflecting their productivity) in a secure environment. Prisoners might even
engage in collective bargaining. Their wages would be used to pay for their living
costs and to make reparations to their victims, and they would be released only
when full restitution had been made or when it was adjudged that reparations
could more quickly be made by unconfined employment.16
Other Factors Influencing Criminal Conduct
Of course, other factors contribute to the problem of crime besides those
discussed here. For example, governmentally enforced restrictions on the labor
market and on entrepreneurial activity have prevented “classes” of people from
escaping their dependence on government assistance or on criminal conduct.
To the extent that persons are principally motivated to commit crimes (usually
 Pursuing Justice in a Free Society 83

property crimes) by genuine financial need, a freer and more prosperous society
where more economic opportunities were available to those who are willing to
work should significantly reduce this incentive.
Moreover, statutes against victimless activities of all kinds have created
lucrative black markets which provide enormous profits to those persons who
are willing to break these “laws.” Such “criminal” activity will inevitably un-
dermine whatever respect for law a person engaged in such conduct may once
have had. In such a setting, it is unrealistic to expect most black marketeers,
whose livelihood is earned by providing goods and services that are deemed to
be illegal, to observe the fine line between violating such statutes and violating
the genuine rights of others—particularly when their black market activities are
denied the protection of recognized legal institutions and they must routinely
resort to self help.
Victimless crime laws not only breed victim crimes, but the huge premiums
that result from making certain highly desired transactions illicit create powerful
financial incentives for criminals to organize into groups which in effect pur-
chase the “rights” to engage in criminal conduct by corrupting law enforcement
agents at all levels.17 Where legal constraints on exchanges between consent-
ing adults are eliminated by a Liberty Approach, the source of the artificially
inflated profits earned by those who are willing to accept the substantial risks
of doing business on the black market would also be eliminated. Without these
profits, the other sordid side effects of these statutes would also be rapidly and
markedly diminished.
Unanswered Questions about a Liberty Approach
No approach to any serious problem is without difficulty. By now, several
important questions about a Liberty Approach are likely to have occurred to most
readers: How would private law enforcement services be paid for, especially
by the poor? How would private owners be able to coordinate their preventa-
tive activities? How would injustice by private owners be held in check? How
could enforcement agencies be prevented from banding together and recreating
a monopoly system? Is law enforcement a “public good” that for economic
reasons cannot be provided on a market?
Answers to some of these questions will be offered in an exploratory fashion
in the next section. Other questions must be left unanswered for now because
of space limitations. A Liberty Approach will not, however, be taken seriously
by reformers if the problem of providing services to the poor is not discussed.
So let us turn our attention briefly to this important issue.
Those who are unable to pay for private law enforcement services (and other
privately provided goods and services) may receive them in one of four ways.
Such services might be voluntarily provided to poor persons without charge (pro
bono) by private firms, or people concerned about the well-being of others can
voluntarily give to private agencies who will pay for private law enforcement
84 Anarchy and the Law

services for the poor.18 Or law enforcement agencies can be forced to service
those who cannot afford to pay their fees, or some people can be forced to con-
tribute their money to those agencies who serve the poor. These alternatives need
not be evaluated here, for whether one favors or opposes forced redistribution
to the poor, a Liberty Approach is far superior to a system based on the Power
Principle and its regime of public crime prevention.
Supposing (as most people do) that some degree of forced redistribution of
wealth to poor persons is justified, there is no reason why an inferior system
of public property, public law enforcement, and public imprisonment must be
created or preserved just to service those who are not wealthy enough to pay for
private law enforcement. Either direct cash payments or “vouchers” (which are
money payments with use restrictions) can be provided to the poor to pay for
those privately provided services that are now governmentally provided.
Giving the poor recreational, law enforcement, and judicial services “in
kind” makes as much sense as creating a governmental food production and
distribution monopoly for everyone to ensure that the poor have food. Instead,
vouchers—called “food stamps”—are given so that the poor can buy food
from private sources. Had the private food production and distribution system
been supplanted by a government system at some distant point in our history,
exactly the same criticisms would probably be made of a Liberty Approach to
food production as are made in opposition to extensions of a Liberty Approach
to areas where our history has been less fortunate and the Power Principle has
prevailed.
Despite whatever serious problems they may be experiencing, most people
have a natural conservative instinct to accept that which exists as inevitable and
right. The truth is, however, that imposing a retrogressive public system of law
enforcement on everyone solely to benefit those who are poor is unnecessary,
foolish, and wrong.
A Nonmonopolistic Legal Order
A possible…objection to the view [of law] taken here is that it permits the existence
of more than one legal system governing the same population. The answer is, of
course, that such multiple legal systems do exist and have in history been more
common than unitary systems.19
What kind of legal order is consistent with the rights and remedies described
in Part One of this article?20 Two constraints on our choices immediately pres-
ent themselves.
First, the legal order must be financed by noncoercive means. The confisca-
tion or extortion of one person’s rightful possessions to finance the defense
of that person’s rights or those of another is itself a rights invasion.21 Second,
the jurisdiction of each court system cannot be a legal monopoly. It would be
inconsistent with the rights and remedies of the Liberty Approach to impose
legal sanctions on someone solely because he has attempted to provide judicial
services in competition with another person or group since such an attempt
 Pursuing Justice in a Free Society 85

would itself violate none of the rights specified by the Liberty Approach.22 I
shall consider each of these constraints in turn.
Noncoercive Sources of Funding
There is no reason why either a law enforcement agency or a court system
cannot charge for its services, in much the same way as do other “essential”
institutions, such as hospitals, banks, and schools.23 Each business requires
expertise and integrity, and institutions engaged in such activities must earn the
trust of the consumer. Hospitals, banks, and schools, however, rely primarily
on fees charged their customers, though payment of these charges can be made
in a variety of different ways.
The very large and largely unanticipated expenditures for emergency hospital
care are financed by insurance arrangements, by conventional credit, and, of
course, by cash payments. Banks raise the bulk of their revenue from the dif-
ference between the interest they charge borrowers and the interest they pay
depositors, and where this differential is narrow, service charges may be im-
posed as well. Schools which do not receive tax receipts rely largely on tuition
payments made by parents and students out of savings or from the proceeds of
long-term loans. A significant portion of both educational and health services
is subsidized by private charitable contributions.24
It takes no great imagination to envision competitive law enforcement agen-
cies providing police protection to paying subscribers—especially in a society
where streets, sidewalks, and parks are privately owned. (Park and road owners
could, for example, bundle the provision of protective services with their other
transportation and recreational services.) Such a system25 would probably include
agreements between agencies to reimburse each other if they provide services in
an emergency to another firm’s client.26 Competitive court systems could utilize
many of the same techniques as hospitals to fund their services: insurance, credit,
cash, and charity. Prepaid legal service plans or other forms of legal insurance
are also possible and, where permitted, sometimes are available even today.
In addition, court systems could profit by selling the written opinions of their
judges to law firms (or to the various retrieval services on which lawyers rely).
Such opinions would be of value to lawyers and yield a profit to the court system
which sold them only to the extent that they are truly useful to predict the future
actions of these judges. So to fully profit from such publications, each court
system would have to monitor and provide internal incentives to encourage its
judges both to write and to follow precedential decisions.
At present, attorneys bill clients by the hour or collect a percentage of the
damage awards they succeed in obtaining. They also work pro bono—that is,
they donate their services in the interests of justice. Except in unusual cases,
however, those who successfully bring or defend lawsuits in the United States
today cannot recover their legal fees from those persons who either violated
their rights or who wrongfully brought suit against them.
86 Anarchy and the Law

In contrast a Liberty Approach requires restitution to compensate as com-

pletely as possible for all the determinable expenses which result from a rights
violation. Therefore, in a legal system that adheres to a Liberty Approach, the
loser of a lawsuit must be liable (at least prima facie) for the full legal costs of
the prevailing party. In the absence of such a rule, the innocent party would be
made to absorb some of the costs of the other party’s wrongdoing. And such a
legal rule would also serve both to protect innocent persons from the expense
and injustice of baseless lawsuits by increasing the costs of losing weak cases,
and to help pay for meretricious winning lawsuits brought by people who could
not otherwise afford the legal costs.
Moreover, it is important to note that consumers using such institutions as
hospitals, schools, and banks must now pay both for the services of doctors,
bankers, and teachers and for the overhead of the facility (the hospital, the bank,
or the school) where these professionals practice. With the legal profession,
however, we are accustomed to privately paying for lawyers, while providing
the capital and labor used by lawyers—courts and court personnel—by tax
receipts. This “public good” arrangement encourages overuse by some until
court backlogs and overcrowding create queues that substitute for prices or
fees to clear the market.
Some people worry that allocating court resources by means of a market
price mechanism will unfairly reward the rich. But the system as it now exists
rewards those litigants who are better able to wait out the imposed delays and
penalizes those who for any reason require a fast decision.27 Who is more likely
to be in each group, the wealthy or the poor, a company or an injured consumer,
the guilty or the innocent? Remember also that in a Liberty Approach, the loser
would have to reimburse the prevailing party for court costs, including costs
caused by delaying tactics.28 The most likely result of adopting a competitive
legal order with market-based pricing is that all legal costs would be greatly
reduced from their present level, and successful litigants would be able to keep
a higher proportion of whatever damages awards they recovered.
In short, the financing of legal services is neither a very different nor a more
serious problem than the financing of many other public services that rely only
minimally, if at all, on tax revenues and that sometimes even now must compete
against tax subsidized competition to survive. Whatever problems may exist in
providing indigents with legal and judicial services exist as well with hospitals
and schools. But such problems do not justify taxation as a means of provid-
ing these services to everyone, whether indigent or not, nor, as was suggested
above,29 must these services be provided in kind.30
No Jurisdictional Monopoly
The argument that law enforcement and adjudication are so important that
they must be provided by a coercive monopoly is ironic. If one had to identify
a service that is really fundamental to social well-being, it would be the provi-
 Pursuing Justice in a Free Society 87

sion of food. Yet no one (in this country) seriously suggests that this service is
“too important” to be left to private firms subject to the market competition.31
On the contrary, both theory and history demonstrate that food production is
too important to be left to a coercive monopoly.
The more vital a good or service is, the more dangerous it is to let it be
produced by a coercive monopoly. A monopoly post office does far less harm
than monopoly law enforcement and court systems. And a coercive monopoly
might go largely unnoticed if it were limited to making paper clips—that is,
the inferior and/or costly paper clips inevitably produced by such a monopoly
might not bother us too much. It is when something really important is left to
a coercive monopoly that we face potential disaster.
Moreover, upon closer examination the seemingly radical proposal to end the
geographical monopoly of legal systems is actually a rather short step from the
competitive spirit to which we have been, and to some extent still are, accus-
tomed. In the long history of English law, royal courts competed with merchant
courts; courts of law competed with courts of equity.32 “The very complexity
of a common legal order containing diverse legal systems contributed to legal
sophistication.”33 Even today, the federal system in the United States preserves
a degree of competition between state and federal courts. We are accustomed
to the idea of “checks and balances” among governmental power centers that
is said to be embodied in the constitutional framework.34 And private adjudica-
tion and arbitration organizations routinely compete with government courts
for commercial business.
In evaluating the merits of a nonmonopolistic legal order we must be careful
always to take a comparative approach. It is tempting but ultimately fruitless
to compare any proposal to an ideal that no other possible legal order could
more closely achieve.35 When comparing the realistic prospects of a legal order
made up of diverse legal systems with those of a monopoly legal system, the
advantages can readily be seen.
Without a coercive monopoly, actual or potential competition provides genu-
ine checks and balances. In a competitive legal order, an individual excluded
from or oppressed by one legal system can appeal to another; an individual
shut out of a monopoly legal system cannot.36 People are extremely reluctant to
“vote with their feet” by leaving a country because doing so means abandoning
one’s friends, family, culture, and career. And yet people do so if things get bad
enough. By having the choice to shift one’s legal affiliation without having to
incur the substantial costs of expatriation means that things do not have to get
nearly so bad before a change in affiliation occurs.
Contrary to contemporary preferences for a unitary legal system, it is the
pluralism of the Western legal order that has been, or once was, a source of
freedom. A serf might run to the town court for protection against his master.
A vassal might run to the king’s court for protection against his lord. A cleric
might run to the ecclesiastical court for protection against the king.37
88 Anarchy and the Law

Law will remain supreme in a society if, and only if, a unitary legal system
does not develop.
Perhaps the most distinctive characteristic of the Western legal tradition is the
coexistence and competition within the same community of diverse jurisdictions
and diverse legal systems. It is this plurality of jurisdictions and legal systems
that makes the supremacy of law both necessary and possible.38
The modern monopolistic conception of a unitary legal system threatens
this vital diversity.39
Moreover, while we are accustomed to thinking about a single agency with
a geographical monopoly—such as county government—providing both the
judicial system and the police agency to enforce its orders, in a competitive legal
order no such combination is either likely or desirable. Wholly different skills
and resources are needed to efficiently render just decisions than are needed to
efficiently enforce such decisions as are rendered by a court.
For instance, an efficient judicial system must accumulate and organize the
historical information and legal analysis needed to do justice between con-
tending parties, and it must also demonstrate to the relevant social group that
justice is being done. A successful court system must fulfill at least two distinct
functions: the justice function and the fairness function. The justice function
consists of devising and implementing reliable means of accurately determining
facts and law. The fairness function consists of convincing the practicing bar
who must recommend where to initiate lawsuits, the litigants who must suffer
the consequences of this choice, and the general public who must acquiesce
to the enforcement of legal judgments in their midst that the procedures it has
employed have produced justice. A legal system will not provide a service
worth paying for if it fails to fulfill either function. Additionally, some kinds
of procedural safeguards may be mandated not only by market demands but
by principles of justice as well.40
Efficient law enforcement, on the other hand, involves the least costly use
of coercion (a) to protect people from harm, (b) to seize and sell property in
satisfaction of judgments by a “recognized” court, or (c) to administer a system
of productive enterprises where persons who are either unable or unwilling to
make payments from regular earnings can be employed under controlled condi-
tions and paid market wages from which reparations are deducted until their debt
to the victim is satisfied.41 It is implausible that a single agency would provide
any two of these services. The fact that an institution performs one of these
functions well would seem to be unrelated to its ability to effectively perform
any of the others. It is even more implausible that a successful law enforcement
agency would also most efficiently supply judicial services.
As important as the balance maintained by a competitive legal order are the
constraints provided by the requirement that legal systems contract with their
clientele. Deprived of the power to tax and the power to coercively impose their
services upon consumers, legal systems which must depend upon market-based
 Pursuing Justice in a Free Society 89

fees and prepaid insurance would have to be comparatively more responsive to

the needs and desires of their consumers than agencies with the right to collect
their revenues at gun point. The fact that individuals and firms respond to the
incentives provided by competition is acknowledged to be true in every other
area of human endeavor. Human nature does not suddenly change when one
gets a job providing law enforcement and judicial services.
Where opportunities for better service are perceived by entrepreneurs, the
capital markets permit enormous amounts of money to be raised in a short period
of time, either to purchase existing firms which are mismanaged, to start a new
firm, or to diversify from one area of law enforcement into another. Each legal
system would be constrained by the knowledge that alternative systems exist, in
much the same way that individual states in a federal system are constrained in
how they make corporation law by the knowledge that it is always possible for
companies to reincorporate in another state without moving their assets.42 Even
a rumor of unreliability can be expected to shake the biggest of companies.
In short, there is an increased likelihood that a competitive legal order would
be far more responsive to the consumer than a coercive monopoly. In fact, when
one seriously compares the potential responsiveness of each system, many
readers may concede the point and offer the opposite objection: Competing
jurisdictions would most likely be too responsive to their customers, and this
would inevitably lead to injustice and serious conflicts among agencies, creat-
ing serious social disruption. What is to prevent one judicial organization from
fighting with or ignoring the rulings of another? Why should any organization
heed the call of another? These are serious questions deserving serious answers,
but first some perspective is needed.
We now have fifty (state) court systems in the United States, each with its
own hierarchical structure, plus twelve Federal Circuit Courts of Appeals.
There is no general right to appeal from the decision of any one of them to
the Supreme Court of the United States. (With few exceptions, the Supreme
Court of the United States must choose to accept a petition for review.) And
the situation is, in fact, still more diverse. For within each state, there are often
numerous appellate court jurisdictions from whose judgment one has no general
right to appeal to the supreme court of that state. (Again, with few exceptions,
the supreme courts of each state must choose to accept a petition for review.)
Moreover, the federal as well as many state appellate court districts are divided
into “panels” of judges, who are randomly assigned to hear cases arising from
the same jurisdiction. Add to this diversity the many municipal court systems
and courts of limited jurisdiction—such as bankruptcy courts—and the image
of a unitary court system begins to blur.
The abolition of geography-based jurisdictional monopolies would mean
only that jurisdictional conflicts would arise between persons who had chosen
different court systems by contract, rather than as now between persons who
have decided to live in different places.43 Where two disputants have chosen the
90 Anarchy and the Law

same court system, no jurisdictional conflict is presented. Where individuals have

chosen different court systems, conflicts between the two disputants would be
governed by the same type of preexisting agreements between the court systems
that presently exists between the court systems of states and nations.
Extended conflict between competing court systems is quite unlikely. It is
simply not in the interest of repeat players (and most of their clients) to attempt
to obtain short-run gains at the cost of long-run conflict. Where they have the
opportunity to cooperate, in even the most intense conflicts—warfare, for
example—participants tend to evolve a “live and let live” philosophy.44 Most
successful lawyers do not today go to any lengths to pursue a given client’s
interests: they must live to fight another day and to preserve their ability to ef-
fectively defend other clients. Likewise, it is not in the interest of any judge or
court system to use or threaten force to resolve a legal or jurisdictional conflict
in any but the most serious of circumstances.
Courts and judges have, therefore, traditionally found peaceful ways to
resolve the two questions most likely to lead to conflict when multiple legal
jurisdictions exist: Which court system is to hear the case when more than one
might do so? And which law is to be applied when more than one law might be
applied? Much of the court-made law of “civil procedure” addresses the first
question,45 and an entire body of law—called the conflict of laws—has arisen
spontaneously (that is, it was not imposed by a higher authority) to provide a
means of resolving the second of these two questions. As one commentator
wrote:
What is the subject matter of the conflict of laws? A fairly neutral definition…is that
the conflict of laws is the study of whether or not and, if so, in what way, the answer
to a legal problem will be affected because the elements of the problem have contacts
with more than one jurisdiction.46
How much greater the incentive to cooperate would be if competing ju-
dicial services did not have access to a steady stream of coercively obtained
revenue—that is, by taxation. Those contemplating such a conflict would know
that the resources available to fight would not exceed those on hand and those
which people were freely willing to contribute to the fight. Unlike national
governments, they could not obtain by coercion—that is by draft—personnel
to enforce their judgment.
A “renegade” judicial system or law enforcement firm, no matter how fi-
nancially well endowed it might be as compared with any single rival, would
undoubtedly be dwarfed by the capital market as a whole. Imagine the Cook
County Sheriff’s Office fighting all the other sheriff’s offices in the region, state,
or country with only the resources it had on hand. (Actually, the jurisdictional
dispersion of a nonmonopolistic legal order makes McDonald’s declaring war
on Wendy’s and Burger King a far more apt analogy.)
The argument that we need court systems with geography-based jurisdictional
monopolies does not stop at the border of a nation-state. Any such argument
 Pursuing Justice in a Free Society 91

suggests the need for a single world court system with one Super-Supreme
Court to decide international disputes and its own army to enforce its decisions.
After all, the logic of the argument against a competitive legal order applies
with equal force to autonomous nations.47 Yet, although governments do go to
war against one another—of course, they can tax their populations and draft
soldiers48—few people favor the coercive monopoly “solution” to the most
serious problem of war. Rather than invoking the Power Principle that would
mandate the creation of a hierarchy, most people favor the use of “treaties” or
agreements—contracts, if you will—between nations to settle their conflicts.
That is precisely how a nonmonopolistic legal order should and would resolve
their conflicts as well.
To better understand the case for a nonmonopolistic legal order and the
deficiencies of a monopolistic system, posit what most people fear would hap-
pen if a unitary international “one-world” court system and police force were
adopted. The same fears should apply with equal force to a national monopoly
court system, except for the fact that some people have the ability to flee if
a single country becomes too tyrannical. The abolition of geography-based
jurisdictional monopolies would simply strengthen the constraints on tyranny
by making alternative legal systems available without leaving home.
In sum, conflicts between court systems whose jurisdictions geographically
overlap present no huge practical problem. It is more reasonable to expect a
never-ending series of “little” problems around the edges. Information must
be shared; duplicated efforts avoided; minor conflicts settled amicably; and
profit margins preserved. As with any other organization, the normal problems
confronting business and political rivals—who must constantly strike a bal-
ance between competition and cooperation—would have to be managed. How
these edges would be smoothed would sometimes require ingenuity. There is
no good reason, however, to refrain from seriously pursuing this alternative to
the Power Principle.
Imagining a Nonmonopolistic Legal Order
It is no easier to predict the formal organization and division of labor of a
future legal order than it is to predict the formal organization of the personal
computer market ten years from now. (Of course, ten years ago the challenge
would have been to predict the very existence of a personal computer market.)
Difficulties of prediction notwithstanding, some speculation is needed, for
without a conception of what such a legal order would look like, few will be
inspired to move in the direction of a Liberty Approach. However, rather than
attempt the impossible task of comprehensively assessing the limitless pos-
sibilities that freedom makes possible, let us instead imagine that somewhere
today there exists the legal order that I shall now describe.49
In this hypothetical world, the vast majority of people who work or who have
spouses or parents who work are covered by health insurance arrangements (like
92 Anarchy and the Law

those provided in our world by such companies as Blue Cross/Blue Shield). In

return for a monthly fee, if they are ever sick they receive medical attention by
simply presenting their membership card to an approved doctor or hospital. In this
hypothetical world, many people also carry a Blue Coif/Blue Gavel card (“Don’t
get caught without it!”) as well. If they ever need legal services, they present their
card to an approved lawyer and court system. Of course, as with medical insur-
ance, not all kinds of legal actions are covered and there may be limits to some
kinds of coverage; and not everyone makes use of this type of system.
Others belong to a “Rights Maintenance Organization” (or “R.M.O.”). These
firms keep lawyers on staff as salaried employees (rather than as partners)
providing “preventative” legal services. Costs created by needless or hopeless
litigation are said to be more tightly controlled than is possible with conven-
tional legal insurance arrangements, and this permits an R.M.O. to offer more
coverage for a lower premium. Legal disputes between members of the same
R.M.O. are very expeditiously handled internally. And when it is necessary
to go to an outside court, the R.M.O. will pay the court fee (having arranged
group discounts for its members in advance). On the other hand, the freedom to
pick your own lawyer within an R.M.O. is necessarily limited, and this feature
will not satisfy everyone. Another drawback is the fact that the client is more
dependent on the R.M.O.’s determination that a lawsuit is cost-justified than is
a client who has coverage by Blue Coif/Blue Gavel.
Large retailers (like Sears) who sell insurance (Allstate), investment (Dean
Witter), and real estate (Caldwell Banker) services also sell legal services, as do
some bank and trust companies. Most offer in-house revolving charge accounts
as an alternative to insurance and other kinds of credit arrangements. Law firm
franchises dot the landscape with well-lit (some think garish) “Golden Scales of
Justice” signs prominently displayed at streetside. Located in shopping malls and
along busy streets, these firms advertise nationally and specialize in high volume
(some say homogenized) practices, handling routine legal matters at standard-
ized fees. (They accept Blue Coif/Blue Gavel and major credit cards.)
Such mass merchandising is not for everyone. Many clients still prefer the
personal touch and custom tailored work of solo practitioners who thrive by
providing a more individualized approach. Some of these independent lawyers
offer more specialized expertise than the chains; others try to be “generalists”
and claim that they can spot interrelated legal problems that the lawyers who
only handle certain kinds of less complicated legal matters often miss. Most
large companies with commercial legal problems prefer the elegance, prestige,
and economies of scale of large, traditionally organized high-rise law firms.
(Some things never change.)
Other means of financing lawsuits besides insurance are also available. A
few credit card companies offer extended payment plans when used for legal
services. Contingency-fee-based entrepreneurs (who, like everyone else, can
and do advertise widely) serve many who cannot or choose not to advance the
 Pursuing Justice in a Free Society 93

money for legal services. (However, to help minimize the number of improvident
lawsuits, some court systems have established rules restricting such practices
in a manner similar to the rules established in our world by private stock and
mercantile exchanges.) Such legal entrepreneurs are a bit more risk averse than
they are in our legal system since, if they lose, their clients will be liable for the
full legal expenses of the other side. Still, they provide an important service to
many who could not otherwise afford legal services.50
The judicial order mirrors the diversity of the legal profession as a whole.
There are well-known and well-advertised national judicial centers, with regional
and local offices, that handle the bulk of routine commercial practice. (These
firms sometimes attempt to satisfy the fairness function by hiring lay jurors to
decide simple factual matters.) There are small firms that handle specialized
legal matters like maritime cases and patent or mineral disputes. (These firms
almost never use lay jurors, but rely instead on panels of professional experts
who receive retainers from the company.51) And there are thousands of indi-
vidual judges who hang out a shingle in neighborhoods after registering with
the National Register of Judges and Justices of the Peace, which requires of its
members a minimum (some say minimal) level of legal education and experi-
ence. Many of these judges share the ethnic heritage of the community where
their offices are located. Many of these judges are multilingual.
Individuals and businesses tend to avoid judges and judicial systems which
lack some significant certification of quality. The Harvard Law School Guide
to the American Judiciary, for example, is one useful source of information
(but it is occasionally accused of being somewhat elitist). Who’s Who in the
American Judiciary, published by a nonacademic publishing firm, is another.
Others prefer the annual guide published by the Consumers Union (it ac-
cepts no advertising). Still others prefer the Whole Earth Catalog of Judges
(though it usually is a bit out of date). The Michelin Guide to International
Law Judges uses a five-star rating system. Even with all of these publica-
tions providing information about the legal system that is unavailable to us
in our world, newspapers and television “news magazines” never seem to tire
of stories about judicial corruption. Such exposes sometimes lead to reforms
by the various rating agencies.
To attract business most judges obtain enforcement of their judgments by
subscribing to services offered by police companies. Otherwise only the moral
authority of their rulings would induce compliance. Since all law enforcement
agencies are legally liable to those who can prove to the satisfaction of a special
appellate system that an erroneous judgment had been imposed upon them,52
no enforcement company will long maintain a relationship with an unreliable
judicial agency or an unregistered judge. (Some judges even advertise to law
enforcement firms and the general public: “Judgment affirmed or your money
back!”) Until a few years ago, several large judicial agencies owned their own
police company (more on this development in a moment).
94 Anarchy and the Law

Surprisingly, however, not every judge utilizes the services of an enforcement

agency. The American Association of Adjudicators (AAA) does not promise
enforcement but only a fair and just decision. All parties must contractually
agree to binding adjudication in a form recognized as enforceable by other courts
who do have enforcement arrangements and who will only on rare occasions
fail to summarily honor an AAA adjudicator’s decision. Other judges don’t
rely even indirectly on law enforcement agencies. In some discrete communi-
ties—like the diamond trading community in our world whose judges apply a
variant of Jewish law—social sanctions are all that are required to effectively
enforce judgments.
The enforcement agencies themselves tend to specialize in what we call
criminal and civil cases. The distinction between these areas is not considered to
be a theoretical matter, but turns instead on the differing enforcement problems
that necessitate a division of labor. Those firms specializing in “criminal”
matters either catch criminals or provide work to those who may not be able
to earn enough to satisfy the judgment against them if left on their own.
The “civil” agencies must be adept at sorting through paper arrangements to
locate assets that can be legitimately seized and sold to satisfy judgments.
Occasionally, when a civil agency is done with a convicted defendant, the
case must be turned over to a criminal agency to collect the balance. To
be sure, conflicts between enforcement agencies have arisen. Most have been
quickly resolved by the agencies themselves. Some have required other agen-
cies to intervene.
In addition, all law enforcement agencies subscribe to one of two competing
computer networks that gather and store information about individuals who
have been convicted of offenses (in much the same manner as government
police departments and private credit rating agencies share information in our
world). Such services provide their clients with near instantaneous information
about individuals and firms that they might be contemplating doing business
with (something like the information that local Better Business Bureaus in
our world claim to provide) and persons whom they might consider excluding
from their property.
While it does not directly concern the legal order, some may be interested to
learn that most common areas in this world are as accessible as private shopping
centers and other commercial and residential developments are in ours. Smaller
parks, however, tend to be for the exclusive use of those neighborhood residents
and their guests who pay annual fees; larger parks issue single admission tickets
and season passes. People who do not use the parks at all are free to spend their
money on other goods and services.
Intercity highways charge tolls. Urban commuter highways issue license
plates that vary in price (and color) depending on whether or not they can be
used during “rush hours.” (Price rationing has eliminated regular traffic jams.
For example, as with long distance phone service, usage between 8:00 p.m.
 Pursuing Justice in a Free Society 95

and 6:00 a.m. is heavily discounted.) Tourists can obtain temporary permits at
outlying tollbooths. Some firms in this world are now experimenting with elec-
tronic systems that monitor highway usage—with rates that can more precisely
reflect such factors as distance, time, and day—and send monthly bills to users.
With road use subject to market pricing, competing private train and bus firms
seem to do better in this world than in ours, where road use is rationed by gas
prices and a queue.
All new commercial and residential developments must build their own
roads, and all leases and land titles include both contractual rights of access and
stipulated maintenance fees. Ownership of formerly public streets has been as-
signed to road companies. Stock in these companies belongs to those who own
commercial or residential property adjacent to the streets, and these property
owners also receive contractual rights of access and egress. These companies
have continued to merge and break up with one another until their sizes and
configurations are economically efficient.
(Aside: What now follows is a worse case scenario offered only to show
the stability of such a legal order. What makes the story particularly unlikely
to occur in a nonmonopolistic legal order is that its ending would be so easily
foreseeable.)
Some years ago, one quite serious problem with the legal system did de-
velop, however. About ten years after the monopoly legal system was ended,
“TopCops,” one of the country’s largest law enforcement agencies (commanding
about one-third of the national market in protective services) merged with Jus-
tice, Inc., one of the largest court systems. Many observers were quite disturbed
by this development, and the other judicial companies and law enforcement
agencies also became concerned. Since the merger violated no one’s rights,
no legal action against this new institution could be taken. The fears, however,
turned out to be well founded.
Initially the operation of this organization appeared to be unobjectionable,
but after a time rumors began to circulate that when subscribers to TopCops
came into conflict with subscribers to other agencies, Justice, Inc., sided with
TopCops in some highly questionable decisions. In response to these rumors,
both the Chief Judge of Justice, Inc., and the corporate president of TopCops
denied that any lack of fairness existed, and they publicly promised an internal
investigation. Still the rumors persisted and took a new turn. Officers of TopCops
were said to have been accused of committing crimes, but Justice, Inc., rarely
if ever found for their accusers.
Unbeknownst to the general public, in response to these rumors a secret task
force was formed by a consortium of major rival enforcement agencies and
court systems to devise a strategy to deal with the problem. (It was thought at
the time that secrecy was important so as not to shake the faith of the general
public in the legal structure as a whole.) The following policies were quietly
adopted and implemented:
96 Anarchy and the Law

First, no subscriber of a court system belonging to the consortium would

submit to the sole jurisdiction of Justice, Inc. This had not been the usual practice
formerly because avoiding duplicate legal actions saved costs for both sides.
Second, all decisions of Justice, Inc., that were in conflict with a decision of
a court belonging to the consortium were to be automatically appealed to a third
court system according to the appellate structure established by the Cambridge
Convention (of which Justice, Inc., was a member).
Finally, no decision of Justice, Inc., that conflicted with that of a member court
would be recognized and enforced by a member law enforcement agency.
Smaller court systems and law enforcement agencies quickly got wind of the
new policy and began emulating it. The immediate consequence of these actions
was a drastic increase in the adjudication and enforcement costs incurred by
Justice, Inc., and TopCops. A backlog of cases began to develop, and the rates
of both companies eventually had to be raised. As a result, subscribers began
switching to alternative services. A major faction of the board of directors of Top-
Cops resigned when the board refused to adopt any significant reforms. Instead,
the remainder of the board voted to sever their affiliation with the Cambridge
Convention and began to search for alliances with other companies. (The true
reason for this apparently irrational behavior was discovered only later.)
Several small enforcement companies and even one medium size company
were induced to affiliate with TopCops, forming the Confederation of Enforce-
ment Agencies. It was rumored that some had been intimidated to affiliate.
These alliances, however, did little more than make up for the steady drop in
both subscribers and revenues. At its zenith, the entire Confederation controlled
about a third of the enforcement market—about the same share of the market
that TopCops alone had previously controlled.
In response, the Cambridge Convention formally severed relations with the
members of the Confederation and went public with its factual findings. Not-
withstanding the Confederation’s public protests, its already jittery subscribers
began to repudiate their contracts in large numbers. The Confederation first
announced that it would no longer give pro rata refunds for subscription fees.
When resignations nonetheless persisted, the Confederation announced that
because they were a result of “unfounded panic,” it would not recognize them
as valid until the “rumormongering” of the “Cambridge Cartel” ceased.
Then a new and frightening story broke. It was learned that the board mem-
bers of TopCops who had pioneered these developments were secretly affiliated
with members of the remnants of the old “organized crime syndicate.” Since all
victimless crimes—crimes involving drugs, gambling, prostitution, pornography,
and so on—had long ago been abolished, the syndicate’s power and income
had drastically declined. It obtained what income it received primarily from
organizing and attempting to monopolize burglary, auto theft, and extortion
activities. Of course, even these activities were not as profitable as they had
once been because preventative law enforcement efforts had greatly increased,
 Pursuing Justice in a Free Society 97

and the corruption of law enforcement officers had become much more difficult.
Hence the scheme to infiltrate TopCops was hatched.
A search by independent investigative journalists of the court records made
available by the consortium revealed that the syndicate-affiliated criminals had
received unjustifiably favorable treatment by Justice, Inc. With this news, the
Cambridge Convention communicated the following extraordinary order to all
law enforcement agencies and to the general public:
No order of Justice, Inc. is to be recognized or obeyed. Free protection is to
be extended to any subscriber of TopCops who is threatened in any way. Any
victim of a burglary or auto theft whose case had been adversely decided by
Justice, Inc., is entitled to a re-hearing, and all previously acquitted defendants
in such cases are subject to immediate re-arrest and re-trial. All TopCops em-
ployees are to be placed under immediate surveillance.
With this action, Justice, Inc., was forced to close its operations because of
lack of business. The remainder of TopCops’ honest subscribers repudiated their
affiliation, and scores of burglars and auto thieves were placed under arrest.
(Several of TopCops’ employees turned out to have been acquitted burglary
and auto theft defendants.) Without a cash flow, and with the risk of personal
liability now present, TopCops’ employees began quitting the company in very
large numbers. Since TopCops had been a national organization, it did not have
a single location that was strategically defensible, so there was little armed
resistance to the law enforcement actions of the consortium members. In most
instances, TopCops facilities were within a few blocks of other agencies. Within
a matter of weeks, the TopCops organization had been disbanded and its assets
auctioned off to provide funds to partially reimburse persons whose rights it
had violated. Soon, offices formerly operated by TopCops were reopened for
business as new branches of other established companies.
The entire unhappy episode had taken not quite six months to unfold, but
some important lessons were learned. First, the initial euphoria surrounding the
abolition of the archaic monopoly legal system was tempered. People realized
that a nonmonopolistic legal order was no panacea for the problems of law
enforcement and adjudication. Diligence was still required to prevent injustice
and tyranny from recurring. Second, the Cambridge Convention announced that
in the future it would not recognize any court system created or purchased by
a law enforcement agency. Court systems were still able to administer a small
enforcement contingent, but strict guidelines were formulated for such arrange-
ments. Third, organized burglary, auto theft, and extortion rings had been dealt
a serious financial blow. (They still persist, however.)
Finally, after all the turmoil and talk of “crisis” had subsided, most people
came to realize that their new legal order was far more stable than many of the
“old guard” who had grown up under the ancient regime had expected it to be.
The entire unhappy incident had unfolded in a matter of months and had been
successfully and largely peacefully resolved. And this realization extended to
98 Anarchy and the Law

members of the law enforcement community as well, making any future forays
into aggressive activities much less likely than ever before.
Conclusion: Beyond Justice in a Free Society
We are now in a position to provide new answers to the three problems of
power that were posed in the first installment:53
Who gets the power? Those court systems whose jurisdiction people agree
to accept and those law enforcement agencies to which people are willing to
subscribe.
How do you keep power in the hands of the good? By permitting people to
withdraw their consent and their financial support from those who are perceived to
be corrupt or to be advantage-takers and letting them shift their support to others
who are perceived to be better. The potentially rapid swing of resources and the
ability of law-abiding organizations to organize their resistance to aggression can
help assure that swift preventative measures will be smoothly implemented.
How do you prevent holders of power from receiving undue legitimacy? No
nonmonopolistic court would have any special legal privileges. Stripped of the
legitimacy traditionally accorded rulers, private court systems would be con-
stantly scrutinized to detect any self-serving behavior. Their legitimacy would
depend solely on their individual reputations. While a tradition of integrity would
heavily shape a reputation, an effective court system would need to ensure that
its current practices and policies did not jeopardize its reputation in any way.
Two final questions remain to be addressed. First, how can we expect that
the substantive rights and remedies suggested by a Liberty Approach will be
the law adopted by a nonmonopolistic legal order? After all, these rights go far
beyond the simple abolition of monopolistic legal jurisdictions.54 As a practical
matter the answer is quite simple. It is hard to imagine a society that did not
adhere to some version of the rights and remedies prescribed by a Liberty Ap-
proach ever accepting a nonmonopolistic legal order in the first instance. In other
words, a societal consensus supporting these rights and remedies would seem
to be a precondition forever ending the monopolistic aspect of our legal system.
Moreover, the inherent stability of a competitive system is likely to preserve
this initial consensus. In the last analysis, where no consensus about liberty and
individual rights exists, it is unlikely that a coercive monopoly of power will do
much to prevent violations of these rights violations from occurring.55
Second, while acknowledging that only a summary description of a Liberty
Approach has been presented here, even the most open-minded reader is likely to
have a lingering doubt. There may remain a sense that a Liberty Approach—even
if it operated as advertised—may somehow not be enough; that to achieve the
kind of society to which we aspire requires more than the rights, duties, and
legal order of a Liberty Approach.
In an important respect, I think that such a doubt is entirely justified. A Liberty
Approach alone is not enough to ensure that a good society will be achieved—a
 Pursuing Justice in a Free Society 99

world with culture, with learning, with wisdom, with generosity, with manners,
with respect for others, with integrity, with a sense of humor, and much more.
A Liberty Approach neither includes such values in its prescriptions nor seems
to assure that by adhering to its prescriptions such a world will be attained. So
what does a Liberty Approach have to offer to those who share these values?
Lon Fuller once distinguished between two moralities—the morality of
aspiration and the morality of duty:
The morality of aspiration…is the morality of the Good Life, of excellence, of the
fullest realization of human powers. [A] man might fail to realize his full capabili-
ties. As a citizen or as an official, he might be found wanting. But in such a case he
was condemned for failure, not for being recreant to duty; for shortcoming, not for
wrongdoing….
Where the morality of aspiration starts at the top of human achievement, the
morality of duty starts at the bottom. It lays down the basic rules without which an
ordered society is impossible, or without which an ordered society directed toward
certain specific goals must fail of its mark…. It does not condemn men for failing to
embrace opportunities for the fullest realization of their powers. Instead, it condemns
them for failing to respect the basic requirements of social living.56
A Liberty Approach, if correct, is a morality of duty. It purports to specify
what justice is and how it may best be pursued. It is not an entire ethical system
for achieving a good society. Adherents to a Liberty Approach seek to identify
“the basic rules without which an ordered society is impossible.” They believe
that to legally require any more than this—to attempt to enforce a morality of
aspiration as we would a morality of duty—will ultimately undermine both
projects. They do not deny that more than justice is important. Nor do they deny
that the pursuit of justice will be influenced by the extent to which people adhere
to a morality of aspiration. But they believe no less firmly that the framework of
justice provided by a Liberty Approach offers humankind the best opportunity
to pursue both virtue and justice.
If the morality of aspiration is not enforced by a coercive monopoly in a
Liberty Approach, then what kind of institutions would enforce it? In a society
that rigorously adhered to a Liberty Approach, the so-called “intermediate”
institutions that have traditionally bridged the gap between individual and
State—schools, theaters, publishers, clubs, neighborhood groups, charities,
religious and fraternal groups, and other voluntary associations—would con-
tinue to serve their vital function of developing and inculcating values. But
in a completely free society, they would do so unburdened by the forcible
interference of third parties that is made possible by an adherence to the Power
Principle. Because they are noncoercive, these institutions—like the market
process—are inadequately appreciated by many. But it is no coincidence that
totalitarian regimes invariably strive to regulate, co-opt, subvert, and ultimately
to completely destroy these institutions.
Are such voluntary institutions enough? We have no way of being sure. But,
as I have repeatedly stressed here, a system based on the Power Principle offers
100 Anarchy and the Law

no guarantees either. Even an ideally wielded coercive monopoly of power is

only as “good” as the persons wielding the power. But power corrupts those who
wield it, and virtue is its first victim. Our values come not from coercion but
from the exhortations and examples set by countless individuals and groups.
The rights, remedies, and legal order specified by a Liberty Approach will
not end all injustice. There will always be injustice, just as there will always
be corruption and advantage-taking. But although a Liberty Approach offers
no guarantees, it does enable us to better pursue justice in a free society by
providing a clear idea of what we are pursuing and how we may best pursue
it without undermining our precious freedom in the process. For those who
believe in liberty and justice for all, a Liberty Approach may be an idea whose
time has come.
Notes

1. Barnett, “Pursuing Justice in a Free Society: Power vs. Liberty,” 4 Crim. Just. Ethics
50-72 (Summer/Fall 1985).
2. As discussed in Barnett, supra note 1, at 63-67, some within a Liberty Approach
would favor punishment in addition to restitution. While I briefly discussed, id. at
65-66, the feasibility and justice of obtaining punishment within a Liberty Approach,
more could and probably should be said about this dispute among adherents to a
Liberty Approach than is possible in this space.
3. The Power Principle is the belief that there must exist somewhere in society a “co-
ercive monopoly of power.” See Barnett, supra note 1, at 50-52. 1 have suggested
that certain features inherent in the Power Principle render it a counterproductive
and inappropriate means of solving the problems it is supposedly devised to solve.
Id. at 52-56.
4. Harold Demsetz’s distinction between two types of economic policy analysis—the
nirvana approach and the comparative institution approach—could be usefully ap-
plied to legal policy discussions as well. See Demsetz, “Information and Efficiency:
Another Viewpoint,” 12 J. Law & Econ. 1 (1969):
In practice, those who adopt the nirvana viewpoint seek to discover discrepan-
cies between the ideal and the real and if discrepancies are found, they deduce
that the real is inefficient. Users of the comparative institution approach attempt
to assess which alternative real institutional arrangement seems best able to cope
with the economic problem; practitioners of this approach may use an ideal norm
to provide standards from which divergences are assessed for all practical alterna-
tives of interest and select as efficient that alternative which seems most likely to
minimize the divergence.
5. See Barnett, supra note 1, at 63-64.
6. See R. Nozick, Anarchy, State and Utopia 28-35 (1974). See also Introduction to
Assessing the Criminal: Restitution, Retribution, and the Legal Process 1-25 (R.
Barnett and J. Hagel III, eds., 1977) (discussing the relationship between social
goals and individual rights in the context of criminal justice).
7. See Furubotn and Pejovich, “Property Rights and Economic Theory: A Survey of
recent Literature,” 10 J. of Econ. Literature 1137 (1972) (discussing the literature
analyzing property rights structures and the connection between ownership rights,
incentives, and behavior).
8. See Hardin, “The Tragedy of the Commons,” 161 Sci. 1243 (1968). For the view
of a state supreme court judge that the present court system is an example of a
 Pursuing Justice in a Free Society 101

commons problem, see R. Neely, Why Courts Don’t Work 164 (1983). (“Since the
courts are available free of charge, they are overused, and the result is justice-defy-
ing delays.”)
9. Even those who place an inordinately high value on protecting resources for the
benefit of future generations must still place some value on the benefits resources
can provide for presently living human beings.
10. See Barnett, supra note 1, at 58-59. See, e.g., Demsetz, “The Exchange and En-
forcement of Property Rights,” 7 J. of Law & Econ. 11, 18 (1964) (private property
is useful “in revealing the social values upon which to base solutions to scarcity
problems…. This valuation function is related to but distinct from the incentives to
work provided by a property system.........); Demsetz, “Some Aspects of Property
Rights,” 9 J. of Law & Econ. 61, 65-68 (1966) (“insisting on voluntary consent
tends to produce information accuracy when many costs and benefits are known
only by the individuals affected…. The marginal cost and benefit curves associated
with a prospective realignment of resources is not known to the government…. The
primary problem of the government is the estimation problem.”)
11. See D. Lavoie, National Economic Planning: What is Left? 51-87 (1985) (describ-
ing the “knowledge problem” facing nonmarket institutions).
12. See, e.g., Demsetz, “Some Aspects of Property Rights,” supra note 10, at 62 (“A
private property right system requires the prior consent of ‘owners’ before their
property can be affected by others”).
13. See B. Benson, The Enterprise of Law: Justice without the State (San Francisco:
Pacific Research Institute for Public Policy, 1990) (describing contemporary and
historical instances of private law enforcement).
14. However, minorities and strangers may suffer in such settings far more than they
would in a regime of private property. Neither a Liberty Approach nor the Power
Principle can guarantee that irrational prejudice will not make some worse off than
they would otherwise be. In either system, if a critical mass of persons persists in hat-
ing certain persons or groups, these groups can be expected to suffer. However, even
persecuted minorities fare far better in a regime of individual private property rights
for two reasons. First, they may own private property and reap the many benefits of
such ownership. Throughout history, Jews were prevented by the governments of
many countries from owning land. Slavery and apartheid are two governmentally
enforced systems that also restrict property ownership. Slavery goes so far as to
legally enforce the claims of some persons to own others. Nonmonopolistic law
enforcement of a complete range of property rights can only increase the well be-
ing of such persecuted groups. Second, a free market permits those members of
the majority who treat minorities fairly to profit from such transactions, thereby
always ensuring that powerful economic incentives exist to erode any barriers that
prejudice may erect.
15. Ask yourself whether a smart public policeman who saw a suspected burglar (in a
public alley behind your house) would stop him before he entered the house—that
is, before a crime had been committed—or would he wait instead until after the
burglary was in progress? Is it not perverse that public law enforcement makes
standing by until a crime is being committed the smart way to prevent crime?
16. But see Barnett, supra note 1, at 71 n.45 (citing adherents to a Liberty Approach
who would extend legal sanctions beyond restitution).
17. For more on the harmful effects of illegalizing victimless conduct, see Barnett,
“Public Decisions and Private Rights,” 3 Crim. Just. Ethics 50 (Summer/Fall 1984).
The analysis of drug laws and victimless crimes presented there is greatly expanded
in Barnett, “Curing the Drug Law Addiction: The Hidden Side Effects of Legal
Prohibitions,” in Dealing with Drugs (R. Hamowy, ed., 1987).
102 Anarchy and the Law

18. See infra note 24.

19. L. Fuller, The Morality of Law 123 (rev. ed. 1969).
20. See Barnett, supra note 1, at 56-67.
21. The philosophical claim that “taxation is theft” is, of course, controversial. The
attempt to refute this claim by pointing to circumstances where the seizure and
even the destruction of private property is allegedly justified to prevent a disaster
from occurring is inapt. It is one thing to attempt to justify the destruction of a
house to save a town from burning down. It is quite another to attempt to justify
the systematic extortion of money to provide a “service” of police protection. The
former describes a state of emergency. The latter does not. Normal rights theory is
determined with normal social conditions in mind. Fortunately we do not live in a
constant state of emergency. If we truly did, if life were really a perpetual “lifeboat
situation,” social order based on individual rights would probably be impossible.
Happily, this is not the case.
22. Not all advocates of the Liberty Approach are in agreement on this point or on
the analysis presented in the balance of this article. Robert Nozick, for example,
devoted the first part of Anarchy State and Utopia (1974) to an attempt to show
how a monopoly legal system—the so-called night watchman state—could arise
without violating anyone’s rights. For refutations of his argument that are consistent
with the Liberty Approach presented here, see M. Rothbard, The Ethics of Liberty
229 (1982); Barnett, “Whither Anarchy? Has Robert Nozick Justified the State?”
1 J. Libertarian Stud. 15 (1977); Childs, “The Invisible Hand Strikes Back,” 1 J.
Libertarian Stud.
23. It is assumed here that law enforcement and judicial services are not, as some have
argued, “public goods”—a category of goods and services that for technical eco-
nomic reasons are said to be unobtainable in a free market. See, e.g., J. Buchanan,
The Limits of Liberty 109 (1975) (“‘law’ of the sort analyzed here qualifies as a
pure collective consumption or public good”). I plan to address this issue in a future
essay.
24. Some might argue that charitable donations are induced by their being deductible
from income taxes. The argument is largely implausible. Even people in the 50
percent tax bracket have to spend $1.00 to save 50 cents on their tax bills. This is
hardly a profitable enterprise for most donors. And large gifts other than to charity
are subject to a gift tax. Moreover, at no time in our history was there more phi-
lanthropy than prior to the enactment of an income tax when most of our private
colleges and hospitals were founded. This only stands to reason. When people
believe that the money taken from them by taxation is caring for the truly needy,
they will feel much less inclined to give more than that amount.
Two vitally important features of private giving militate for keeping charity
voluntary, even if it were certain that less giving would take place. First, private
charity will tend to be far more efficient in assisting the needy than government
charity. Private charities have to answer directly to their donors. If they fail to adhere
to the donors’ Intentions, their contributions will dry up. By comparison, govern-
ment “welfare” agencies have little or no such incentives. Second, the donor as
well as the donee benefits from voluntary giving. Choosing to give to others gives
satisfaction to the donor and, if such acts become habitual, can permanently improve
the donor’s character. Coerced giving, by contrast, breeds resentment toward the
donee and can lead to class division and conflict. Ultimately, we risk undermining
the charitable instincts that motivated political support for forced giving programs.
Were this ever to happen, forced giving programs would not long survive.
 Pursuing Justice in a Free Society 103

We have witnessed an analogous development with the increasing public support

for a “good faith” exception to the exclusionary rule. The exclusionary rule creates
an unnecessary conflict between the protection of individual rights and public safety.
See Barnett, “Resolving the Dilemma of the Exclusionary Rule: An Application of
Restitutive Principles of justice,” 32 Emory L. J. (1983) (describing this conflict
and evaluating the deterrent effects of a restitutive remedy for police misconduct).
Unyielding proponents of the exclusionary rule have, by forcing a choice between
procedural rights and personal security, seriously undetermined popular support
for the former.
25. There is no room here to consider the argument that any such system is a “natural
monopoly.” Suffice it to say that there is a big difference between a natural monopoly
and a coercive monopoly. With the latter, even the threat of competition does not
exist.
26. Some motor clubs, for example, now offer reimbursement for the expense of road
repairs that were needed when club-provided services were unavailable.
27. See R. Neely, supra note 8, at 164-186; B. Bensen, supra note 13. Judge Neely
endorses the Liberty Approach to court systems for “specialized users” but ul-
timately rejects a complete abolition of the monopoly court system, largely for
economic reasons. He revealingly analogizes government courts to government
schools. “Litigation, like education, serves a public function, and that function
cannot be impaired by relegation [sic] it to the private sector where it cannot attract
a sufficiently broad-based support to ensure its continued availability.” Id. at 173n.
Would that Judge Neely had thought about the problems of education as carefully
as he has the problems of a legal system. For a contrary view of the necessity and
desirability of government schools, see The Public School Monopoly (R. Everhart,
ed. 1982).
28. See supra text accompanying notes 26 and 27.
29. See supra text accompanying note 18.
30. The public schools and the post office demonstrate the ineffectiveness of providing
vital services in kind. Many students and parents opt out of the public school system,
even though this means that they will have to pay for two school systems at the same
time. The premiums charged by the burgeoning express package delivery industry
indicate a similar failure of governmentally provided services. With legal services,
however, most people do not have the option of (lawfully) paying a premium for
better service. Where the stakes are high enough and the parties knowledgeable
enough, however, many large companies insist on private arbitration clauses in
their commercial contracts. Cf. R. Neely supra note 8, at 172n.
31. Even the age-old legislative efforts to assist failing farmers is no longer defended
in terms of social necessity or efficiency. Rather, appeals are made to preserving
the lifestyle of the “family farms” and to the “unfairness” of penalizing farmers
for what are alleged to be the effects of government monetary and fiscal policy
32. H. Berman, Law and Revolution 10 (1983): “Legal pluralism originated in the dif-
ferentiation of the ecclesiastical polity from the secular polities. The church declared
its freedom from secular control, its exclusive jurisdiction in some matters, and
its concurrent jurisdiction in other matters…. Secular law itself was divided into
various competing types, including royal law, feudal law, manorial law, urban law,
and mercantile law. The same person might be subject to the ecclesiastical courts
in one type of case, the king’s courts in another, his lord’s courts in a third, the
manorial courts in a fourth, a town court in a fifth, a merchant’s court in a sixth.”
33. Id. at 10. Consistent with this distinction the phrase “legal order” will be used
when speaking of the entire legal structure and the phrase “legal system” when
104 Anarchy and the Law

speaking of one court or other dispute resolution system within the larger order.
A nonmonopolistic legal order, then, would be likely to consist of several legal
systems.
34. See also Barnett, supra note 1, at 54-55 (discussing the anemic nature of this form
of “checks and balances”).
35. See supra note 4.
36. Yet such appeals do occasionally take place now when citizens of one state or country
flee to another and then contest (with occasional success) their extradition.
37. H. Berman, supra note 32, at 10.
38. H. Berman, supra note 32, at 10.
39. See H. Berman, supra note 32, at 38-39: “The source of supremacy of law in the
plurality of legal jurisdictions and legal systems within the same legal order is
threatened in the twentieth century by the tendency within each country to swallow
up all the diverse jurisdictions and systems in a single central program of legisla-
tion and administrative regulation…. Blackstone’s concept of two centuries ago
that we live under a considerable number of different legal systems has hardly any
counterpart in contemporary legal thought.”
40. See Smith, “Justice Entrepreneurship in a Free Market,” 4 J. Libertarian Stud.
405 (1979); Smith, “Justice Entrepreneurship Revisited: A Reply to Critics,” 4 J.
Libertarian Stud. 453 (1979); See also Barnett, supra note 1, at 71 n.48.
41. Such facilities have, for example, recently used prison labor to manufacture com-
puter disk drives and as telephone operators to take reservations for a hotel chain.
Confinement need not be synonymous with nonproductivity. And productivity is
not synonymous with chain gangs.
42. Federal Appeals Court Judge Ralph Winter favors a limited expansion of the law-
making competition that presently exists among the various states in the corporate
law area into other areas such as secured transactions, sales, and landlord/tenant
law. See Winter, “Private Goals and Competition Among State Legal Systems,” 6
Harv. J. of Law & Pub. Policy 127, 128-29 (1982). (“With Delaware leading this
race, you no longer have to worry about what the right law is. As long as Delaware
is competing, there will be a race to the top. There will be a race to establish the
optimal corporation code…. The system I am talking about is peculiar because it
is the one area of the law in which the contracting parties can choose from among
the law of fifty states”) (emphasis added).
43. The reality is likely to be somewhat less open-ended than the text suggests. To
minimize the costs of transacting in such a legal order, many kinds of property
will undoubtedly be sold with jurisdictions over at least some legal issues specified
in advance, as condominiums are sold today. When you buy a condominium, you
buy the rules, procedures, and jurisdiction of the condominium association along
with it. This does not guarantee that jurisdictional problems will not arise. It just
minimizes their occurrence and severity.
44. See R. Axelrod, The Evolution of Cooperation 3 (1984) (presenting a theory of
cooperation that can be used to discover what is necessary for cooperation to emerge
“in a world of egoists without central authority”).
45. The following describes the present legal system: “If the defendant does not want
to submit to the jurisdiction of the court, he plainly would not authorize his attorney
to enter a general appearance. If he is confident that jurisdiction over his person is
lacking, he may, in theory at least, simply ignore the lawsuit entirely. To illustrate:
P commences an action against D in State X for an alleged tort committed by D in
State Y, seeking money for damages. D resides in State Y and has never set foot in
or had any connection with State X and has no property there. P delivers process
 Pursuing Justice in a Free Society 105

to D in State Y. State X has not acquired jurisdiction over D’s person. If judgment
on D’s default is entered against him, and an attempt made to enforce the judg-
ment in State Y or elsewhere by an action in which proper service is made upon
D, he can set up the invalidity of the judgment. But D may wish to contest State
X’s jurisdiction over his person in the courts of the State; he may be in genuine
doubt whether State X has acquired jurisdiction over him, or he may not relish the
prospect of an over-hanging judgment against him even though he is convinced it
is invalid…[in which case] the defendant would file a notice that he was appearing
solely for the purpose of challenging jurisdiction and/or submitting generally to
the jurisdiction of the court.” R. Field And B. Kaplan, Civil Procedure 199-200 (3d
ed. 1973). The impetus for developing this elaborate set of rules, principles, and
theories was simply to resolve the inevitable conflicts between geography-based
jurisdictions.
46. R. Weintraub, Commentary on the Conflicts Of Laws 1 (1971). See also Chaetham
and Willis, “Choice of the Applicable Law,” 52 Colum. L. Rev. 959 (1952) (discuss-
ing the various policies to be weighed in deciding choice of law problems).
47. John Locke noted that national rulers are “independent” in the relevant sense. See
Locke, “An Essay Concerning the True Original Extent and End of Civil Govern-
ment” as it appears in 35 Great Books of the Western World 28 (1980) (“All princes
and rulers of ‘independent’ governments all through the world are in a state of Na-
ture…whether they are, or are not, in league with others; for it is not every compact
that puts an end to the state of Nature between men, but only this one of agreeing
together mutually to enter into one community, and make one body politic; other
promises and compacts men may make one with another, and still be in a state
of Nature.”). See also M. Rothbard, For a New Liberty 221 (rev. ed. 1978) (“We
must never forget that we are all living in a world of ‘international anarchy,’ in a
world of coercive nation-states unchecked by any world government, and there is
no prospect of this situation changing”).
48. There is another important reason why governments go to war against each other:
they can hope to gain by obtaining the “surrender” of the other government. Govern-
ments start wars in large part to expropriate the wealth (both labor and resources) of
the population ruled by another government. (Another popular motive is to distract
the attention of their citizens from domestic problems.) If the total destruction of a
society were necessary to bring a land area under the domination of an aggressor,
then any prospective gain to be realized from war would be greatly reduced. When
societies are organized in hierarchical monopolies, however, you do not have to
conquer a whole people to win a war. You need only put enough pressure on the
indigenous monopoly to cause its surrender. Then the conquering government puts
its own people at the head of the monopoly apparatus already in place (being careful
not to disrupt the existing bureaucracy) and begins extracting the wealth from the
population by the same means that the native rulers did: by taxation, conscription,
and condemnation.
This indicates that one way to greatly reduce the incentives for war—as well
as the incentives to develop and use weapons of mass destruction—is to end all
monopoly legal (and political) systems and sufficiently intermix the competitive
legal systems that supplant them so that there is no “over there” to conquer and no
one has the authority to surrender for anyone else.
49. Another approach would be to examine historical examples of nonmonopolistic
legal systems. See, e.g., Friedman, “Private Creation and Enforcement of Law: A
Historical Case,” 8 J. of Legal Stud. 399 (1979) (describing the ancient Icelandic
legal system); Peden, “Property Rights in Celtic Law,” I J. Libertarian Stud. 81
106 Anarchy and the Law

(1977) (describing the ancient Irish legal system); Bensen, “The Lost Victim and
Other Failures of the Public Law Experiment,” 9 Harv. J. of Law & Pub. Policy 2,
399-427 (1986) (discussing several historical examples of private legal systems in
American territories); B. Benson, supra note 13 (expanding to include descriptions
of other systems). Because of the vast cultural and technological differences between
such remote cultures and our own and sometimes limited historical evidence, any
such study can only partially assist an understanding of how a nonmonopolistic
system would work in our day and age.
50. See J. Auerbach, Unequal Justice 45 (1976) (describing the historical controversy
over “contingent fee” arrangements and the high costs to the legal system of such
practices, but conceding that they served to “enable some workers to secure oth-
erwise unobtainable legal services”).
51. Cf. Fed. R. Evid. (1984) 706 (giving federal trial judges the power to appoint and
compensate expert witnesses to testify in a trial); E. Cleary, Mccormick On Evi-
dence §17 (3d ed. 1984) (describing the history of and recent proposals for court
appointed experts). Some of these practices and proposals come close to letting
panels of experts serve not as witnesses but as the fact finder. See id. at 45. But not
all “expert” testimony is of equal value to a court. See, e.g., J. Ziskin, Coping with
Psychiatric and Psychological Testimony (2d. ed. 1975) (forcefully arguing that
psychiatric and psychological evidence should not be admitted in a court of law
and, if admitted, should be given little or no weight).
52. See Barnett, supra note 24 (discussing the deterrent effect of a system of restitution
to victims of police misconduct).
53. See Barnett, supra note 1, at 52-54.
54. See Barnett, supra note 1, at 56-67. This question is briefly discussed in D. Friedman,
The Machinery of Freedom 172 (1973) (“I have described how a private system of
courts and police might function, but not the laws it would produce and enforce; I
have discussed institutions, not results…. Whether these institutions will produce
a libertarian society—a society in which each person is free to do as he likes with
himself and his property as long as he does not use either to initiate force against
others—remains to be proven”).
55. See, e.g., Korematsu v. United States, 323 U.S. 214, 223 (1944) (upholding the
internment of citizens of Japanese descent “because we are at war with the Japanese
Empire, because the properly constituted military authorities feared an invasion
of our West Coast and felt constrained to take proper security measures, because
they decided that the military urgency of the situation demanded that all citizens
of Japanese ancestry be segregated from the West Coast temporarily, and finally,
because Congress, reposing its confidence in this time of war in our military lead-
ers—as inevitably it must—determined that they should have the power to do just
this”).
56. L. Fuller, supra note 19, at 5-6.
 6

Capitalist Production and the Problem of

Public Goods (excerpt)
Hans Hoppe
[N]owadays it is almost impossible to find a single economic textbook that
does not make and stress the vital importance of the distinction between private
goods, for which the truth of the economic superiority of a capitalist order of
production is generally admitted, and public goods, for which it is generally
denied. Certain goods or services, and among them, security, are said to have
the special characteristic that their enjoyment cannot be restricted to those per-
sons who have actually financed their production. Rather, people who have not
participated in their financing can draw benefits from them, too. Such goods are
called public goods or services (as opposed to private goods or services, which
exclusively benefit those people who actually paid for them). And it is due to
this special feature of public goods, it is argued, that markets cannot produce
them, or at least not in sufficient quantity or quality, and hence compensatory
state action is required. The examples given by different authors for alleged
public goods vary widely. Authors often classify the same good or services dif-
ferently, leaving almost no classification of a particular good undisputed. This
clearly foreshadows the illusory character of the whole distinction. Nonetheless,
some examples that enjoy particularly popular status as public goods are the
fire brigade that stops a neighbor’s house from catching fire, thereby letting
him profit from my fire brigade, even though he did not contribute anything
to financing it; or the police that by walking around my property scare away
potential burglars from my neighbor’s property as well, even if he did not help
finance the patrols; or the lighthouse, a particularly dear example to economists,
that helps ships find their way, even though they did not contribute a penny to
its construction or upkeep.
Before continuing with the presentation and critical examination of the theory
of public goods let us investigate how useful the distinction between private and
public goods is in helping decide what should be produced privately and what
by the state or with state help. Even the most superficial analysis could not fail
to point out that using this alleged criterion, rather than presenting a sensible
solution, would get one into deep trouble. While at least at first glance it seems
that some of the state-provided goods and services might indeed qualifies public

107
108 Anarchy and the Law

goods, it certainly is not obvious how many of the goods and services that are
actually produced by states could come under the heading of public goods.
Railroads, postal services, telephone, streets, and the like seem to be gold whose
usage can be restricted to the persons who actually finance them, and hence
appear to be private goods. And the same seems to be the case regarding many
aspects of the multidimensional good “security”: everything for which insur-
ance could be taken out would have to qualify as a private good. Yet this does
not suffice. Just as a lot of state-provided goods appear to be private goods, so
many privately produced goods seem to fit in the category of a public good.
Clearly my neighbors would profit from my well-kept rose garden—they could
enjoy the sight of it without ever helping me garden. The same is true of all
kinds of improvements that I could make on my property that would enhance
the value of neighboring property as well. Even those people who do not throw
money in his hat could profit from a street musician’s performance. Those fellow
travelers on the bus who did not help me buy it profit from my deodorant. And
everyone who ever comes into contact with me would profit from my efforts,
undertaken without their financial support, to turn myself into a most lovable
person. Now, do all these goods—rose gardens, property improvements, street
music, deodorants, personality improvements—since they clearly seem to pos-
sess the characteristics of public goods, then have to be provided by the state
or with state assistance?
As these latter examples of privately produced public goods indicate, there
is something seriously wrong with the thesis of public goods theorists that
these goods cannot be produced privately but instead require state intervention.
Clearly they can be provided by markets. Furthermore, historical evidence shows
us that all of the alleged public goods which states now provide had at some
time in the past actually been provided by private entrepreneurs or even today
are so provided in one country or another. For example, the postal service was
once private almost everywhere; streets were privately financed and still are
sometimes; even the beloved lighthouses were originally the result of private
enterprise; private police forces, detectives, and arbitrators exist; and help for the
sick, the poor, the elderly, orphans, and widows has been a traditional field for
private charity organizations. To say, then, that such things cannot be produced
by a pure market system is falsified by experience one hundredfold.
Apart from this, other difficulties arise when the public-private goods dis-
tinction is used to decide what to leave to the market and what not. What, for
instance, if the production of so-called public goods did not have positive but
negative consequences for other people, or if the consequences were positive for
some and negative for others? What if the neighbor whose house was saved from
burning by my fire brigade had wished (perhaps because he was overinsured)
that it had burned down, or my neighbors hate roses, or my fellow travelers find
the scent of my deodorant disgusting? In addition, changes in the technology
can change the character of a given good. For example, with the development
 Capitalist Production and the Problem of Public Goods (excerpt) 109

of cable TV, a good that was formerly (seemingly) public has become private.
And changes in the laws of property—of the appropriation of property—can
have the very same effect of changing the public-private character of a good.
The lighthouse, for instance, is a public good only insofar as the sea is publicly
(not privately) owned. But if it were permitted to acquire pieces of the ocean
as private property, as it would be in a purely capitalist social order, then as the
lighthouse only shines over a limited territory, it would clearly become possible
to exclude nonpayers from the enjoyment of its services.
Leaving this somewhat sketchy level of discussion and looking into the
distinction between private and public goods more thoroughly, it turns out to
be a completely illusory distinction. A clear-cut dichotomy between private and
public goods does not exist, and this is essentially why there can be so many
disagreements on how to classify given goods. All goods are more or less private
or public and can—and constantly do—change with respect to their degree of
privateness/publicness with people’s changing values and evaluations, and with
changes in the composition of the population. They never fall, once and for
all, into either one or the other category. In order to recognize this, one must
only recall what makes something a good. For something to be a good it must
be realized and treated as scarce by someone. Something is not a good—as
such—that is to say, but goods are goods only in the eyes of the beholder. Noth-
ing is a good without at least one person subjectively evaluating it as such. But
then, since goods are never goods—as such—no physico-chemical analysis can
identify something as an economic good—there is clearly no fixed, objective
criterion for classifying goods as either private or public. They can never be
private or public goods as such. Their private or public character depends on
how few or how many people consider them to be goods, with the degree to
which they are private or public changing as these evaluations change, and
ranging from one to infinity. Even seemingly completely private things like
the interior of my apartment or the color of my underwear thus can become
public goods as soon as somebody else starts caring about them. And seem-
ingly public goods, like the exterior of my house or the color of my overalls,
can become extremely private goods as soon as other people stop caring about
them. Moreover, every good can change its characteristics again and again; it
can even turn from a public or private good to a public or private bad and vice
versa, depending solely on the changes in this caring or uncaring. However, if
this is so, no decision whatsoever can be based on the classification of goods as
private or public. In fact, to do so it would not only become necessary to ask
virtually every individual person with respect to every single good whether or
not he happened to care about it, positively or negatively and perhaps to what
extent, in order to determine who might profit from what and should hence
participate in its financing (and how could one know if they were telling the
truth?!); it would also become necessary to monitor all changes in such evalu-
ations continually, with the result that no definite decision could ever be made
110 Anarchy and the Law

regarding the production of anything, and as a consequence of a nonsensical

theory all of us would be long dead.
But even if one were to ignore all these difficulties, and were willing to
admit for the sake of argument that the private-public good distinction did
hold water, even then the argument would not prove what it is supposed to. It
neither provides conclusive reasons why public goods—assuming that they exist
as a separate category of goods—should be produced at all, nor why the state
rather than private enterprises should produce them. This is what the theory
of public goods essentially says, having introduced the above-mentioned con-
ceptual distinction: The positive effects of public goods for people who do not
contribute anything to their production or financing proves that these goods are
desirable. But evidently, they would not be produced, or at least not in sufficient
quantity and quality, in a free, competitive market, since not all of those who
would profit from their production would also contribute financially to make the
production possible. So in order to produce these goods (which are evidently
desirable, but would not be produced otherwise), the state must jump in and
assist in their production. This sort of reasoning, which can be found in almost
every textbook on economics (Nobel laureates not excluded ) is completely
fallacious, and fallacious on two counts.
For one thing, to come to the conclusion that the state has to provide public
goods that otherwise would not be produced, one must smuggle a norm into
one’s chain of reasoning. Otherwise, from the statement that because of some
special characteristics of theirs certain goods would not be produced, one could
never reach the conclusion that these goods should be produced. But with a
norm required to justify their conclusion, the public goods theorists clearly
have left the bounds of economics as a positive, wertfrei science. Instead they
have transgressed into the field of morals or ethics, and hence one would ex-
pect to be offered a theory of ethics as a cognitive discipline in order for them
to legitimately do what they are doing and to justifiably derive the conclusion
that they actually derive. But it can hardly be stressed enough that nowhere in
the public goods theory literature can there be found anything that even faintly
resembles such a cognitive theory of ethics. Thus it must be stated at the outset,
that the public goods theorists are misusing whatever prestige they might have
as positive economists for pronouncements on matters on which, as their own
writings indicate, they have no authority whatsoever. Perhaps, though, they
have stumbled on something correct by accident, without supporting it with an
elaborate moral theory? It becomes apparent that nothing could be further from
the truth as soon as one explicitly formulates the norm that would be needed to
arrive at the above-mentioned conclusion about the state’s having to assist in
the provision of public goals. The norm required to reach the above conclusion
is this: whenever it can somehow be proven that the production of a particular
goal or service has a positive effect on someone but would not be produced
at all, or would not be produced in a definite quantity or quality unless others
 Capitalist Production and the Problem of Public Goods (excerpt) 111

participated in its financing, then the use of aggressive violence against these
persons is allowed, either directly or indirectly with the help of the state, and
these persons maybe forced to share in the necessary financial burden. It does
not need much comment to show that chaos would result from implementing
this rule, as it amounts to saying that everyone can aggress against everyone
else whenever he feels like it. Moreover, it should be sufficiently clear from the
discussion of the problem of the justification of normative statements (Chapter
7) that this norm could never be justified as a fair norm. For to argue in that
way and to seek agreement for this argument must presuppose, contrary to what
the norm says, that everyone’s integrity as a physically independent decision-
making unit is assured.
But the public goals theory breaks down not just because of the faulty moral
reasoning implied in it. Even the utilitarian, economic reasoning contained in
the above argument is blatantly wrong. As the public goods theory states, it
might well be that it would be better to have the public goods than not to have
them, though it should not be forgotten that no a priori reason exists that this
must be so of necessity (which would then end the public goods theorists’
reasoning right here). For it is clearly possible, and indeed known to be a fact,
that anarchists exist who so greatly abhor state action that they would prefer not
having the so-called public goods at all to having them provided by the state!
In any case, even if the argument is conceded so far, to leap from the statement
that the public goods are desirable to the statement that they should therefore
be provided by the state is anything but conclusive, as this is by no means the
choice with which one is confronted. Since money or other resources must be
withdrawn from possible alternative uses to finance the supposedly desirable
public goods, the only relevant and appropriate question is whether or not these
alternative uses to which the money could be put (that is, the private goods
which could have been acquired but now cannot be bought because the money
is being spent on public goods instead) are more valuable—more urgent— than
the public goods. And the answer to this question is perfectly clear. In terms of
consumer evaluations, however high its absolute level might be, the value of
the public goods is relatively lower than that of the competing private goods,
because if one had left the choice to the consumers (and had not forced one
alternative upon them), they evidently would have preferred spending their
money differently (otherwise no force would have been necessary). This proves
beyond any doubt that the resources used for the provision of public goods are
wasted, as they provide consumers with goods or services which at best are
only of secondary importance. In short, even if one assumed that public goods
which can be distinguished clearly from private goods existed, and even if it
were granted that a given public good might be useful, public goods would
still compete with private goods. And there is only one method for finding out
whether or not they are more urgently desired and to what extent, or, mutatis
mutandis, if, and to what extent, their production would take place at the expense
112 Anarchy and the Law

of the nonproduction or reduced production of more urgently needed private

goods: by having everything provided by freely competing private enterprises.
Hence, contrary to the conclusion arrived at by the public goods theorists, logic
forces one to accept the result that only a pure market system can safeguard the
rationality, from the point of view of the consumers, of a decision to produce a
public good. And only under a pure capitalist order could it be ensured that the
decision about how much of a public good to produce (provided it should be
produced at all) is rational as well. No less than a semantic revolution of truly
Orwellian dimensions would be required to come up with a different result.
Only if one were willing to interpret someone’s “no” as really meaning “yes,”
the “nonbuying of something” as meaning that it is really “preferred over that
which the nonbuying person does instead of nonbuying,” of “force” really mean-
ing “freedom,” of “non-contracting” really meaning “making a contract” and so
on, could the public goods theorists’ point be “proven.” But then, how could we
be sure that they really mean what they seem to mean when they say what they
say, and do not rather mean the exact opposite, or don’t mean anything with a
definite content at all, but are simply babbling? We could not! M. Rothbard is
thus completely right when he comments on the endeavors of the public goods
ideologues to prove the existence of so-called market failures due to the non-
production or a quantitatively or qualitatively “deficient” production of public
goods. He writes, “…such a view completely misconceives the way in which
economic science asserts that free-market action is ever optimal. It is optimal,
not from the standpoint of the personal ethical views of an economist, but from
the standpoint of free, voluntary actions of all participants and in satisfying the
freely expressed needs of the consumers. Government interference, therefore,
will necessarily and always move away from such an optimum.”
Indeed, the arguments supposedly proving market failures are nothing short
of being patently absurd. Stripped of their disguise of technical jargon all they
prove is this: a market is not perfect, as it is characterized by the nonaggres-
sion principle imposed on conditions marked by scarcity, and so certain goods
or services which could only be produced and provided if aggression were
allowed will not be produced. True enough. But no market theorist would ever
dare deny this. Yet, and this is decisive, this “imperfection” of the market can
be defended, morally as well as economically, whereas the supposed “perfec-
tions” of markets propagated by the public goods theorists cannot. It is true
enough, too, that a termination of the state’s current practice of providing
public goods would imply some change in the existing social structure and the
distribution of wealth. And such a reshuffling would certainly imply hardship
for some people. As a matter of fact, this is precisely why there is widespread
public resistance to a policy of privatizing state functions, even though in the
long run overall social wealth would be enhanced by this very policy. Surely,
however, this fact cannot be accepted as a valid argument demonstrating the
failure of markets. If a man had been allowed to hit other people on the head
 Capitalist Production and the Problem of Public Goods (excerpt) 113

and is now not permitted to continue with this practice, he is certainly hurt.
But one would hardly accept that as a valid excuse for upholding the old (hit-
ting) rules. He is harmed, but harming him means substituting a social order in
which every consumer has an equal right to determine what and how much of
anything is produced, for a system in which some consumers have the right to
determine in what respect other consumers are not allowed to buy voluntarily
what they want with the means justly acquired by them and at their disposal.
And certainly, such a substitution would be preferable from the point of view
of all consumers as voluntary consumers.
By force of logical reasoning, then, one must accept Molinari’s above-cited
conclusion that for the sake of consumers, all goods and services be provided by
markets. It is not only false that clearly distinguishable categories of goods exist,
which would render special amendments to the general thesis of capitalism’s
economic superiority necessary; even if they did exist, no special reason could
be found why these supposedly special public goods should not also be produced
by private enterprises since they invariably stand in competition with private
goods. In fact, in spite of all the propaganda from the side of the public goods
theorists, the greater efficiency of markets as compared with the state has been
realized with respect to more and more of the alleged public goods. Confronted
daily with experience, hardly anyone seriously studying these matters could
deny that nowadays markets could produce postal services, railroads, electric-
ity, telephone, education, money, roads and so on more effectively, i.e., more
to the liking of the consumers, than the state. Yet people generally shy away
from accepting in one particular sector what logic forces upon them: in the field
of the production of security. Hence, the rest of this chapter will explain the
superior functioning of a capitalist economy in this particular area—a superi-
ority whose logical case has already been made, but which shall be rendered
more persuasive once some empirical material is added to the analysis and it
is studied as a problem in its own right.
How would a system of nonmonopolistic, competing producers of security
work? It should be clear from the outset that in answering this question one is
leaving the realm of purely logical analysis and hence the answers must nec-
essarily lack the certainty, the apodictic character of pronouncements on the
validity of the public goods theory. The problem faced is precisely analogous
to that of asking how a market would solve the problem of hamburger produc-
tion, especially if up to this point hamburgers had been produced exclusively
by the state, and hence no one could draw on past experience. Only tentative
answers could be formulated. No one could possibly know the exact structure
of the hamburger industry—how many competing companies would come into
existence, what importance this industry might have compared to others, what
the hamburgers would look like, how many different sorts of hamburgers would
appear on the market and perhaps disappear again because of a lack of demand,
and so on. No one could know all of the circumstances and the changes which
114 Anarchy and the Law

would influence the very structure of the hamburger industry that would take
place over time—changes in demand of various consumer groups, changes
in technology, changes in the prices of various goods that affect the industry
directly or indirectly, and so on. It must be stressed that all this is no different
when it comes to the question of the private production of security. But this by
no means implies that nothing definitive can be said on the matter. Assuming
certain general conditions of demand for security services which are known to
be more or less realistic by looking at the world as it presently is, what can and
will be said is how different social orders of security production, characterized
by different structural constraints under which they have to operate, will respond
differently. Let us first analyze the specifics of monopolistic, state-run security
production, as at least in this case one can draw on ample evidence regarding the
validity of the conclusions reached, and then turn to comparing this with what
could be expected if such a system were replaced by a nonmonopolistic one.
Even if security is considered to be a public good, in the allocation of scarce
resources it must compete with other goods. What is spent on security can no
longer be spent on other goods that also might increase consumer satisfaction.
Moreover, security is not a single, homogeneous good, but rather consists of
numerous components and aspects. There is not only prevention, detection, and
enforcement but there is also security from robbers, rapists, polluters, natural
disasters, and so on. Moreover, security is not produced in a “lump, “but can
be supplied in marginal units. In addition, different people attach different im-
portance to security as a whole and also to different aspects of the whole thing,
depending on their personal characteristics, their past experiences with various
factors of insecurity, and the time and place in which they happen to live. Now,
and here we return to the fundamental economic problem of allocating scarce
resources to competing uses, how can the state—an organization which is not
financed exclusively by voluntary contributions and the sales of its products, but
rather partially or even wholly by taxes—decide how much security to produce,
how much of each of its countless aspects, to whom and where to provide how
much of what? The answer is that it has no rational way to decide this question.
From the point of view of the consumers its response to their security demands
must thus be considered arbitrary. Do we need one policeman and one judge,
or 100,000 of each? Should they be paid $100 a month, or $10,000? Should the
policemen, however many we might have, spend more time patrolling the streets,
chasing robbers, recovering stolen loot, or spying on participants in victimless
crimes such as prostitution, drug use, or smuggling? And should the judges
spend more time and energy hearing divorce cases, traffic violations, cases of
shoplifting, murder, or antitrust cases? Clearly, all of these questions must be
answered somehow because as long as there is scarcity and we do not live in
the Garden of Eden, the time and money spent on one thing cannot be spent
on another. The state must answer these questions, too, but whatever it does, it
does it without being subject to the profit-and-loss criterion. Hence, its action is
 Capitalist Production and the Problem of Public Goods (excerpt) 115

arbitrary and thus necessarily involves countless wasteful misallocations from

the consumer’s viewpoint. Independent to a large degree of consumer wants,
the state-employed security producers instead do, as everyone knows, what
they like. They hang around instead of doing anything, and if they do work they
prefer doing what is easiest or work where they can wield power rather than
serve consumers. Police officers drive around a lot in cars, hassle petty traffic
violators, and spend huge amounts of money investigating victimless crimes
which a lot of people (i.e., nonparticipants) do not like, but which few would be
willing to spend their money on to fight, as they are not immediately affected by
it. Yet with respect to the one thing those consumers want most urgently—the
prevention of hardcore crime (i.e., crimes with victims), the detection and effec-
tive punishment of hardcore criminals, the recovery of loot, and the securement
of compensation to victims of crimes from the aggressors—they are notoriously
inefficient, in spite of ever higher budget allocations.
Further, and here I return to the problem of a lowered quality of output (with
given allocations), whatever state-employed police or judges happen to do
(arbitrary as it must be), since their income is more or less independent of the
consumers’ evaluations of their respective services, they will tend to do poorly.
Thus one observes police arbitrariness and brutality and the slowness in the
judicial process. Moreover, it is remarkable that neither the police nor the judicial
system offers consumers anything even faintly resembling a service contract
in which it is laid down in unambiguous terms what procedure the consumer
can expect to be set in motion in a specific situation. Rather, both operate in a
contractual void which over time allows them to change their rules of procedure
arbitrarily, and which explains the truly ridiculous fact that the settlement of
disputes between police and judges on the one hand and private citizens on the
other is not assigned to an independent third party, but to another police or judge
who shares employers with one party—the government—in the dispute.
Third, anyone who has seen state-run police stations and courts, not to men-
tion prisons, knows how true it is that the factors of production used to provide
us with such security are overused, badly maintained, and filthy. There is no
reason for them to satisfy the consumers who provide their income. And if, in an
exceptional case, this happens not to be so, then it has only been possible at costs
that are comparatively much higher than those of any similar private business.
Without a doubt, all of these problems inherent in a system of monopolistic
security production would be solved relatively quickly once a given demand
for security services was met by a competitive market with its entirely different
incentive structure for producers. This is not to say that a “perfect” solution to the
problem of security would be found. There would still be robberies and murders;
and not all loot would be recovered nor all murderers caught. But in terms of
consumer evaluations the situation would improve to the extent that the nature
of man would allow this. First, as long as there is a competitive system, i.e., as
long as the producers of security services depend on voluntary purchases, most
116 Anarchy and the Law

of which probably take the form of service and insurance contracts agreed to
in advance of any actual “occurrence” of insecurity or aggression, no producer
could increase its income without improving services or quality of product as
perceived by the consumers. Furthermore, all security producers taken together
could not bolster the importance of their particular industry unless, for what-
ever reason, consumers indeed started evaluating security more highly than
other goods, thus ensuring that the production of security would never and
nowhere take place at the expense of the non- or reduced production of, let us
say, cheese, as a competing private good. In addition, the producers of security
services would have to diversify their offerings to a considerable degree because
a highly diversified demand for security products among millions and millions
of consumers exists. Directly dependent on voluntary consumer support, they
would immediately be hurt financially if they did not appropriately respond to
the consumers’ various wants or changes in wants. Thus, every consumer would
have a direct influence, albeit small, on the output of goods appearing on or
disappearing from the security market. Instead of offering a uniform “security
packet” to everyone, as is characteristic of state production policy, a multitude
of service packages would appear on the market. They would be tailored to the
different security needs of different people, taking account of different occupa-
tions, different risk-taking behavior, different things to be protected and insured,
and different geographical locations and time constraints.
But that is far from all. Besides diversification, the content and quality of the
products would improve, too. Not only would the treatment of consumers by the
employees of security enterprises improve immediately, the “I could care less”
attitude, the arbitrariness and even brutality, the negligence and tardiness of the
present police and judicial systems would ultimately disappear. Since they then
would be dependent on voluntary consumer support, any maltreatment, impo-
liteness, or ineptitude could cost them their jobs. Further, the above-mentioned
peculiarity—that the settlement of disputes between a client and his service
provider is invariably entrusted to the latter’s judgment—would almost certainly
disappear from the books, and conflict arbitration by independent parties would
become the standard deal offered by producers of security. Most importantly,
though, in order to attract and retain customers the producers of such services
would have to offer contracts which would allow the consumer to know what
he was buying and enable him to raise a valid, intersubjectively ascertainable
complaint if the actual performance of the security producer did not live up to its
obligations. And more specifically, insofar as they are not individualized service
contracts where payment is made by the customers for covering their own risks
exclusively, but rather insurance contracts proper which involve pooling one’s
own risks with those of other people, contrary to the present statist practice,
these contracts most certainly would no longer contain any deliberately built-in
redistributive scheme favoring one group of people at the expense of another.
Otherwise, if anyone had the feeling that the contract offered to him involved
 Capitalist Production and the Problem of Public Goods (excerpt) 117

his paying for other people’s peculiar needs and risks—factors of possible
insecurity, that is, that he did not perceive as applicable to his own case—he
would simply reject signing it or discontinue his payments.
Yet when all this is said, the question will inevitably surface, “Wouldn’t a
competitive system of security production still necessarily result in permanent
social conflict, in chaos and anarchy?” There are several points to be made
regarding this alleged criticism. First, it should be noted that such an impres-
sion would by no means be in accordance with historical, empirical evidence.
Systems of competing courts have existed at various places, such as in ancient
Ireland or at the time of the Hanseatic league, before the arriva1of the modern
nation-state, and as far as we know they worked well.
Judged by the then existent crime rate (crime per capita), the private police
in the Wild West (which incidentally was not as wild as some movies insinuate)
was relatively more successful than today’s state-supported police. And turning
to contemporary experience and examples, millions and millions of interna-
tional contacts exist even now—contacts of trade and travel—and it certainly
seems to be an exaggeration to say, for instance, that there is more fraud, more
crime, more breach of contract there than in domestic relations. And this is so,
it should be noted, without there being one big monopolistic security producer
and lawmaker. Finally it is not to be forgotten that even now in a great number
of countries there are various private security producers alongside to the state:
private investigators, insurance detectives, and private arbitrators. Regarding
their work, the impression seems to confirm the thesis that they are more, not
less, successful in resolving social conflicts than their public counterparts.
However, this historical evidence is greatly subject to dispute, in particular
regarding whether any general information can be derived from it. Yet there
are systematic reasons, too, why the fear expressed in the above criticism is not
well-founded. Paradoxical as it may seem at first, this is because establishing a
competitive system of security producers implies erecting an institutionalized
incentive structure to produce an order of law and law-enforcement that embod-
ies the highest possible degree of consensus regarding the question of conflict
resolution, and hence will tend to generate less rather than more social unrest
and conflict than under monopolistic auspices! In order to understand this it
is necessary to take a closer look at the only typical situation that concerns the
skeptic and allows him to believe in the superior virtue of a monopolistically
organized order of security production. This is the situation when a conflict arises
between A and B, both are insured by different companies and the companies
cannot come to an immediate agreement regarding the validity of the conflicting
claims brought forward by their respective clients. (No problem would exist if
such an agreement were reached, or if both clients were insured by one and the
same company—at least the problem then would not be different in any way
from that emerging under a statist monopoly!) Wouldn’t such a situation always
result in an armed confrontation? This is highly unlikely. First, any violent battle
118 Anarchy and the Law

between companies would be costly and risky, in particular if these companies

had reached a respectable size which would be important for them to have in
order to appear as effective guarantors of security to their prospective clients
in the first place. More importantly though, under a competitive system with
each company dependent on the continuation of voluntary consumer payments,
any battle would have to be deliberately supported by each and every client
of both companies. If there were only one person who withdrew his payments
because he was not convinced the battle was necessary in the particular conflict
at hand, there would be immediate economic pressure on the company to look
for a peaceful solution to the conflict. Hence, any competitive producer of se-
curity would be extremely cautious about his dedication to engaging in violent
measures in order to resolve conflicts. Instead, to the extent that it is peaceful
conflict-resolution that consumers want, each and every security producer would
go to great lengths to provide such measures to its clients and to establish in
advance, for everyone to know, to what arbitration process it would be willing
to submit itself and its clients in case of a disagreement over the evaluation of
conflicting claims. And as such a scheme could only appear to the clients of
different firms to be really working if there were agreement among them regard-
ing such arbitrational measures, a system of law governing relations between
companies which would be universally acceptable to the clients of all of the
competing security producers would naturally evolve. Moreover, the economic
pressure to generate rules representing consensus on how conflicts should be
handled is even more far-reaching. Under a competitive system the independent
arbitrators who would be entrusted with the task of finding peaceful solutions to
conflicts would be dependent on the continued support of the two disagreeing
companies insofar as they could and would select different judges if either one
of them were sufficiently dissatisfied with the outcome of their arbitration work.
Thus, these judges would be under pressure to find solutions to the problems
handed over to them which, this time not with respect to the procedural aspects
of law, but its content, would be acceptable to all of the clients of the firms
involved in a given case as a fair and just solution. Otherwise one or all of the
companies might lose some of their customers, thus inducing those firms to
turn to a different arbitrator the next time they were in need of one.
But wouldn’t it be possible under a competitive system for a security pro-
ducing firm to become an outlaw company—a firm, that is, which, supported
by its own clients, started to aggress against others? There is certainly no way
to deny that this might be possible, though again it must be emphasized that
here one is in the realm of empirical social science and no one could know
such a thing with certainty. And yet the tacit insinuation that the possibility
of a security firm becoming an outlaw company would somehow indicate a
severe deficiency in the philosophy and economics of a pure capitalist social
order is fallacious. First, it should be recalled that any social system, a stat-
ist-socialist order no less than a pure market economy, is dependent for its
 Capitalist Production and the Problem of Public Goods (excerpt) 119

continued existence on public opinion, and that a given state of public opinion
at all times delimits what can or cannot occur, or what is more or less likely to
occur in a given society. The current state of public opinion in West Germany,
for instance, makes it highly unlikely or even impossible that a statist-socialist
system of the present-day Russian type could be imposed on the West German
public. The lack of public support for such a system would doom it to failure
and make it collapse. And it would be even more unlikely that any such attempt
to impose a Russian-type order could ever hope to succeed among Americans,
given American public opinion. Hence, in order to see the problem of outlaw
companies correctly, the above question should be phrased as follows: How
likely is it that any such event would occur in a given society with its specific
state of public opinion? Formulated in this way, it is clear that the answer would
have to be different for different societies. For some, characterized by socialist
ideas deeply entrenched in the public, there would be a greater likelihood of
the reemergence of aggressor companies, and for other societies there would
be a much smaller chance of this happening. But then, would the prospect of a
competitive system of security production in any given case be better or worse
than that of the continuation of a statist system? Let us look, for instance, at
the present-day United States. Assume that by a legislative act the state had
abolished its right to provide security with tax funds, and a competitive system
of security production were introduced. Given the state of public opinion, how
likely would it then be that outlaw producers would spring up, and what if they
did? Evidently, the answer would depend on the reactions of the public to this
changed situation. Thus, the first reply to those challenging the idea of a private
market for security would have to be: what about you? What would your reaction
be? Does your fear of outlaw companies mean that you would then go out and
engage in trade with a security producer that aggressed against other people
and their property, and would you continue supporting it if it did? Certainly the
critic would be much muted by this counterattack. But more important than this
is the systematic challenge implied in this personal counterattack. Evidently,
the described change in the situation would imply a change in the cost-benefit
structure that everyone would face once he had to make his decisions. Before
the introduction of a competitive system of security production it had been legal
to participate in and support (state) aggression. Now such an activity would
be an illegal activity. Hence, given one’s conscience, which makes each of
one’s own decisions appear more or less costly, i.e., more or less in harmony
with one’s own principles of correct behavior, support for a firm engaging in
the exploitation of people unwilling to deliberately support its actions would
be more costly now than before. Given this fact, it must be assumed that the
number of people—among them even those who otherwise would have readily
lent their support to the state—who would now spend their money to support a
firm committed to honest business would rise, and would rise everywhere this
social experiment was tried. In contrast, the number of people still committed
120 Anarchy and the Law

to a policy of exploitation, of gaining at the expense of others, would fall. How

drastic this effect would be would, of course, depend on the state of public
opinion. In the example at hand—the United States, where the natural theory of
property is extremely widespread and accepted as a private ethic, the libertarian
philosophy being essentially the ideology on which the country was founded and
that let it develop to the height it reached —the above-mentioned effect would
naturally be particularly pronounced. Accordingly, security-producing firms
committed to the philosophy of protecting and enforcing libertarian law would
attract the greatest bulk of public support and financial assistance. And while it
may be true that some people, and among them especially those who had profited
from the old order, might continue their support of a policy of aggression, it
is very unlikely that they would be sufficient in number and financial strength
to succeed in doing so. Rather, the likely outcome would be that the honest
companies would develop the strength needed—alone or in a combined effort
and supported in this effort by their own voluntary customers—to check any
such emergence of outlaw producers and destroy them wherever and whenever
they came into existence. And if against all odds the honest security producers
should lose their fight to retain a free market in the production of security and
an outlaw monopoly reemerged, one would simply have a state again.
In any case, implementing a pure capitalist social system with private pro-
ducers of security—a system permitting freedom of choice—would necessarily
be better than what one has now. Even if such an order should then collapse
because too many people were still committed to a policy of aggression against
and exploitation of others, mankind would at least have experienced a glorious
interlude. And should this order survive, which would seem to be the more
likely outcome, it would be the beginning of a system of justice and unheard-
of economic prosperity.
Notes
1. Cf. for instance, W. Baumol and A. Blinder, Economics, Principles and Policy
(New York, 1979), Chapter 31.
2. Another frequently used criterion for public goods is that of “non-rivalrous con-
sumption.” Generally, both criteria seem to coincide: when free riders cannot be
excluded, nonrivalrous consumption is possible; and when they can be excluded,
consumption becomes rivalrous, or so it seems. However, as public goods theorists
argue, this coincidence is not perfect. It is, they say, conceivable that while the
exclusion of free riders might be possible, their inclusion might not be connected
with any additional cost (the marginal cost of admitting free riders is zero, that
is), and that the consumption of the good in question by the additionally admitted
free rider will not necessarily lead to a subtraction in the consumption of the good
available to others. Such a good would be a public good, too. And since exclusion
would be practiced on the free market and the good would not become available for
nonrivalrous consumption to everyone it otherwise could—even though this would
require no additional costs—this, according to statist-socialist logic, would prove a
market failure, i.e., a suboptimal level of consumption. Hence, the state would have
to take over the provision of such goods. (A movie theater, for instance, might only
 Capitalist Production and the Problem of Public Goods (excerpt) 121

be half-full, so it might be “costless” to admit additional viewers free of charge,

and their watching the movie also might not affect the paying viewers; hence the
movie would qualify as a public good. Since, however, the owner of the theater
would be engaging in exclusion, instead of letting free riders enjoy a “costless”
performance, movie theaters would be ripe for nationalization.) On the numerous
fallacies involved in defining public goods in terms of nonrivalrous consumption
cf. notes 8 and 12 below.
3. Cf. on this W. Block, “Public Goods and Externalities,” in Journal of Libertarian
Studies, 1983.
4. Cf. for instance, J. Buchanan, The Public Finances (Homewood, 1970), p.23; P.
Samuelson, Economics (New York, 1976), p.160.
5. Cf. R. Coase, ‘‘The Lighthouse in Economics,” in Journal of Law and Economics,
1974.
6. Cf. for instance, the ironic case that W. Block makes for socks being public goods
in “Public Goods and Externalities,” in Journal of Libertarian Studies, 1983.
7. To avoid any misunderstanding here, every single producer and every association
of producers making joint decisions can, at any time, decide whether or not to pro-
duce a good based on an evaluation of the privateness or publicness of the good. In
fact, decisions on whether or not to produce public goods privately are constantly
made within the framework of a market economy. What is impossible is to decide
whether or not to ignore the outcome of the operation of a free market based on
the assessment of the degree of privateness or publicness of a good.
8. In fact, then, the introduction of the distinction between private and public goods
is a relapse into the presubjectivist era of economics. From the point of view of
subjectivist economics no good exists that can be categorized objectively as pri-
vate or public. This, essentially, is why the second proposed criterion for public
goods, i.e., permitting nonrivalrous consumption (cf. note 6 above), break down
too. For how could any outside observer determine whether or not the admittance
of an additional free rider at no charge would not indeed lead to a reduction in the
enjoyment of a good by others?! Clearly, there is no way that he could objectively
do so. In fact, it might well be that one’s enjoyment of a movie or driving on a road
would be considerably reduced if more people were allowed in the theater or on the
road. Again, to find out whether or not this is the case one would have to ask every
individual—and not everyone might agree. (What then?) Furthermore, since even
a good that allows nonrivalrous consumption is not a free good, as a consequence
of admitting additional free riders “crowding” would eventually occur, and hence
everyone would have to be asked about the appropriate “margin.” In addition, my
consumption may or may not be affected, depending on who it is that is admitted
free of charge, so I would have to be asked about this, too. And finally, everyone
might change his opinion on all of these questions over time. It is thus in the same
way impossible to decide whether or not a good is a candidate for state (rather than
private) production based on the criterion of nonrivalrous consumption as on that
of nonexcludability (cf. also note 16 below).
9. Ct. P. Samuelson, ‘‘The Pure Theory of Public Expenditure,” in Review of Economics
and Statistics, 1954; and Economics (New York, 1976), Chapter 8; M. Friedman,
Capitalism and Freedom (Chicago, 1962), Chapter 2; F. A. Hayek, Law, Legislation
and Liberty, vol. 3 (Chicago, 1979), Chapter 14.
10. In recent years economists, in particular of the so-called Chicago school, have been
increasingly concerned with the analysis of property rights (cf. H. Demsetz, “The
Exchange and Enforcement of Property Rights,” in Journal of Law and Economics,
1964; and “Toward a Theory of Property Rights,” in American Economic Review,
122 Anarchy and the Law

1967; R. Coase, “The Problem of Social Cost,” in Journal of Law and Economics,
1960; A. Alchian, Economic Forces at Work (Indianapolis, 1977), part 2; R. Posner,
Economic Analysis of Law (Boston, 1977). Such analyses, however, have nothing
to do with ethics. On the contrary, they represent attempts to substitute economic
efficiency considerations for the establishment of justifiable ethical principles (on
the critique of such endeavors cf. M. N. Rothbard, The Ethics of Liberty (Atlantic
Highlands, 1982), Chapter 26; W. Block, “Coase and Demsetz on Private Property
Rights,” in Journal of Libertarian Studies, 1977; R. Dworkin, “Is Wealth a Value,”
in Journal of Legal Studies, 1980; M. N. Rothbard, “The Myth of Efficiency,” in M.
Rizzo (ed.), Time, Uncertainty, and Disequilibrium (Lexington, 1979). Ultimately,
all efficiency arguments are irrelevant because there simply exists no nonarbitrary
way of measuring, weighing, and aggregating individual utilities or disutilitles that
result from some given allocation of property rights. Hence, any attempt to recom-
mend some particular system of assigning property rights in terms of its alleged
maximization of “social welfare” is pseudo-scientific humbug (see in particular, M.
N. Rothbard, “Toward a Reconstruction of Utility and Welfare Economics,” Center
for Libertarian Studies, Occasional Paper No.3 New York, 1977; also, L Robbins,
“Economics and Political Economy,” in American Economic Review, 1981).
The “Unanimity Principle” which J. Buchanan and G. Tullock, following K
Wicksell (Flnanztheoretlsche Untersuchungen [Jena, 1896]), have repeatedly
proposed as a guide for economic policy is also not to be confused with an ethical
principle proper. According to this principle only such policy changes should be
enacted which can find unanimous consent—and that surely sounds attractive; but
then, mutatis mutandis, it also determines that the status quo be preserved if there
is less than unanimous agreement or any proposal of change—and that sounds far
less attractive because it implies that any given, present state of affairs regarding the
allocation of property rights must be legitimate either as a point of departure or as
a to-be-continued state. However, the public choice theorists offer no justification
in terms of a normative theory of property rights for this daring claim as would be
required. Hence, the unanimity principle is ultimately without ethical foundation.
In fact, because it would legitimize any conceivable status quo, the Buchananites’
most favored principle is no less than outrightly absurd as a moral criterion (cf. on
this also M. N. Rothbard, The Ethics of Liberty [Atlantic Highlands, 1982], Chapter
26; arid “The Myth of Neutral Taxation,” in Cato Journal, 1981, p. 549f). Whatever
might still be left for the unanimity principle, Buchanan and Tullock, following the
lead of Wicksell again, then give away by reducing it in effect to one of “relative”
or “quasi” unanimity.
11. Cf. on this argument M. N. Rothbard, “The Myth of Neutral Taxation,” in Cato
Journal, 1981, p. 533. Incidentally, the existence of one single anarchist also invali-
dates all references to Pareto-optimality as a criterion for economically legitimate
state action.
12. Essentially the same reasoning that leads one to reject the socialist statist theory
built on the allegedly unique character of public goods as defined by the criterion
of nonexcludability, also applies when instead, such goods are defined by means of
the criterion of nonrivalrous consumption (cf. notes 2 and 8 above). For one thing,
in order to derive the normative statement that they should be so offered from the
statement of fact that goods which allow nonrivalrous consumption would not be
offered on the free market to as many consumers as could be, this theory would
face exactly the same problem of requiring a justifiable ethics. Moreover, the utili-
tarian reasoning is blatantly wrong, too. To reason, as the public goods theorists
do, that the free-market practice of excluding free riders from the enjoyment of
 Capitalist Production and the Problem of Public Goods (excerpt) 123

goods which would permit nonrivalrous consumption at zero marginal costs would
indicate a suboptimal level of social welfare and hence would require compensa-
tory state action is faulty on two related counts. First, cost is a subjective category
and can never be objectively measured by any outside observer. Hence, to say that
additional free riders could be admitted at no cost is totally inadmissible. In fact,
if the subjective costs of admitting more consumers at no charge were indeed zero,
the private owner-producer of the good in question would do so. If he does not do
so, this reveals that to the contrary, the costs for him are not zero. The reason for
this may be his belief that to do so would reduce the satisfaction available to the
other consumers and so would tend to depress the price for his product; or it may
simply be his dislike for uninvited free riders as, for instance, when I object to the
proposal that I turn over my less-than-capacity filled living room to various self-
inviting guests for nonrivalrous consumption. In any case, since for whatever reason
the cost cannot be assumed to be zero, it is then fallacious to speak of a market
failure when certain goods are not handed out free of charge. On the other hand,
welfare losses would indeed become unavoidable if one accepted the public goods
theorists’ recommendation of letting goods that allegedly allow for nonrivalrous
consumption to be provided free of charge by the state. Besides the insurmountable
task of determining what fulfills this criterion, the state, independent of voluntary
consumer purchases as it is would first face the equally insoluble problem of ra-
tionally determining how much of the public good to provide. Clearly, since even
public goods are not free goods but are subject to “crowding” at some level of use,
there is no stopping point for the state, because at any level of supply there would
still be users who would have to be excluded and who, with a larger supply, could
enjoy a free ride. But even if this problem could be solved miraculously, in any
case the (necessarily inflated) cost of production and operation of the public goods
distributed free of charge for nonrivalrous consumption would have to be paid for
by taxes. And this then, i.e., the fact that consumers would have been coerced into
enjoying their free rides, again proves beyond any doubt that from the consumers’
point of view these public goods, too, are inferior in value to the competing private
goods that they now no longer can acquire.
13. The most prominent modem champions of Orwellian double talk are J. Buchanan
and G. Tullock (cf. their works cited above). They claim that government is founded
by a “constitutional contract” in which everyone “conceptually agrees” to submit
to the coercive powers of government with the understanding that everyone else
is subject to it, too. Hence, government is only seemingly coercive but really vol-
untary. There are several evident objections to this curious argument. First, there
is no empirical evidence whatsoever for the contention that any constitution has
ever been voluntarily accepted by everyone concerned. Worse, the very idea of all
people voluntarily coercing themselves is simply inconceivable, much in the same
way that it is inconceivable to deny the law of contradiction. For if the voluntarily
accepted coercion as voluntary, then it would have to be possible to revoke one’s
subjection to the constitution and the state would be no more than a voluntarily
joined club. If, however, one does not have the “right to ignore the state”—and
that one does not have this right is, of course, the characteristic mark of a state as
compared to a club—then it would be logically inadmissible to claim that one’s
acceptance of state coercion is voluntary. Furthermore, even if all this were possible,
the constitutional contract could still not claim to bind anyone except the original
signers of the constitution.
How can Buchanan and Tullock come up with such absurd ideas? By a semantic
trick. What was “inconceivable” and “no agreement” in pre-Orwellian talk is for
124 Anarchy and the Law

them “conceptually possible” and a “conceptual agreement.” For a most instructive

short exercise in this sort of reasoning in leaps and bounds cf. J. Buchanan, “A
Contractarian Perspective on Anarchy,” in Freedom in Constitutional Contract (Col-
lege Station, 1977). Here we learn (p. 17) that even the acceptance of the 55 m.p.h.
speed limit is possibly voluntary (Buchanan is not quite sure), since it ultimately
rests on all of us conceptually agreeing on the constitution, and that Buchanan is
not really a statist, but in truth an anarchist (p. 11).
14. M. N. Rothbard, Man, Economy and State (Los Angeles, 1970), p. 887.
15. This, first of all, should be kept in mind whenever one has to assess the validity of
statist-interventionist arguments such as the following, by J. M. Keynes (“The End
of Laissez Faire,” in J. M. Keynes, Collected Writings [London 1972], vol. 9, p.
291): “The most important Agenda of the state relate not to those activities which
private individuals are already fulfilling but to those functions which fall outside
the sphere of the individual, to those decisions which are made by no one if the
state does not make them. The important thing for government is not to do things
which individuals are doing already and to do them a little better or a little worse;
but to do those things which are not done at all.” This reasoning not only appears
phony, it truly is.
16. Some libertarian minarchists object that the existence of a market presupposes the
recognition and enforcement of a common body of law, and hence a government
as a monopolistic judge and enforcement agency. (Cf., for instance, J. Hospers,
Libertarianism [Los Angeles, 1971]; T. Machan, Human Rights and Human Lib-
erties [Chicago, 1975].) Now, it is certainly correct that a market presupposes the
recognition and enforcement of those rules that underlie its operation. But from
this it does not follow that this task must be entrusted to a monopolistic agency.
In fact, a common language or sign-system is also presupposed by the market; but
one would hardly think it convincing to conclude that hence the government must
ensure the observance of the rules of language. Just as the system of language
then, the rules of market behavior emerge spontaneously and can be enforced by
the “invisible hand” of self-interest. Without the observance of common rules of
speech people could not reap the advantages that communication offers, and without
the observance of common rules of conduct, people could not enjoy the benefits
of the higher productivity of an exchange economy based on the division of labor.
In addition, as I have demonstrated in Chapter 7, independent of any government,
the rules of the market can be defended a priori as just. Moreover, as I will argue
in the conclusion of this chapter, it is precisely a competitive system of law ad-
ministration and law enforcement that generates the greatest possible pressure to
elaborate and enact rules of conduct that incorporate the highest degree of consensus
conceivable. And, of course, the very rules that do just this are those that a priori
reasoning establishes as the logically necessary presupposition of argumentation
and argumentative agreement.
17. Incidentally, the same logic that would force one to accept the idea of the production
of security by private business as economically the best solution to the problem
of consumer satisfaction also forces one, as far as moral ideological positions are
concerned, to abandon the political theory of classical liberalism and take the
small but nevertheless decisive step (from there) to the theory of libertarianism, or
private property anarchism. Classical liberalism, with L. v. Mises as its foremost
representative in this century, advocates a social system based on the fundamental
rules of the natural theory of property. And these are also the rules that libertarian-
ism advocates. But classical liberalism then wants to have these laws enforced by
a monopolistic agency (the government, the state)—an organization, that is, which
 Capitalist Production and the Problem of Public Goods (excerpt) 125

is not exclusively dependent on voluntary, contractual support by the consumers of

its respective services, but instead has the right to unilaterally determine its own
income, i.e., the taxes to be imposed on consumers in order to do its job in the
area of security production. Now, however plausible this might sound, it should be
clear that it is inconsistent. Either the principles of the natural property theory are
valid, in which case the state as a privileged monopolist is immoral, or business
built on and around aggression—the use of force and of no contractual means of
acquiring resources—is valid, in which case one must toss out the first theory. It
is impossible to sustain both contentions and not be inconsistent unless, of course,
one could provide a principle that is more fundamental than both the natural theory
of property and the state’s right to aggressive violence and from which both, with
the respective limitations regarding the domain, in which they are valid, can be
logically derived. However, liberalism never provided any such principle, nor will
it ever be able to do so, since, as demonstrated in Chapter 7, to argue in favor of
anything presupposes one’s right to be free of aggression. Given the fact then that
the principles of the natural theory of property cannot be argumentatively contested
as morally valid principles without implicitly acknowledging their validity, by force
of logic one is committed to abandoning liberalism and accepting instead its more
radical child: libertarianism, the philosophy of pure capitalism, which demands
that the production of security be undertaken by private business too.
18. Cf. on the problem of competitive security production G. de Molinari, “The Pro-
duction of Security,” Center for Libertarian Studies, Occasional Paper No. 2, New
York, 1977; M. N. Rothbard, Power and Market (Kansas City, 1977), Chapter 1; and
For A New Liberty (New York, 1978), Chapter 12; also, W. C. Wooldridge, Uncle
Sam the Monopoly Man (New Rochelle, 1970), Chapters 5-6; M. and L. Tannehill,
The Market for Liberty (New York, 1984), Part 2.
19. Cf. M. Murck, Soziologie der oeffentlichen Sicherheit (Frankfurt/M., 1980).
20. On the deficiencies of democratically controlled allocation decisions cf. above,
Chapter 9, n. 4.
21. Sums up Molinari (“Production of Security,” Center for Libertarian Studies, Oc-
casional Paper No. 2, New York, 1977, pp. 13-14): “If…the consumer is not free
to buy security wherever he pleases, you forthwith see open up a large profession
dedicated to arbitrariness and bad management. Justice becomes slow and costly,
the police vexatious, individual liberty is no longer respected, the price of security
is abusively inflated and inequitably apportioned, according to the power and influ-
ence of this or that class of consumers.”
22. Cf. the literature cited in note 17 above; also, B. Leoni, Freedom and the Law
(Princeton, 1961); J. Peden, “Property Rights in Celtic Irish Law,” in Journal of
Libertarian Studies, 1977.
23. Cf. T. Anderson and P. J. Hill, “The American Experiment in Anarcho-Capitalism:
The Not So Wild, Wild West,” in Journal of Libertarian Studies, 1980.
24. Ct. on the following H. H. Hoppe, Eigentum, Anarchier und Staat (Opladen 1987),
Chapter 5.
25. Contrast this with the state’s policy of engaging in battles without having everyone’s
deliberate support because it has the right to tax people; and ask yourself if the risk
of war would be lower or higher if one had the right to stop paying taxes as soon
as one had the feeling that the state’s handling of foreign affairs was not to one’s
liking.
26. And it may be noted here again that norms that incorporate the highest possible
degree of consensus are, of course, those that are presupposed by argumentation
and whose acceptance makes consensus on anything at all possible, as shown in
Chapter 7.
126 Anarchy and the Law

27. Again, contrast this with state-employed judges who, because they are paid from
taxes and so are relatively independent of consumer satisfaction, can pass judgments
which are clearly not acceptable as fair by everyone; and ask yourself if the risk of
not finding the truth in a given case would be lower or higher if one had the possibility
of exerting economic pressure whenever one had the feeling that a judge who one
day might have to adjudicate in one’s own case had not been sufficiently careful in
assembling and judging the facts of a case, or simply was an outright crook.
28. Cf. on the following in particular, M. N. Rothbard, For a New Liberty (New York,
1978), pp. 233ff.
29. Cf. B. Bailyn, The Ideological Origins of the American Revolution (Cambridge,
1967); J. T. Main, The Anti-Federalists: Critics of the Constitution (Chapel Hill,
1961); M. N. Rothbard, Conceived in Liberty, 4 vols. (New Rochelle, 1975-1979).
30. Naturally, insurance companies would assume a particularly important role in
checking the emergence of outlaw companies. Note M. and L. Tannehill: “Insur-
ance companies, a very important sector of any totally free economy, would have
a special incentive to dissociate themselves from any aggressor and, in addition,
to bring all their considerable business influence to bear against him. Aggressive
violence causes value loss, and the insurance industry would suffer the major cost
in most such value losses. An unrestrained aggressor is a walking liability, and
no insurance company, however remotely removed from his original aggression,
would wish to sustain the risk that he might aggress against one of its own clients
next. Besides, aggressors and those who associate with them are more likely to be
involved in situations of violence and are, thus, bad insurance risks. An insurance
company would probably refuse coverage to such people out of a foresighted desire
to minimize any future losses which their aggressions might cause. But even if the
company were not motivated by such foresight, it would still be forced to raise
their premiums up drastically or cancel their coverage altogether in order to avoid
carrying the extra risk involved in their inclination to violence. In a competitive
economy, no insurance company could afford to continue covering aggressors and
those who had dealings with aggressors and simply pass the cost on to its honest
customers; it would soon lose these customers to more reputable firms which could
afford to charge less for their insurance coverage.
What would loss of insurance coverage mean in a free economy? Even if [the
aggressor] could generate enough force to protect itself against any aggressive
or retaliatory force brought against it by any factor or combination of factors, it
would still have to go completely without several economic necessities. It could
not purchase insurance protection against auto accidents, natural disasters, or con-
tractual disputes. It would have no protection against damage suits resulting from
accidents occurring on its property. It is very possible that [it] would even have to
do without the services of a fire extinguishing company, since such companies are
natural outgrowths of the fire insurance business.
In addition to the terrific penalties imposed by the business ostracism which
would naturally follow its aggressive act [it] would have trouble with its employ-
ees… [For] if a defense service agent carried out an order which involved the
intentional initiation of force, both the agent and the entrepreneur or manager who
gave him the order, as well as any other employees knowledgeably involved, would
be liable for any damages caused” (M. and L. Tannehill, The Market for Liberty
[New York, 1984], pp. 110-111).
31. The process of an outlaw company emerging as a state would be even further com-
plicated, since it would have to reacquire the “ideological legitimacy” that marks the
existence of the presently existing states and which took them centuries of relentless
propaganda to develop. Once this legitimacy is lost through the experience with a pure
free market system, it is difficult to imagine how it could ever be easily regain.
 7
National Defense and
the Public-Goods Problem
Jeffrey Rogers Hummel and Don Lavoie1
National defense, according to the popular ideal, is a service provided by
the state to its citizens.2 It entails protection from aggressors outside the state’s
jurisdiction, usually foreign states. The most sophisticated theoretical justifi-
cation for government provision of this service is the public-goods argument.
Roughly stated, this argument claims that the incentive to free ride inhibits
people from providing enough protection from foreign aggression voluntarily.
Thus, it is in people’s best interests to coerce themselves. Taxation is necessary
to ensure sufficient military expenditures.
Many opponents of arms control treat the public-goods problem as if it alone
were sufficient to discredit any radical reduction in military spending. We,
however, will challenge this presumption. This chapter will not question the
validity, realism, or relevance of the public-goods concept.3 Indeed, we think
that the core service within national defense—safety from violence and aggres-
sion—captures the essence of a public good more fully than economists have
appreciated. But this essential feature, rather than providing a solid justification
for heavy military expenditures, offers one of the most powerful objections to
such a government policy.
We will first reexamine the nature of national defense in order to clarify the
underlying goal of military spending. The presumption that the state’s military
establishment automatically provides safety from aggression needs careful
scrutiny. The taxation necessary to fuel military expansion often generates more
public-goods problems than it circumvents. This leads us to the more general
question of how the free-rider incentive is ever overcome, despite theoretical
predictions to the contrary. Public-goods theory seems to misunderstand human
nature, by exaggerating the importance of narrow self-interest and confining
attention to artificially static Prisoners’ Dilemmas. A more social and dynamic
model of human action is better able to account for the observed fact that free-
rider problems are overcome in the real world all the time.
What is a Public Good?
Economists have called many things public goods and then endlessly debated
whether the label really applies, but national defense has remained the quintes-

127
128 Anarchy and the Law

sential public good. Although rarely discussed in detail, it is universally invoked

as the classic representative of the public-goods category.4
Two characteristics distinguish a pure public good from a private good, and
both are exhibited by the case of national defense. The first is nonrival consump-
tion. One customer’s consumption of a marginal unit of the good or service
does not preclude another’s consumption of the same unit. For example, in an
uncrowded theater, two patrons’ enjoyment of the same movie is nonrival. The
second characteristic is nonexcludability. The good or service cannot be pro-
vided to an individual customer without simultaneously providing it to others.
The owner of a dam, for example, cannot provide flood control separately to
the individual farmers residing downstream.5
Although these two characteristics frequently come in conjunction with each
other, they do not necessarily have to. Nonexcludability from the dam’s flood-
control services is accompanied by nonrival consumption of the services among
the various farmers, but the owner of a nearly empty theater can still exclude ad-
ditional patrons. Yet, according to the public-goods argument, either characteristic
alone causes “market failure”—that is, an allocation of resources that is less than
Pareto optimal. Thus, either can be sufficient to justify state intervention.6
Even national defense is not a pure public good. Americans in Alaska and
Hawaii could very easily be excluded from the U.S. government’s defense pe-
rimeter, and doing so might enhance the military value of at least conventional
U.S. forces to Americans in the other forty-eight states. But, in general, an ad-
ditional ICBM in the U.S. arsenal can simultaneously protect everyone within
the country without diminishing its services. In that respect, consumption of
national defense is nonrival. Moreover, a technique that defends just a single
American from the Soviet state without necessarily defending his or her entire
community and perhaps the entire nation is difficult to visualize. That makes
national defense nonexcludable as well.
We are going to focus, however, only upon nonexcludability. If consumption
of a service is nonrival, but businessmen and entrepreneurs can exclude those
who do not pay for it, then they still have strong incentives to provide the service.
The most serious “market failure” that is alleged to result is underutilization of
the service. Some people will be prevented from benefiting from the quantity
of the service that has been produced, even though permitting them to do so
costs nothing. Furthermore, even this imperfection will dissipate if the market
permits discriminatory pricing.7
On the other hand, nonexcludabillty creates opportunities for free riders,
who will pay for the service only if doing so is absolutely necessary to receive
it. From the perspective of economic self-interest, every potential customer has
an incentive to try to be a free rider. If enough of them act on this incentive, the
service will not be produced at all, or at least not enough of it.
Another way to think about nonexcludability is as a positive externality in its
purest form. Many goods and services generate additional benefits for people
other than those who directly consume and pay for them. There is often no way
 National Defense and the Public-Goods Problem 129

for the producers of these goods to charge those who receive these external
benefits. A nonexcludable good or service is one where the positive externali-
ties are not just an incidental by-product but rather constitute the major benefit
of the good or service.8
Clearly, the justification for the state’s provision of national defense does
not stem from any major concern that in its absence protection services would
be produced but underutilized. Rather, it stems from the assumption that, un-
less taxation or some other coercive levy forces people to contribute, national
defense will be inadequately funded and therefore its core service of safety from
aggression will be underproduced. It is this widely held but rarely examined
assumption that we wish to question.
What is National Defense?
Before we can explore the free-rider dynamics of the state’s military es-
tablishment, we must clarify the meaning of the term “national defense.” The
public-goods justification for military expenditures rests upon a fundamental
equivocation over exactly what service national defense entails. When econo-
mists discuss national defense, the core service they usually have in mind,
explicitly or implicitly, is protection of people’s lives, property, and liberty from
foreign aggressors. This also appears to be what people have in mind when they
fear foreign conquest, particularly in the case of the American fear of Soviet
conquest. People throughout the world believe that their own government, no
matter how disagreeable, defends them from foreign governments, which they
think would be even more oppressive.
This defense of the people is not synonymous with another service that goes
under the same “national defense” label: protection of the state itself and its ter-
ritorial integrity. Historically, the state has often embarked on military adventures
unrelated to the defense of its subjects. If this were not the case, people would
require no protection from foreign states in the first place. Many Americans
seriously doubt that the U.S. bombing of North Vietnam and Cambodia had
very much to do with protecting their liberty. One defense-budget analyst, Earl
Ravenal, contends that nearly two-thirds of U.S. military expenditures goes
toward the defense of wealthy allied nations in Europe and Asia and has little
value for the defense of Americans.9
The distinction between the two meanings of national defense does not
apply only when the state engages in foreign intervention or conquest. Even
during unambiguously defensive wars, the state often systematically sacrifices
the defense of its subjects to the defense of itself. Such universal war measures
as conscription, confiscatory taxation, rigid economic regulation, and suppres-
sion of dissent aggress against the very citizens whom the state is presumably
protecting. People believe the state defends their liberty; in fact, many end up
surrendering much of their liberty to defend the state.
People of course may consider some tradeoff worth it. They may accept the
costs and risks of the state’s protection in order to reduce the risks and costs of
130 Anarchy and the Law

foreign conquest. But in most discussions of national defense, the aggressive

acts taken by the government against its own subjects are arbitrarily excluded
from the discussion. It is this frequently overlooked cost which is suggested in
Randolph Bourne’s famous observation: “War is the health of the State.”10
In other words, the national interest and the public good do not automatically
coincide. We do not deny the possibility of an incidental relationship between
the defense of the state and the defense of the people. But in the next section,
we will present general reasons why we think this relationship is not as strong as
usually supposed. Before we can do that, we, must fully expose the conceptual
gulf between the two meanings of national defense.
The pervasive doctrine of nationalism obscures this fundamental distinction.
Nationalism treats nations as collective entities, applying principles drawn from
the analysis of individual interaction to the international level. In a war between
two nations, the nationalist model focuses on essentially two parties: nation A
and nation B. As in fights between individuals, one of these two nations is the
aggressor, whereas the other is the defender. As a result, the model axiomati-
cally equates protecting the state with protecting its subjects.
The basic flaw in the nationalist model is its collectivist premise. Although the
model informs many of the formal economic analyses of international relations,
it represents a glaring example of the fallacy of composition. The state simply
is not the same thing as its subjects. Democracies are sometimes referred to
as “governments of the people,” but this is, at best, rhetorical sloppiness. The
state and the people interpenetrate one another and in complex ways, but they
clearly do not have exactly the same purposes or interests.
Consequently, any conflict between two nations involves not just two par-
ties, but at least four: the state governing nation A, the state governing nation
B, the people with the (mis)fortune to live under state A, and the people with
the (mis)fortune to live under state B. Whatever the merits of a dispute between
states A and B, the dispute need not divide a significant portion of people A
from people B.11
Abandoning this collectivist identification of the state with its subjects
exposes the critical insight about the national-defense service. If one is truly
concerned about defense of peoples’ lives, property, and liberty, then the transfer
of their capital city from one location to another is not intrinsically significant.
In some cases it might even be thought an improvement. Many Americans are
convinced that the territory constituting Russia is in a very real sense already
conquered—by the Soviet government. Some even believe that the Soviet
people would fare better with Washington, D.C. as their capital city. What
ultimately matters is whether transferring the capital city brings the citizens a
net loss or gain.
The danger therefore is not foreign conquest per se, but the amount of
power the conquering government can successfully wield. In the final analysis,
protection from foreign states is not a unique service. It is a subset of a more
general service: protection from aggression by anyone—or any state. Whether
 National Defense and the Public-Goods Problem 131

we formally label an oppressive state “foreign” or “domestic” becomes a sec-

ondary consideration.
People admittedly may highly value their own state’s preservation and
glorification, in and of itself. Their government’s military establishment may
directly enter their utility functions, the same way their favorite baseball or
football team does. But nationalism is not just a subjective preference. It is also
a positive social theory, as legitimately subject to criticism for its policy recom-
mendations as any other. The military’s coercive funding unfortunately prevents
people from revealing their true preferences about national defense directly and
unambiguously. Some citizens may still want a huge and expensive military
establishment even if they discover that it gives them less protection than they
thought. But meanwhile, an examination of whether military expansion truly
does defend people’s lives, property, and liberty is still in order.12
The Free-Rider Dynamics of Government Intervention
When Paul Samuelson first formalized public-goods theory, many economists
unreflectively subscribed to what Harold Demsetz has called the nirvana ap-
proach to public policy. Demonstrating some “market failure” with respect to an
abstract optimum was considered sufficient to justify state action. Economists
assumed that the costless, all-knowing, and benevolent state could simply and
easily correct any failure.
Since then, economists have become far more realistic. Public-goods theory
has advanced to the point where it is now an exercise in comparative institutions.
Demonstrating “market failure” is no longer sufficient. One must compare the
market with the state, not as one wishes the state would behave in some ideal
realm, but as it must behave in the real world. To justify state action, one must
show that the agents of government have the capacity and the incentive to do a
better job than participants in the market. Can the state provide the public good
without costs that exceed the benefits? And is there some incentive structure
that would conceivably ensure that it do so?13
Economists within the field of public choice have done some of the most
important work on the comparative capabilities of the state—by applying
public-goods insights to political action itself. They have come to the realiza-
tion that the free-rider incentive does not only arise for market enterprises. As
Mancur Olson has demonstrated, the free-rider incentive can arise for any group,
especially political groups wanting to influence state policy. This imparts an
inherent public-goods character to all political decisions.14
Assume that one of us wishes to change some state policy that we personally
find particularly onerous—for instance, to repeal a tax. We are members of a
fairly large group that will benefit if the tax is repealed. If enough of us contribute
money, time, or other resources to bringing about the tax’s repeal, we will suc-
ceed and all be better off. The money we save in taxes will more than reimburse
us for our effort. Once the tax is repealed, however, even those who did not join
our campaign will no longer have to pay it. We cannot exclude them from the
benefits of the tax’s repeal. They will be free riders on our political efforts.
132 Anarchy and the Law

Just as in the case of a nonexcludable good in the market, every potential

beneficiary of the tax repeal has an incentive, from the perspective of economic
self-interest, to try to be a free rider. If enough of them act according to this
incentive, the tax will never be repealed. Public choice economists call this
result “government failure,” completely analogous the “market failure” caused
by nonexcludability.
Of course, this example grossly oversimplifies the problem. Under democratic
states, people do not directly purchase changes in state policy; they vote for them.
Or more precisely, some of them vote for representation who then vote on and
bargain over state policy. If the tax repeal example were completely accurate,
nearly every intentional benefit provided by the state would be a pure private
good, similar to the current salaries of politicians and bureaucrats. With voting,
political entrepreneurs and vote maximizing firms (which are called political
parties) have some incentive to provide us with our tax repeal, even if we do
not politically organize, in order to entice us to vote for them.15
This incentive, however, is not very great. First of all, voting itself gives rise
to a public good. An individual must expend time and other resources to vote,
but he or she can avoid these expenditures by free riding on the voting of oth-
ers. Only in the very remote case where the voter anticipates that a single vote
will decide the election’s outcome does this incentive to free ride disappear.
Consequently, the political entrepreneur must have some reason to expect that
we will vote at all. And if we do in fact vote, he must in addition have some
reason to expect that the tax repeal, among all the other competing issues, will
affect how we vote. Our forming a political organization to repeal the tax gives
him reason to believe both these things.16
In short, unorganized groups have some influence upon the policies of a
democratic state. But other things being equal, groups that organize and cam-
paign for policies have a significant advantage. That is presumably why they
organize and campaign. It strains credulity to suppose that all the people who
pour vast sums of money into political lobbying are utterly mistaken in the belief
that they thereby gain some leverage on policy. The common observation that
special interests have inordinate influence upon a democratic state is without
doubt empirically well founded.
Two variables affect the likelihood that a group will overcome the free-rider
problem and successfully organize. These variables operate whether the group
is trying to attain nonexcludable benefits on the market or from the state. The
first is the size of the group. The smaller the group, ceteris paribus, the more
likely the members are to organize successfully. The larger the group, the more
difficult it is to involve enough of them to secure the public good.
The second variable is the difference between the value of the public good
to the members of the group and the cost to them. The greater this difference,
ceteris paribus, the more likely they are to organize successfully. Indeed, if
this difference is great enough, one single member might benefit enough to be
willing to pay the entire cost and let all the other members of the group free
 National Defense and the Public-Goods Problem 133

ride. The smaller this difference, on the other hand, the more essential becomes
the contribution of each potential member.17
The democratic state therefore makes it much easier to enact policies that
funnel great benefits to small groups than to enact policies that shower small
benefits on large groups. Because of this free-rider-induced “government fail-
ure,” the state has the same problem in providing nonexcludable goods and
services as the market—with one crucial difference. When a group successfully
provides itself a public good through the market, the resources it expends pay
directly for the good. In contrast, when a group successfully provides itself a
public good through the state, the resources it expends pay only the overhead
cost of influencing state policy. The state then finances the public good through
taxation or some coercive substitute.
Moreover, the group that campaigned for the state-provided public good will
not in all likelihood bear very much of the coerced cost of the good. Otherwise,
they would have had no incentive to go through the state, because doing so
then costs more in total than simply providing themselves the good voluntarily.
Instead, the costs will be widely distributed among the poorly organized large
group, who may not benefit at all from the public good.
This makes it possible for organized groups to get the state to provide bo-
gus public goods, goods and services which in fact cost much more than the
beneficiaries would be willing to pay even if exclusion were possible and they
could not free ride. In this manner, the state generates externalities, and ones that
are negative. Rather than overcoming the free-rider problem, the state benefits
freeloaders, who receive bogus public goods at the expense of the taxpayers.
Provision of these goods and services moves the economy away from, not to-
ward, Pareto optimality. When the bogusness of such public goods is obvious
enough, economists call them transfers.
What is the upshot of this “government failure” for national defense? In the
case of defending the state itself, we are dealing quite clearly with a service that
the state has enormous incentives to provide. If this is a nonexcludable good or
service at all, then it is a public good that benefits small groups very highly. But
in the case of defending the people, we are talking about, in the words of David
Friedman, “a public good…with a very large public.” The benefits, although
potentially great, are dispersed very broadly.18
Thus, to the extent that the free-rider obstacle inhibits market protection of
liberty, it raises an even more difficult obstacle to the state’s ever undertaking
that vital service. The state has strong incentives to provide national defense
that protects itself and its prerogatives, but it has very weak incentives to
provide national defense that protects its subjects’ lives, property, and liberty.
This explains the common historical divergence between defending the state
and defending the people.
Furthermore, there is a perverse inverse relationship between the people’s
belief that the state defends them and the reality. To the extent that they accept
this nationalistic conclusion, their political resistance against the domestic state’s
134 Anarchy and the Law

aggression, however weak because of the public-goods problem to begin with,

decreases further. This is most noticeable during periods of actual warfare. The
belief of the state’s subjects that it provides protection actually reduces the
amount of protection they enjoy, at least against the domestic state.
Nationalism thus results in an ironic paradox. It views the state as a protec-
tion agency, but this very view contributes to the possibility that the state will
take on the literal role of a protection racket. Those who decline to pay for
the state’s protection become its victims. This in turn gives the state an added
incentive to find foreign enemies. For without a foreign threat, the justification
for the state’s protection becomes far less persuasive.19
Our remarks have thus far been confined to the democratic state. They ap-
ply, however, even more strikingly to the undemocratic state, insofar as there is
any significant difference between the political dynamics of the two types. We
believe that many economists have overemphasized the operative significance
of formal voting. Both types of states are subject to the influence of groups that
marshal resources in order to affect policy. Formal voting only makes it possible
for some changes to manifest themselves faster and less painfully.
Our argument does not rule out the possibility that the state might actually
defend its subjects. Whereas the difference between the political dynamics of
democratic and undemocratic states is overdrawn, states do differ markedly
in the amount of aggression they commit against their own subjects. If we
automatically assume that a conquering government can wield as much power
over foreign populations as it does over its domestic subjects, then a relatively
less oppressive government will, in the process of defending itself, provide
some protection for its subjects. But this is often only an unintended positive
externality.
Moreover, a military policy designed primarily to defend the state’s preroga-
tives will generally differ from what would be sufficient for the protection of
its subjects. This difference may unnecessarily involve the people in dangerous
military commitments and adventures. Their lives, liberty, and property, beyond
being sacrificed to the interests of the domestic state, will then be at greater risk
from foreign governments as well. Even when countering oppressive govern-
ments, national defense therefore generates negative externalities that may more
than offset the possible positive externality.
Above all, the value of this defense hinges entirely upon the assumption
that conquering governments can oppress a foreign population more fully and
easily than can that population’s domestic government. But this assumption is
highly simplistic. It treats the power of the state as exogenously determined.
Yet, if our concern is for the protection of people’s lives, property, and liberty
from any state, then a state’s oppressiveness becomes the most critical variable
of all. One state’s military policy might not only directly affect the liberty of
its own subjects, but it might also indirectly influence the power of opposing
states. Only a more sophisticated understanding of oppression’s fundamental
determinants can tell us how best to ward off foreign aggression.
 National Defense and the Public-Goods Problem 135

The Free-Rider Dynamics of Social Consensus

To this point, our conclusions have been somewhat pessimistic, justifying
Earl Brubaker’s observation that the free-rider assumption makes economics a
dismal science.20 Based on that assumption, neither the market nor the state has
much incentive to provide any direct protection of peoples lives, property, and
liberty. To the extent that historical accident has resulted in marked differences
in the power of various states over their own subjects, some such protection
might be produced as an unintended externality of the state’s effort to protect
its own territorial integrity. But that very effort at self-protection will also have
a significant countervailing negative impact on the degree to which the state
aggresses against its own subjects.
Attributing a difference to historical accident, however, is simply another way
of saying that the difference is unexplained. Not until we explain the marked
differences in domestic power of the world’s states will we fully comprehend
the relationship between protecting the state and protecting the people.
One naive explanation common among economists is the public-goods theory
of the state. This theory often rests upon a sharp dichotomy between two types
of states, usually democratic and undemocratic. Undemocratic states accord-
ing to this theory are little better than criminal gangs, run by single despots or
small groups of oligarchs essentially for their own personal ends. The subjects
of these states suffer under their rulers but can do very little about their plight.
Any effort on their part to change the situation, whether through violent revolu-
tion or other means, produces an outcome that is a public good; again, we are
caught in the free-rider trap.21
Democratic states, in contrast, are the result of social contracts. Accord-
ing to the public-goods theory of the state, people create democratic states to
solve the free-rider problem. At some obscure moment in the past, they drew
up constitutional rules in which they agreed to be coerced in order to provide
public goods for themselves. Over time, because the free-rider problem gener-
ates “government failure,” democratic states have a tendency to fall under the
influence of special interests. Perhaps better constitutional decision rules could
alleviate this decay. Nonetheless, democratic states always retain vestiges of
their public-goods origin. That is why they aggress against their own subjects
far less than do undemocratic states.22
We do not have to turn to the readily accessible historical evidence to refute
this naive theory about the origin of democratic states. The theory’s proponents
quite often do not literally believe it. Instead, they view the theory as merely
explaining the conceptual nature rather than the concrete origin of the democratic
state. Either way, however, the theory has an inner contradiction. Creating a
democratic state of this nature is a public good itself. A very large group must
in some manner have produced it. Because of the free-rider problem, they have
no more incentive to do that than to revolt against an undemocratic state or to
provide themselves any other nonexcludable benefit.23
136 Anarchy and the Law

A more realistic alternative to the public-goods theory of the state is what

we can call the social-consensus theory of the state. All states are legitimized
monopolies on coercion. The crucial word is “legitimized.” This legitimization
is what differentiates states from mere criminal gangs. Any society in which
people refrain from regularly killing each other enjoys some kind of social
consensus. No government rules through brute force alone, no matter how
undemocratic. Enough of its subjects must accept it as necessary or desirable
for its rule to be widely enforced and observed. But the very consensus which
legitimizes the state also binds it.24
The social consensus bears little resemblance to the mythical social contract
of public-goods theory. Whereas the social contract is generally conceived of
as an intentional political agreement, agreed upon explicitly at some specific
moment, the social consensus is an unintended societal institution, like language,
evolving implicitly over time. Sometimes, the evolution of the social consensus
can be very violent. Often, particular individuals or even fairly large groups
will strongly disagree with certain features of their society’s consensus. But
at all times, members of society are socialized into the consensus in ways that
they only dimly grasp, if at all.25
Consider a classroom filled with average American citizens. Ask for a show
of hands on the following question: how many would pay their taxes in full if
no penalties resulted from nonpayment? Very few would raise their hands. This
shows that taxation is involuntary. Then ask the group a second question: how
many think taxes are necessary or just? This time, nearly every hand would go
up. This shows that taxation is legitimized.26
Of course, one of the reasons Americans generally view taxation as legiti-
mate is because they think it is necessary in order to provide public goods. All
this proves, however, is that, although the public-goods theory of the state is
utterly worthless as an objective description of the state’s origin or nature, it is
very valuable as an ideological rationalization for the state’s legitimization. It
performs a function analogous to that performed by the divine right of kings
under monarchical states or by Marxist dogma under communist states.
The social-consensus theory of the state suggests that if you conducted the
same survey about taxation upon a group of average Russians living within the
Soviet Union, or a group of average Iranians living under the Ayatollah (and you
could guarantee them complete immunity regardless of how they answered),
you would get similar results. These foreign and “evil” undemocratic states are
not exogenous and alien institutions imposed on their subjects by sheer terror.
They are complex products of the culture, attitudes, preferences, and ideas,
whether explicit or implicit, that prevail within their societies.27
The vast ideological and cultural differences among the peoples of the world
are what explain the marked differences in the domestic power of their states.
The consensual constraints upon states differ in content, but all states face
them. The Soviet leaders fully realize this, which is why they devote so many
resources to domestic and foreign propaganda. The shifting social consensus
 National Defense and the Public-Goods Problem 137

also explains the many changes in the form and power of the state over time.
Although professional economists tend to ignore the ideological and cultural
components of social dynamics, professional historians give these factors the
bulk of their attention.
History records that in the not-so-distant past the world was entirely in the
grip of undemocratic states, which permitted their subjects very little liberty.
Democratic states evolved from undemocratic states. States that now must
tolerate a large degree of liberty emerged from states that did not have to do
so. Public-goods theory is in the awkward position of theoretically denying
that this could have happened. It raises an across-the-board theoretical obstacle
to every conceivable reduction in state power that benefits more than a small
group of individuals.28 The social-consensus theory, in contrast, attributes this
slow progress, sometimes punctuated with violent revolutions and wars, to
ideological changes within the social consensus.
Thus, history is littered with drastic changes in state power and policy that
resulted from successful ideological surmountings of the free-rider obstacle.
The Minutemen volunteers who fought at Concord Bridge could not even come
close to charging all the beneficiaries of their action. They produced tremendous
externalities from which Americans are still benefiting today. The Abolitionist
movement produced such a cascade of positive externalities that chattel slav-
ery—a labor system that was one of the world’s mainstays no less than two hun-
dred years ago, and had been so for millennia—has been rooted out everywhere
across the entire globe. We could multiply the examples endlessly.29
Indeed, the existence of any voluntary ethical behavior at all faces a free-rider
obstacle. Society is much more prosperous if we all cease to steal and cheat, but
the single individual is better off still if everyone else behaves ethically while he
or she steals and cheats whenever able to get away with it. Thus, everyone has
a powerful personal incentive to free ride on other people’s ethical behavior. If
we all succumbed to that incentive, society would not be possible at all.
We must avoid the mistaken impression that the government’s police forces
and courts are what prevents most stealing and cheating. To begin with, the
initial creation of such a police and court system (at least under government
auspices) is another public good. But far more important, the police and courts
are only capable of handling the recalcitrant minority, who refuse voluntarily
to obey society’s norms. A cursory glance at varying crime rates, over time
and across locations, clearly indicates that the total stealing and cheating in
society is far from solely a function of the resources devoted to the police and
the courts. Certain neighborhoods are less safe, making an equal unit of police
protection less effective, because they contain more aspiring ethical free riders. If
all members of society or even a substantial fraction became ethical free riders,
always stealing and cheating whenever they thought they could get away with
it, the police and court system would collapse under the load.30
In short, every humanitarian crusade, every broad-based ideological move-
ment, every widely practiced ethical system, religious and non-religious, is a
138 Anarchy and the Law

defiant challenge hurled at the neoclassical economist’s justification for state

provision of public goods. The steady advance of the human race over the centu-
ries is a series of successful surmountings of the free-rider obstacle. Civilization
itself would be totally impossible unless people had somehow circumvented
the public-goods problem.31
Beyond the Free-Rider Incentive
If what we have been saying so far is even partly correct, there must be
a serious flaw in public-goods theory. Howard Margolis points out that “no
society we know could function” if all its members actually behaved as the
free-rider assumption predicts they will. He calls this theoretical failure free-
rider “overkill.”32
Despite this flaw, public-goods theory explains a great deal, which is why it
remains so popular among economists. It explains why so many eligible voters
do not waste their time going to the polls. But it fails to explain why so many of
them still do go. (We think an interesting empirical study would be to determine
what percentage of economists who accept public-goods theory violate their
theoretical assumptions about human behavior by voting.) It explains why the
progress of civilization has been so painfully slow. But it fails to explain why
we observe any progress at all.
Before we work out the implications of this theoretical flaw for the issue
of national defense, let us digress briefly and try to identify it. It must involve
some weakness in the theory’s assumption about human behavior. We make
no pretensions, however, to being able fully to resolve the weakness. Because
this very issue sits at the conjunction of public-goods theory and game theory,
it has become one of the most fertile areas of inquiry within economics and
political science over the last decade. All we can do is modestly offer some
tentative thoughts about the sources of the weakness.
Two possibilities suggest themselves. Either people do not consistently
pursue the ends that the free-rider assumption predicts they will pursue, or they
pursue those ends but using means inconsistent with the assumption.
We will take up both of these possibilities in order:
1. Do people consistently pursue their self-interest, as the free-rider assump-
tion defines self-interest? Public-goods theorists have offered not one but two
motives that should cause a person to behave in accordance with the free-rider
assumption. The most obvious is narrow economic self-interest. This end does
provide a sufficient reason to free ride, but visualizing someone choosing a
different end is quite easy. Simple altruism is not the only alternative that will
violate this narrow assumption. People may desire social improvements—liberty,
justice, peace, etc.—not simply for their material benefits, but as ends in and of
themselves, independently present within their utility functions. Patrick Henry
may have been engaging in political hyperbole when he exclaimed “Give me
liberty or give me death!”, but he was still expressing a willingness to pay more
for attaining liberty than its narrow economic returns would cover. Perhaps this
 National Defense and the Public-Goods Problem 139

willingness should be called ideological; no matter what we call it, it appears

to be quite common in human history.33
Mancur Olson is the most prominent public-goods theorist to argue that a
second motive beyond narrow economic self-interest justifies the free-rider
assumption. This second motive applies even to the individual with ideological
ends—if the group is large enough. He contends that only rationality in the pur-
suit of whatever end the individual chooses is strictly necessary. The individual
will still choose to free ride, because for a public good requiring a large group
his meager contribution will have no perceptible effect on attaining the end.34
We could object that an individual’s contribution to a cause is often not
contingent in any way upon the cause’s overall success. Consequently, how
much the individual thinks his action will affect the probability of success is
often irrelevant. Some people refuse to litter, for instance, fully aware that their
refusal will have no perceptible impact on the quantity of litter. Such individu-
als gain satisfaction from doing what they believe is proper, regardless of its
macro-impact. In addition to a sense of righteousness, ideological movements
can offer their participants a sense of solidarity, of companionship in a cause
that keeps many loyal no matter how hopeless the cause.35
But this objection concedes far too much to Olson. As philosopher Richard
Tuck has cogently pointed out, Olson’s notion of “rationality” if consistently
obeyed precludes some everyday activities. It does not just apply to an individ-
ual’s contribution to the effort of a large group; it applies just as forcefully to
the cumulative actions of a single person on a large individual project. Olson’s
“rationality” is simply a modern variant of the ancient philosophical paradox of
the Sorites. In one version, the paradox argues that there can never be a heap of
stones. One stone does not constitute a heap, nor does the addition of one stone
to something that is not already a heap. Therefore, no matter how many stones
are added, they will never constitute a heap. (Of course, in the other direction,
this paradox argues that there can never be anything but a heap of stones.)
One more dollar will not make a perceptible difference in a person’s life
savings. One day’s exercise will not make a perceptible difference in a person’s
health. If the fact that the individual’s imperceptible contribution goes toward
a group rather than an individual effort is what is decisive, then we are simply
back again at the motive of narrow self-interest. No doubt, this type of “ratio-
nality” does influence some people not to undertake some actions under some
circumstances. But just how compelling people find it is demonstrated by the
millions who vote in presidential elections, despite the near certainty that the
outcome will never be decided by one person’s vote.36
2. Do people pursue their self-interest but in a manner inconsistent with the
free-rider assumption? Olson, again, has suggested one way that individuals might
effectively organize despite the free-rider obstacle. Groups can link their efforts at
achieving nonexcludable benefits with excludable by-products. Such by-products
include low group-rate insurance and professional journals. The incentive pro-
vided by these by-products helps counteract the incentive to be a free rider.37
140 Anarchy and the Law

One intriguing aspect of the by-product theory is the easy method it seems to
offer for providing national defense without a state. Why couldn’t the purchase
of national defense be linked to some excludable by-product that everyone
wants, such as protection insurance or contract enforcement? Indeed, most of
those advocating voluntary funding of national defense have hit upon some
such scheme.38
But this solution is too easy. If the excludable by-product is really what
people want, then a competitor who does not link it with the nonexcludable good
or service can sell it at a lower price. Only if the group has a legal monopoly
on marketing its by-product can it really counteract the free-rider incentive.
Every really successful example of groups relying upon by-products that
Olson discusses involves some sort of legal monopoly. But the group’s initial
attainment of this legal monopoly remains an unexplained surmounting of the
public-goods problem.39
Far more promising than the by-product theory for explaining the empirical
weakness of the free-rider assumption is some of the recent dynamic analysis
being done in game theory. As many scholars have pointed out, the free-rider
problem in public-goods theory is identical to the famous Prisoner’s Dilemma
in game theory.40
The Prisoner’s Dilemma derives its name from an archetypal situation where
two prisoners are being held for some crime. The prosecutor separately pro-
poses the same deal to both prisoners, because he only has sufficient evidence
to convict them of a minor crime with a light sentence. Each is told that if he
confesses, but the other does not, he will get off free, while the other will suffer
the full penalty, unless the other also confesses. If they both confess, they both
will be convicted of the more serious crime, although they both will receive
some small leniency for confessing. This deal gives each prisoner an incentive
independently to confess, because by doing so he individually will be better
off regardless of what the other does. Consequently, they both confess, despite
the fact that they both collectively would have had much lighter sentences if
they both refused to confess.
The public-goods problem is essentially a Prisoner’s Dilemma with many
prisoners. We cannot delve into the details here of the recent work, both theo-
retical and empirical, of such game theorists as Michael Taylor, Russell Hardin,
and Robert Axelrod, but essentially they have explored the Prisoner’s Dilemma
within a dynamic rather than static setting. Their conclusion: Whereas in a static
single Prisoner’s Dilemma, cooperation is never rational, in dynamic iterated
Prisoner’s Dilemmas, with two or more people, cooperation frequently becomes
rational for even the most narrowly self-interested individual. What this work
implies is that in many real-world dynamic contexts, ideological altruism or
some similar motive beyond narrow self-interest may not be necessary at all to
counterbalance the free-rider incentive.41
 National Defense and the Public-Goods Problem 141

Conclusion
We have seen that putting domestic limitations upon the power of the state is
a public-goods problem, but nonetheless one that in many historical instances
for whatever reason has been solved. We have also seen that national defense, in
the sense of protecting the people from a foreign state, is a subset of the general
problem of protecting them from any state, domestic or foreign.
Because of “government failure,” the domestic military establishment itself
can become the greatest threat to the lives, property, and liberty of the state’s
subjects. The danger from military expansion, moreover, is not confined to its
domestic impact. By threatening the opposing nation, it cannot even unambigu-
ously guarantee greater international safety. The same threat that deters can also
provoke the opposing side’s military expansion.
Perhaps the factors that already provide protection from the domestic state
are the very factors to which we should turn for protection from foreign states. The
same social consensus that has voluntarily overcome the free-rider obstacle to make
the United States one of the freest, if not the freest, nation may be able to overcome
the free-rider obstacle to protect American freedom from foreign states.
Nearly all of us desire a world in which all states have been disarmed. Of
course, most of the formal economic models of international relations are not
very sanguine about this eventuality. Yet our analysis points to two possible
shortcomings in such models and suggests at least a glimmer of hope. First,
they are generally built upon a static formulation of the Prisoner’s Dilemma,
whereas dynamic formulations are more realistic and more likely to yield
cooperative outcomes. Second, they generally commit the nationalistic fallacy
of composition, ignoring the interactions of the state with its own and foreign
populations. Like the public-goods theory they emulate, these models are very
good at explaining the cases where disarmament fails. They do not do so well at
explaining the cases where it succeeds—as for instance, along the U.S.-Canada
border since 1871.42
The domestic production of disarmament is itself a public good, confront-
ing the same free-rider obstacle that confronts every nonexcludable good and
service. Should a majority in any one nation come to endorse this policy, the
narrow—or not so narrow—special interests who benefit from an armed state
would undoubtedly be willing to commit vast resources to keeping a huge mili-
tary establishment. Thus, like all significant gains in the history of civilization,
the disarming of the state could only be accomplished by a massive ideological
surge that surmounts the free-rider obstacle.
Notes

1. We wish to acknowledge the invaluable assistance of Williamson M. Evers and

Joe Fuhrig in working out the themes of this paper. Tyler Cowen, David Friedman,
Marshall Fritz, M. L. Rantala, David Ramsay Steele, Richard H. Timberlake, Jr.,
David J. Theroux, and Lawrence H. White all gave us helpful comments upon earlier
142 Anarchy and the Law

drafts. They do not necessarily share our conclusions, however, and we alone are
responsible for any remaining errors.
2. By “the state” we mean government. We use the two terms interchangeably, unlike
many political scientists, who use the term the “state” either for what we are calling
the “nation,” i.e., the government plus its subjects, or for some vague intermediate
entity which is less than the entire nation but more than just the government. We
recognize that the state and its subjects can often be intricately interwoven into a
complex web of mixed institutions, but the distinction is still fundamental.
3. Although we will not take up these issues here, some economists suggest that the
characteristics that make something a public good are almost never physically inher-
ent in the good or service but are rather nearly always a consequence of choosing
one out of many feasible methods for producing the good or service. See Tyler
Cowen, “Public Goods Definitions and Their Institutional Context: A Critique of
Public Goods Theory,” Review of Social Economy 43 (April 1985): 53-63; Tom G.
Palmer, “Infrastructure: Public or Private?” Policy Report 5 (May 1983): 1-5, 11;
Walter Block, “Public Goods and Externalities: The Case of Roads,” Journal of
Libertarian Studies 7 (Spring 1983): 1-34; Murray Rothbard, “The Myth of Neutral
Taxation,” Cato Journal 1 (Fall 1981): 532-46; Kenneth D. Goldin, “Equal Access
vs. Selective Access: A Critique of Public Goods Theory,” Public Choice 29 (Spring
1977): 53-71; and Earl Brubaker, “Free Ride, Free Revelation, or Golden Rule,”
Journal of Law and Economics 18 (April 1975): 147-61.
4. Examples of economists treating national defense as the quintessential public good
include Paul A. Samuelson, Economics, 10th ed. (with Peter Temin) (New York:
McGraw-Hill, 1976), p. 159; James M. Buchanan and Marilyn R. Flowers, The
Public Finances: An Introductory Textbook, 4th ed. (Homewood, Ill.: Richard D.
Irwin, 1975), p. 27; and John G. Head and Carl S. Shoup, “Public Goods, Private
Goods, and Ambiguous Goods,” Economic Journal 79 (September 1969): 567.
Among the few attempts of economists to look in any detail at national defense
as a public good are Earl A. Thompson, “Taxation and National Defense,” Journal
of Political Economy 82 (July/August 1974): 755-82; and R. Harrison Wagner,
“National Defense as a Collective Good,” in Comparative Public Policy: Issues,
Theories, and Methods, eds. Craig Liske, William Loehr, and John McCamant
(New York: John Wiley & Sons, 1975), pp. 199-221.
5. Paul A. Samuelson’s two classic articles, “The Pure Theory of Public Expenditure,”
Review of Economics and Statistics 36 (November 1954): 387-89, and “Diagram-
matic Exposition of a Theory of Public Expenditure,” ibid. 37 (November 1955):
350-56, are generally credited as being the first formal statements of modern
public-goods theory.
Important further developments in public-goods theory include Paul A. Samuel-
son, “Aspects of Public Expenditure Theories,” Review of Economics and Statistics
40 (November 1958): 332-38; Richard A. Musgrave, The Theory of Public Finance:
A Study in Public Economy (New York: McGraw-Hill, 1959); James M. Buchanan
and M. Z. Kafoglis, “A Note on Public Good Supply,” American Economic Review
53 (January 1963): 403-14; Harold Demsetz, “The Exchange and Enforcement of
Property Rights,” Journal of Law and Economics 7 (October 1964): 11-26; Jora R.
Minasian, “Television Pricing and the Theory of Public Goods,” ibid., 71-80; Wil-
liam J. Baumol, Welfare Economics and the Theory of the State, 2nd ed. (Cambridge,
Mass.: Harvard University Press, 1965); R. N. McKean and Jora R. Minasian, “On
Achieving Pareto Optimality—Regardless of Cost,” Western Economic Journal 5
(December 1966): 14-23; Otto Davis and Andrew Winston, “On the Distinction
Between Public and Private Goods,” American Economic Review 57 (May1967):
360-73; James M. Buchanan, The Demand and Supply of Public Goods (Chicago:
Rand McNally, 1968); E. J. Mishan, “The Relationship Between Joint Products,
 National Defense and the Public-Goods Problem 143

Collective Goods, and External Effects,” Journal of Political Economy 77 (May/June

1969): 329-48; Head and Shoup, “Public Goods, Private Goods, and Ambiguous
Goods”; John G. Head, Public Goods and Public Welfare (Durham, N.C.: Duke
University Press, 1974); and Duncan Snidal, “Public Goods, Property Rights, and
Political Organizations,” International Studies Quarterly 23 (December 1979):
532-66.
6. Much of the literature has conceded that, strictly speaking, very few actual goods or
services exhibit either of the public-good characteristics in its polar form. Instead,
in the real world we encounter a range of goods and services for which the potential
capacity and quality of nonrival consumption is increasing or for which the costs
of exclusion are increasing.
7. We have slightly understated the supposed “market failure” from nonrival consump-
tion with excludability. The quantity of the public good could also be nonoptimal.
There is a vast economic literature debating the intricacies of nonrival consumption.
Some of the highlights include Paul A. Samuelson, “Contrast Between Welfare
Conditions for Joint Supply and for Public Goods,” Review of Economics and
Statistics 51 (February 1969): 26-30; Harold Demsetz, “The Private Production
of Public Goods,” Journal of Law and Economics 13 (October 1970): 293- 306;
Earl A. Thompson, “The Perfectly Competitive Production of Collective Goods,”
Review of Economics and Statistics 50 (February 1968): 1-12; Robert B. Ekelund
and Joe R. Hulett, “Joint Supply, the Taussig-Pigou Controversy, and the Competi-
tive Provision of Public Goods,” Journal of Law and Economics 16 (October 1973):
369-87; Harold Demsetz, “Joint Supply and Price Discrimination,” ibid., 389-405;
William H. Oakland, “Public Goods, Perfect Competition and Underproduction,”
Journal of Political Economy 82 (September/October 1974): 927-39; Dwight R.
Lee, “Discrimination and Efficiency in the Pricing of Public Goods,” Journal of Law
and Economics 20 (October 1977): 403-20; Thomas Borcherding, “Competition,
Exclusion, and the Optimal Supply of Public Goods,” ibid. 21 (April 1978): 111-
32; and Michael E. Burns and Cliff Walsh, “Market Provision of Price-Excludable
Public Goods: A General Analysis,” Journal of Political Economy 89 (February
1981): 166-91.
8. On the relationship of public goods and externalities, see Paul Samuelson, “Pure
Theory of Public Expenditure and Taxation,” in Public Economics: An Analysis
of Public Production and Consumption and their Relations to the Private Sectors,
ed. J. Margolis and H. Guitton (London: Macmillan, 1969), pp. 98-123; Buchanan,
Demand and Supply of Public Goods, p. 75; John G. Head, “Externality and Pub-
lic Policy,” in Public Goods and Public Welfare, pp. 184-213; and Mishan, “The
Relationship Between Joint Products, Collective Goods, and External Effects.”
9. Earl G. Ravenal, Defining Defense: The 1985 Military Budget (Washington: Cato
Institute, 1984). See also Bruce M. Russett, What Price Vigilance? The Burdens
National Defense (New Haven: Yale University Press, 1970), pp. 91-126.
10. Randolph Bourne, “The State,” in War and the Intellectuals: Essays by Randolph
Bourne, 1915-1919, ed. Carl Resek (New York: Harper & Row, 1964), pp. 65-104.
A general substantiation (or refutation) of Bourne’s observation has so far not
attracted the professional energies of any historian, perhaps because they feel no
need to belabor the obvious. There are lots of studies showing the growth of state
power in particular countries during particular wars, but very few that even treat
a single country during more than one war, or more than a single country during
one war. A few exceptions that have come to our attention include: Clinton Ros-
siter, Constitutional Dictatorship: Crisis Government in the Modern Democracies
(Princeton: Princeton University Press, 1948); Arthur A. Ekirch, Jr., The Civilian
and the Military: A History of the American Antimilitarist Tradition (New York:
Oxford University Press, 1956); Robert Higgs, Crisis and Leviathan: Critical
144 Anarchy and the Law

Episodes in the Growth of American Government (New York: Oxford University

Press, 1987); Charles Tilly, ed., The Formation of National States in Western Eu-
rope (Princeton: Princeton University Press, 1975); Tilly, “War Making and State
Making as Organized Crime,” in Bringing the State Back In, ed. Peter B. Evans,
Dietrich Rueschemeyer, and Theda Skocpol (Cambridge: Cambridge University
Press, 1985); and J. R. Hale, War and Society in Renaissance Europe, 1450-1620
(New York: St. Martin’s Press, 1985).
11. We cite examples of economic models exhibiting the nationalistic fallacy of com-
position below. One of the very few written challenges to the nationalistic model
is Murray N. Rothbard, “War, Peace and the State,” in Rothbard, Egalitarianism
as a Revolt Against Nature: And Other Essays (Washington: Libertarian Review
Press, 1974), pp. 70-80. We have profited greatly from this path-breaking essay.
12. For a purely formal approach to people’s utility functions with regard to national
defense, see Wagner, “National Defense as a Collective Good.”
13. Demsetz makes the comparison between the “nirvana” and “comparative institu-
tions” approaches in “Information and Efficiency: Another Viewpoint,” Journal of
Law and Economics 12 (April 1969): 1-3. See also Ronald Coase, “The Problem of
Social Cost,” ibid. 3 (October 1960): 1-44; James M. Buchanan, “Politics, Policy,
and the Pigovian Margins,” Economica, 2nd ser., 29 (February 1962): 17-28; and
Ralph Turvey, “On the Divergences between Social Cost and Private Cost,” ibid.
30 (August 1963): 309-13.
14. Anthony Downs, An Economic Theory of Democracy (New York: Harper & Row,
1957); James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logi-
cal Foundations of Constitutional Democracy (Ann Arbor: University of Michigan
Press, 1962); Mancur Olson, The Logic of Collective Action: Public Goods and the
Theory of Groups, 2nd ed. (Cambridge, Mass.: Harvard University Press, 1971);
William A. Niskanen, Jr., Bureaucracy and Representative Government (Chicago:
AI Dine Atherton, 1971); Gordon Tullock, Toward a Mathematics of Politics (Ann
Arbor: University of Michigan Press, 1967); Albert Breton, The Economic Theory of
Representative Government (Chicago: Aldine, 1974); and Gary Becker, “A Theory
of Competition among Pressure Groups for Political Influence,” Quarterly Journal
of Economics 98 (August 1983): 372-80.
15. Richard E. Wagner, “Pressure Groups and Political Entrepreneurs: A Review
Article,” Papers on Non-Market Decision Making 1 (1966): 161-70; and Nor-
man Frohlich, Joe A. Oppenheimer, and Oran R. Young, Political Leadership
and Collective Goods (Princeton: Princeton University Press, 1971), stress the
political-entrepreneur thesis. Olson responds briefly in the second edition of The
Logic of Collective Action, pp. 174-75. Brian Barry, Sociologists, Economists and
Democracy (Chicago: University of Chicago Press, 1978), pp. 37-40, and Russell
Hardin, Collective Action (Baltimore: Johns Hopkins University Press, 1982), pp.
35-37, go into the weakness of this thesis in greater detail.
16. Extended discussions of the outcome of voting as a public good include Yoram
Barzel and Eugene Silberberg, “Is the Act of Voting Rational?” Public Choice 16
(Fall 1973): 51-58; Paul E. Meehl, “The Selfish Voter Paradox and the Throw-Away
Vote Argument,” American Political Science Review 71 (March 1977): 11-30; James
M. Buchanan and G. Brennan, “Voter Choice: Evaluating Political Alternatives,”
American Behavioral Scientist 29 (November/December 1984): 185-201; and Barry,
Sociologists, Economists and Democracy, pp. 13-19.
17. One of the clearest expositions of these factors appears in David Friedman’s ne-
glected The Machinery of Freedom: Guide to a Radical Capitalism (New York:
Harper & Row, 1973), pp. 185-88. See also his Price Theory: An Intermediate Text
(Cincinnati: South-Western, 1986), pp. 440-47. Olson’s taxonomy of groups—privi-
leged (small), intermediate, and latent (large)—in The Logic of Collective Action
 National Defense and the Public-Goods Problem 145

treats the two factors—group size and relative cost of the public good—simultane-
ously and thereby slightly confuses the issue. Hardin, Collective Action, pp. 38-42,
clarifies Olson’s taxonomy, correctly pointing out that a privileged group (one in
which a single member values the public good enough to pay its entire cost) could
theoretically be quite large.
Admittedly, there is some ambiguity about which cetera remain pares when
group size is varied. Some scholars have consequently challenged the claim that
larger groups have greater difficulty overcoming the free-rider incentive. See
Norman Frohlich and Joe A. Oppenheimer, “I Get By with a Little Help from My
Friends,” World Politics 23 (October 1970): 104-20;John Chamberlin, “Provision
of Public Goods as a Function of Group Size,” American Political Science Review
68 (June 1974): 707-16; and Martin C. McGuire, “Group Size, Homogeneity, and
the Aggregate Provision of a Pure Public Good under Cournot Behavior,” Public
Choice 18 (Summer 1974): 107-26. The best resolution of these questions is Hardin,
Collective Action, pp. 42-49, 125-37.
18. Friedman, The Machinery of Freedom, p. 189. Dwight R. Lee, “The Soviet Economy
and the Arms Control Delusion,” Journal of Contemporary Studies 8 (Winter/Spring
1985): 46, makes the same observation about the political production of national
defense, but because he does not recognize the distinction between defending the
state and defending the people, he arrives at a much different conclusion: viz.,
democratic states will underproduce military defense relative to undemocratic
states.
19. A similar point is made by Kenneth E. Boulding, “The World War Industry as an
Economic Problem,” in the collection he coedited with Emile Benoit, Disarmament
and the Economy (New York: Harper & Row, 1963), pp. 3-27. He refers to the
world’s competing military organizations as “milorgs” and insists that, in contrast
to any other social enterprise (including police protection), military organizations
generate their own demand. “The only justification for the existence of a milorg is
the existence of another milorg in some other place…. A police force is not justified
by the existence of a police force in another town, that is, by another institution of
the same kind” (p. 10).
20. Brubaker, “Free Ride, Free Revelation, or Golden Rule,” p. 153.
21. For the argument that revolution is a public good, see Gordon Tullock, “The Para-
dox of Revolution,” Public Choice 9 (Fall1971): 89-99, which became with minor
alterations one of the chapters of his book, The Social Dilemma: The Economics
of War and Revolution (Blacksburg, Va.: University Publications, 1974). Tullock
distinguishes between what he calls “exploitative” and “cooperative” governments,
rather than democratic and undemocratic, but the two classifications are almost
identical.
22. The public-goods theory of the democratic state is still stated best in Baumol,
Welfare Economics and the Theory of the State, p. 57.
23. Joseph P. Kalt, “Public Goods and the Theory of Government,” Cato Journal 1
(Fall1981): 565-84, pinpoints the contradiction in the public-goods theory of the
state. The still devastating, classic, point-by-point refutation of the social contract
remains Lysander Spooner, No Treason: The Constitution of No Authority (1870;
reprint ed., Larkspur, Colo.: Pine Tree Press, 1966). See also Williamson M. Evers,
“Social Contract: A Critique,” Journal of Libertarian Studies (Summer 1977):
185-94, which traces the literal notion of a social contract all the way back to
Socrates.
24. Since the definition of the state (or government) is something political scientists
cannot even agree upon, ours will obviously be controversial. By “legitimized” (a
positive adjective), we of course do not mean “legitimate” (a normative adjective).
Most economists should have no difficulty conceiving of the state as a monopo-
146 Anarchy and the Law

listic coercive institution, but noneconomists might balk. Members of the general
public appear to have a bifurcated definition of the state, depending on whether it
is domestic or foreign. They view hostile foreign states as simply monopolies on
coercion, just like criminal gangs, which is why they fear foreign conquest. They
overlook the legitimization of these states. On the other hand, that is the only
element they seem to recognize about the domestic state, overlooking or at least
deemphasizing the coercive element. This dichotomy is only a cruder version of
the distinction made by public-goods theory between democratic and undemocratic
states. For an extended defense of the implications of our universal definition, see
Murray N. Rothbard, “The Anatomy of the State,” in Egalitarianism as a Revolt
Against Nature, pp. 34-53.
25. One of the earliest observations that a social consensus always legitimizes the state
is Etienne de la Boetie, The Politics of Obedience: The Discourse of Voluntary Ser-
vitude (1574; reprint ed., New York: Free Life Editions, 1975). Other writers who
have since put forward a social-consensus theory of the state include David Hume,
“Of the First Principles of Government,” in Essays, Moral, Political, and Literary
(1741-42; reprint ed. London: Oxford University Press, 1963), pp. 29-34; Ludwig
von Mises, Human Action: A ‘Treatise on Economics, 3rd rev. ed. (Chicago: Henry
Regnery, 1966), pp. 177-90; and Gene Sharp, The Politics of Nonviolent Action
(Boston: Porter Sargent, 1973).
26. We are confident about the empirical results, having conducted the test ourselves
many times.
27. Victor Zaslavsky, The Neo-Stalinist State (New York: Oxford University Press,
1983), has actually conducted fairly reliable surveys among Soviet subjects, which
indicate quite unambiguously that the Soviet state is legitimized. Good single-vol-
ume histories that impart an appreciation for the domestic sources of the Soviet
state are Robert V. Daniels, Russia: The Roots of Confrontation (Cambridge: Har-
vard University Press, 1985), and Geoffrey Hosking, The First Socialist Society:
A History of the Soviet Union from Within (Cambridge: Harvard University Press,
1985). An introduction to the various interpretations of Soviet history by American
scholars, written from a revisionist slant, is Stephen E Cohen, Rethinking the Soviet
Experience: Politics and History since 1917 (New York: Oxford University Press,
1985).
28. This awkward position is clearest in Tullock’s Social Dilemma. The new Society
for Interpretive Economics, codirected by Don Lavoie and Arjo Klamer (Econom-
ics Department, George Mason University) is a welcome exception to the general
neglect among economists of cultural and ideological dynamics. We also cite some
specific exceptions below.
29. The premier work on the role of ideas in the American Revolution is Bernard Bailyn,
Ideological Origins of the American Revolution (Cambridge: Harvard University
Press, 1967), while a work that explores the international repercussions of the
revolution is Robert R. Palmer, The Age of Democratic Revolution: A Political His-
tory of Europe and America, 1760-1899, 2 vols. (Princeton: Princeton University
Press, 1959-64). A magisterial survey of the international history of chattel slavery
is David Brion Davis, Slavery and Human Progress (New York: Oxford University
Press, 1984). On the emergence of the international abolitionist movement, see
his The Problem of Slavery in the Age of Revolution, 1770-1823 (Ithaca: Cornell
University Press, 1975).
30. Among the economists who recognize the public-goods nature of ethical behavior
are James M. Buchanan, in “Ethical Rules, Expected Values, and Large Numbers,”
Ethics 76 (October 1965): 1-13, and The Limits of Liberty: Between Anarchy and
Leviathan (Chicago: University of Chicago Press, 1975), pp. 123-29; Richard B.
McKenzie, in “The Economic Dimensions of Ethical Behavior,” Ethics 87 (April
 National Defense and the Public-Goods Problem 147

1977): 208-21; and Douglass C. North, in Structure and Change in Economic His-
tory (New York: W.W. Norton, 1981), pp. 11-12, 18-19, 45-46. See also Dereck
Parfit, Reasons and Persons (Oxford: Clarendon Press, 1984).
31. Rothbard, “The Myth of Neutral Taxation,” 545, makes a similar observation: “Thus
the free-rider argument proves far too much. After all, civilization itself is a process
of all of us free-riding on the achievements of others. We all free-ride, every day,
on the achievements of Edison, Beethoven, or Vermeer.”
32. Howard Margolis, Selfishness, Altruism, and Rationality: A Theory of Social Choice
(Cambridge: Cambridge University Press, 1982), p. 6. See also John McMillan,
“The Free Rider Problem: A Survey,” The Economic Record 55 (June 1979): 95-
107; Vernon L. Smith, “Experiments with a Decentralized Mechanism for Public
Good Decisions,” American Economic Review 70 (September 1980): 584-99 and
Friedrich Schneider and Werner W. Pommerehne, “Free Riding and Collective Ac-
tion: An Experiment in Public Microeconomics,” Quarterly Journal of Economics
91 (November 1981): 689-704.
33. Several scholars are moving in this direction. For instance, Robyn M. Dawes, “Social
Dilemmas,” Annual Review of Psychology 31 (1980): 169-93; Earl R Brubaker,
“Demand Disclosures and Conditions on Exclusion,” Economic Journal 94 (Sep-
tember 1984): 536-53; Barry, Sociologists, Economists, and Democracy; Higgs,
Crisis and Leviathan, chapter 3; and North, Structure and Change in Economic
History, chapter 5. Even Mancur Olson suggests this approach in “Economics,
Sociology, and the Best of All Possible Worlds,” Public Interest 12 (Summer 1968):
96-118, which contrasts economics, the study of rational action, with sociology, the
study of socialization. But the most ambitious effort along these lines is Margolis’s
Selfishness Altruism, and Rationality, which is summarized in his journal article,
“A New Model of Rational Choice,” Ethics 91 (January 1981): 265-79.
We should note that we attach the adjective “narrow” to the term “self-interest”
to indicate the usage that involves seeking particular, usually selfish, goals. This is
to distinguish it from the broader usage of the term, which can encompass any goal,
including altruism. Whether individuals do in fact pursue their narrow self-interest
is a question subject to empirical verification or falsification, but individuals by
definition always pursue their broad self-interest.
34. Olson, The Logic Of Collective Action, pp. 64-65.
35. Higgs, Crisis and Leviathan, chapter 3, heavily emphasizes the role of ideological
solidarity. James S. Coleman, “Individual Interests and Collective Action,” Papers
on Non-Market Decision Making 1 (1966): 49-62, postulates an individual’s psychic
investment in collective entities. Buchanan and Brennan, “Voter Choice: Evaluating
Political Alternatives,” think that this symbolic identification is the major motivation
behind voting.
36. Richard Tuck, “Is There a Free-Rider Problem, and if so, What Is It?” in Rational
Action: Studies in Philosophy and Social Science, ed. Ross Harrison (Cambridge:
Cambridge University Press, 1979), pp. 147-56.
We can salvage Olsonian “rationality” under two strict conditions. When (1) a
threshold level of resources is necessary before any of the public good becomes
available whatsoever, and (2) people end up paying whatever resources they con-
tribute, irrespective of whether they reach the threshold or not, it becomes rational
not to contribute if a person predicts that the threshold will not be reached. In that
special case, he or she would simply be throwing away resources for nothing. Notice
that these two conditions apply more frequently to obtaining public goods through
politics—which is often a win-or-lose, all-or-nothing, situation—than to obtaining
public goods on the market. In particular, it applies to voting. Hardin, Collective
Action, pp. 55-61, analyzes the first of these conditions, for which he employs the
term “step goods.”
148 Anarchy and the Law

37. Olson, The Logic of Collective Action, pp. 132-68. Olson also refers to excludable
“by-products” as “selective incentives.” Looked at another way the by-product
theory converts a full public good into a positive externality of a private good.
38. Those advocating voluntary funding of national defense through the sale of exclud-
able by-products include Ayn Rand, “Government Financing in a Free Society,” in
The Virtue of Selfishness: A New Concept of Egoism (New York: New American
Library, 1964), pp. 157-63; Jarret B. Wollstein, Society without Coercion: A New
Concept of Social Organization (Silver Springs, Md.: Society for Individual Liberty,
1969), pp. 35-38; Morris and Linda Tannehill, The Market for Liberty (Lansing:
Tannehill, 1970), pp. 126-35; and Tibor R. Machan, “Dissolving the Problem of
Public Goods,” in The Libertarian Reader (Totowa, N.J.: Rowman and Littlefield,
1982), pp. 201-8. For a telling critique of the by-product theory as applied to national
defense, see Friedman, The Machinery of Freedom, pp. 192-93.
39. Hardin, Collective Action, pp. 31-34, criticizes the by-product theory.
40. The book that launched mathematical game theory was John von Neumann and
Oskar Morgenstern, The Theory of Games and Economic Behavior, 3rd ed. (Princ-
eton: Princeton University Press, 1953), the first edition of which appeared in
1944.According to Hardin, Collective Action, p. 24, the Prisoner’s Dilemma itself
was first discovered in 1950 by Merril Flood and Melvin Dresher. A. W. Tucker, a
game theorist at Princeton University, later gave the Prisoner’s Dilemma its name.
For the personal reminiscences of one of the early researchers who worked on the
Prisoner’s Dilemma, coupled with a survey of the studies of the dilemma up to
the mid-seventies, see Anatol Rapoport, “Prisoner’s Dilemma—Recollections and
Observations,” in Game Theory as a Theory of Conflict Resolution (Dordrecht: D.
Reidel, 1974), pp. 17-34.
41. R. Hardin, “Collective Action as an Agreeable n-Prisoners’ Dilemma,” Behavioral
Science 16 (September 1971): 472-81; Michael Taylor, Anarchy and Cooperation
(London: John Wiley & Sons, 1976); Hardin, Collective Action; and Robert Axelrod,
The Evolution of Cooperation (New York: Basic Books, 1984). Axelrod confines
himself to two-person dynamic Prisoner’s Dilemmas, while both Taylor and Hardin
consider n-person iterated games. For a good review of the growing literature on
n-person games, see Dawes, “Social Dilemmas.”
42. Britain and the United States demilitarized the Great Lakes in the Rush Bagot
Treaty of 1817. The process of disarming the entire border was not complete until
1871, however. Both Philip Noel-Baker, The Arms Race: A Programme for World
Disarmament (London: Atlantic Books, 1958), and Boulding, “The World War
Industry as an Economic Problem,” appreciate the significance of this example.
Economic studies of international relations that share these weaknesses include
Lee, “The Soviet Economy and the Arms Control Delusion” and Tullock, The Social
Dilemma. Most of the economic work in these areas has focused upon alliances.
See for instance Mancur Olson, Jr. and Richard Zeckhauser, “An Economic Theory
of Alliances,” Review of Economics and Statistics 48 (August 1966): 266-79;
Olson and Zeckhauser, “Collective Goods, Comparative Advantage, and Alliance
Efficiency,” in Issues in Defense Economics, ed. Roland N. McKean (New York:
National Bureau of Economic Research, 1967), pp. 25-63; Todd Sandler, “The
Economic Theory of Alliances: Realigned,” in Comparative Public Policy, ed. Liske,
Loehr, and McCamant, pp. 223-39; and Todd M. Sandler, William Loehr, and John
T. Cauley, The Political Economy of Public Goods and International Cooperation
(Denver: University of Denver Press, 1978).
 8
Defending a Free Nation
Roderick Long
Defense: How?
How should a free nation defend itself from foreign aggression?
Defense: Why?
This question presupposes a prior question: Would a free nation need to
defend itself from foreign aggression? Some would answer no: the rewards of
cooperation outweigh the rewards of aggression, and so a nation will probably
not be attacked unless it first acts aggressively itself.
On the other hand, if this were true, conflicts would never occur—since no
one would make the first aggressive move. It’s true that the rewards for coopera-
tion are evident enough that most people do cooperate most of the time. That’s
what makes human society possible. If people weren’t basically cooperative,
no government could make them so—since the people in government would
have as much difficulty working together as all the rest of us.
Still, a small but troublesome minority obviously do believe they’re better
off not cooperating: we call them criminals. Maybe they do tend to lose out
in the long run—but on the way to that long run they cause a heck of a lot of
damage to the rest of us.
More importantly, governments face different incentives from those faced by
private individuals. Under a government, the people who make the decision to
go to war are not the same people as those who bear the greatest burden of the
costs of the war; and so governments are much more likely than private individuals
to engage in aggression. Thus it’s a mistake to model a nation-state as if it were a
single individual weighing costs against benefits. It’s more like a split personal-
ity, where the dominant personality reaps the benefits but somehow manages to
make the repressed personality bear the costs. (Hence the superiority of private
protection agencies: a protection agency that chooses to resolve its disputes with
other agencies through war rather than arbitration will have to charge constantly
rising premiums, and so will lose customers to nicer agencies.)
That doesn’t mean governments are completely isolated from the bad ef-
fects of war. Certainly the people in power will suffer if they lose the war,
especially if their country is conquered by the enemy. And they can also share
in the prosperity that peace and free trade bring. But the disincentives for war

149
150 Anarchy and the Law

are much weaker for governments than for individuals—which means that it’s
a dangerous world out there, so a free nation needs a defense.
Why Not a Government Military?
Most societies, at least in this century, handle the problem of national defense
by having a large, well-armed, permanent military force, run by a centralized
government, funded by taxation, and often (though not always) manned by
conscription. Is this a solution that a free nation can or should follow?
I don’t think so. First of all, I don’t think there should be a centralized gov-
ernment. My reasons for this position have been set out in some detail both in
FNF Forums and in recent issues of Formulations, so I’ll just summarize the
main points briefly:
First, government is unjust. Government, by definition, requires its citizens to
delegate to the ruler all or part of their right to self-defense. (An institution that
does not require this is no government, but something else.) But to “delegate”
a right involuntarily is no delegation at all; the right has simply been obliter-
ated. And I do not see how this can be justified. By what right does one group
of people, calling itself a government, arrogate to itself the right to take away
the rights of others? (As for taxation and conscription, I can’t see that these are
anything more than fancy words for theft and slavery.)
Second, government is impractical. Government is a monopoly: it prohibits
competition and obtains its revenues by force. It thus faces far less market pres-
sure, and its customers are not free to take their money elsewhere. As a result,
governments have little incentive to cut costs or to satisfy their customers. Hence
governments are, unsurprisingly, notorious for inefficiency, wastefulness, and
abuse of power.
So, since I don’t want a government, I obviously don’t want a government
military. However, even in societies that do have a government, I think it’s still a
good idea not to have a government military. A government which has an army
that it can turn against its own citizens is a lot more dangerous than a government
that doesn’t. That’s why so many of this country’s Founders were so adamantly
opposed to a standing army, seeing it as a threat to domestic liberty (see, e.g.,
the Virginia Declaration of Rights, drafted by George Mason). (A standing navy
worried them less because it’s harder to impose martial law on land by means of
sea power! If the United States had been an archipelago of islands, they might
have thought differently.) In this country today, U.S. soldiers are reportedly
being asked whether they would be willing to shoot American citizens! A free
nation needs to find a less dangerous way of protecting its citizens.
The Dangers of Centralization
Centralized government poses yet another threat to a nation’s liberty. The
more that control over a society is centralized in a single command center,
the easier it is for an invading enemy to conquer the entire nation simply by
 Defending a Free Nation 151

conquering that command center. Indeed, invaders have historically done just
that, simply taking over the power structure that already existed.
By contrast, a society in which power is decentralized lacks a command
center whose defeat or surrender can deliver the entire nation into bondage. For
example, during the American Revolution the British focused their energies on
conquering Philadelphia, at that time the nominal capital of the United States, on
the assumption that once the capital had fallen the rest of the country would be
theirs as well. What the British failed to realize was that the United States was
a loose-knit confederation, not a centralized nation-state, and the government
in Philadelphia had almost no authority. When Philadelphia fell, the rest of the
country went about its business as usual; Americans were not accustomed to
living their lives according to directives from Philadelphia, and so the British
troops ended up simply sitting uselessly in the occupied capital, achieving
nothing. Hence Benjamin Franklin, when he heard that the British army had
captured Philadelphia, is said to have replied, “Nay, I think Philadelphia has
captured the British army.”
The Dangers of Decentralization?
Having pointed out how excessive centralization can make a nation more
vulnerable to foreign domination, let me also point out a respect in which ex-
treme decentralization might seem to pose a similar threat.
In the fourth century B.C., the mass murderer we fondly remember as Alex-
ander the Great conquered nearly all of the area we know today as the Middle
East. If you want to read a terrifying story, put down the latest Stephen King
novel and pick up Arrian’s Campaigns of Alexander, which in dry and matter-
of-fact style records how this erratic psychopath and his tired and aging army
somehow swept like lightning across the shattered remnants of the Persian
Empire, conquering city after city after city after city after city…
Now if the various cities had organized some sort of collective defense,
and attacked Alexander simultaneously, they would have destroyed his army.
Hundreds of thousands of lives would have been saved, and hundreds of cities
would have kept their freedom. Instead, the cities faced Alexander one by one,
each confident of its own unassailability. And one by one they fell.
This might seem to show that some sort of centralized defense is needed in
order to provide effective security. But I don’t think it shows exactly that. It does
show the need for organization—for collective, concerted, cooperative action.
But not all organization should be viewed in terms of a top-down hierarchical
model in which a central authority issues directives and imposes order on the
lower ranks. The key to defending a free nation is to have a system of security
decentralized enough to lack a command center the enemy can capture, but
organized enough so that the invader must face a united collective defense, not
a series of individual skirmishes.
In other words, the key is: ORGANIZATION WITHOUT CENTRALIZA-
TION.
152 Anarchy and the Law

Organization Without Centralization, then, is the goal. How to realize that

goal is, of course, another matter.
An Encouraging Note
It is admittedly a difficult balance to strike. Before we despair, however,
we should notice that the goal we are trying to achieve is relatively modest.
The defense of a free nation will be limited to just that: defense. No military
interventions around the globe, no imperialism, no foreign adventuring, no
gunboat diplomacy. Which means that a free nation’s defense budget will be
much cheaper than those of its potential enemies. If we put that fact together
with the fact that a free nation is also likely to have a much more prosperous
economy than its enemies have, we can see some reason for optimism.
Let the Market Take Care of It
Most libertarians have heard the joke: “How many libertarians does it take
to change a light bulb?” “None, the market will take care of it.”
Perhaps we can give the same answer to worries about national defense.
As students of Austrian economics (see, e.g., the writings of F. A. Hayek) we
know that the free market, by coordinating the dispersed knowledge of market
actors, has the ability to come up with solutions that no individual could have
devised. So why not let a solution to the problem of national defense emerge
through the spontaneous order of the market, rather than trying to dictate ahead
of time what the market solution must be?
In a sense I think that is the answer; but it’s incomplete. As students of Aus-
trian economics (see, e.g., the writings of Israel Kirzner), we also know that
the efficiency of markets depends in large part on the action of entrepreneurs;
and on the Austrian theory entrepreneurs do not passively react to market prices
(as they do in neoclassical economics), but instead are actively alert to profit
opportunities and are constantly trying to invent and market new solutions. I see
our role in the Free Nation Foundation as that of intellectual entrepreneurs; our
coming up with solutions is part of (though by no means the whole of) what it
means for the market to come up with solutions. We are the market.
The light bulb joke captures the Hayekian side of libertarian economics, and
Hayek’s insight is an important one. But before following Hayek in a tirade
against the evils of “constructive rationalism,” we should remember to balance
the Hayekian insight against the equally important Kirznerian insight that the
working of the market depends on the creative ingenuity of individuals.
I would thus suggest a different ending to the joke: “How many libertarians
does it take to change a light bulb?” “I’ll do it, for a dollar.”
The Three Economies
In short, then, although we cannot hope to predict precisely what solu-
tions the market will come up with, it’s worth trying to figure out what could
work—and indeed, like good entrepreneurs, try to influence the market process
 Defending a Free Nation 153

in the direction of the solutions we like. (In any case, we’ll have an easier time
getting people to join the free nation movement if we have something to tell
them about how we propose to defend the nation we hope to found!)
In attempting to devise solutions to the problem of national defense, we need
to make sure that we’re not limiting our search to an excessively narrow range
of options. In this context I find extremely useful a distinction that was first
explained to me by Phil Jacobson. Jacobson pointed out that one can distinguish
three kinds of economy: the Profit Economy, the Charity Economy, and the
Labor Economy.1 (I’m not sure I’m using Jacobson’s exact terminology, but
never mind.) In the Profit Economy, the people who want some good or service
X can obtain X by paying someone else to provide it. In the Charity Economy,
the people who want X can obtain it by finding someone who will give it to
them for free. In the Labor Economy, the people who want X can obtain it by
producing it themselves. As Jacobson notes, when free-market anarchists start
looking for voluntary private alternatives to government, they tend to think
primarily in terms of the Profit Economy—while left-wing anarchists, on the
other hand, tend to think primarily in terms of the Labor Economy. Yet in any
real-world market system, all three economies coexist and interact, in different
combinations depending on culture and circumstances.
Suppose, for example, that a family emergency arises, and I need more money
than my regular income supplies. How can I get the extra money?
I might take a second job, or get a loan. Both of these solutions are available
through the Profit Economy; if I take the job, I am paying for the money with
my labor; if I get a loan, I am paying for the loan through interest payments.
In either case, I solve my problem by finding someone who will help me in
exchange for some good or service I can offer.
Or I might appeal to a private charity, or to a government welfare program—or
obtain an interest-free loan from a friend. In this way, I would be getting my money
through the Charity Economy: I find someone who will help me for free.
Or I might cut down on expenses by growing my own food in my garden;
or perhaps I could draw on the pooled resources of a mutual-aid organization
like those I have described in “How Government Solved the Health Care Crisis:
Medical Insurance that Worked—Until Government ‘Fixed’ It” (Formulations,
Vol. I, No. 2 [Winter 1993-94]) and “Anarchy in the U.K.: The English Experi-
ence With Private Protection” (Formulations, Vol. II, No. 1 [Autumn 1994]).
This solution involves the Labor Economy: I find some way of helping myself
(perhaps in concert with others who are helping themselves).
In looking for free-market approaches to national defense, then, we should
be sure to consider ways in which each of Jacobson’s “three economies” might
be able to help.
Defense via the Profit Economy
In the literature of market anarchism, the most commonly offered solution
to the problem of domestic security is the private protection agency. (I shall
154 Anarchy and the Law

assume general familiarity with this theory. For more details, see, e.g., David
Friedman’s Machinery of Freedom, Murray Rothbard’s For A New Liberty, and
Bruce Benson’s Enterprise of Law.) In this context, the most obvious solution
to the problem of national security is simply to have the protection agencies (or
some of them, or a consortium of them) offer to sell protection against foreign
invaders as well as domestic criminals.
Some market anarchists, like David Friedman, are sympathetic to this solu-
tion, but pessimistic about its viability. The difficulty is that national security
poses a much greater public goods problem than domestic security, because
it is much harder to exclude non-contributors from the benefits of national
security—and if non-contributors can’t be excluded, there’s no incentive to
contribute, and so the agencies selling this protection can’t gain enough revenue
to make it worth their while.
In previous issues I have explained why I do not regard the public goods
problem as a terribly serious difficulty. (“The Nature of Law, Part I: Law and
Order Without Government,” Formulations, Vol. I, No. 3 [Spring 1994]; “Fund-
ing Public Goods: Six Solutions,” Formulations, Vol. II, No. 1 [Autumn 1994].)
So I won’t say much about it here.
There are other problems associated with a Profit Economy solution. A united
military defense seems to require some degree of centralization in order to be effec-
tive, and there is the danger that a consortium of protection agencies selling national
security might evolve into a government, as the Anglo-Saxon monarchs in the Middle
Ages, thanks to the pressure of constant Viking invasions, were able to evolve
from military entrepreneurs providing national defense in exchange for voluntary
contributions, to domestic dictators with the power to tax and legislate.
This danger might be especially pressing if the consortium’s soldiers are
more loyal to the consortium than to the clients. Political authors from Livy
to Machiavelli have warned against the use of foreign mercenaries rather than
citizen soldiers, because it is easier for a government to turn foreign mercenar-
ies against its own citizens. A vivid example of this was seen during the Polish
government’s attempt to crack down on the Solidarity movement in the 1980s;
when a crowd had to be crushed and beaten, the government used Russian
troops, because they feared Polish troops might be divided in their loyalties.
(This perhaps gives us some reason to view with alarm the increasing use of
multinational U.N. forces by Western governments.)
But the problem is perhaps not insuperable. A consortium of defense agen-
cies would lack the mantle of legitimacy and authority available to a king or
government, which would make a power grab more difficult. Moreover, the
citizens of a free nation would presumably be armed; and the freedom of any
people against an encroaching government rests, in the final analysis, on their
possession of arms and their willingness to use them. (Hence governments
bent on consolidating their power have generally followed Cardinal Richelieu’s
advice to the French monarchs: disarm the people, disband local militias, and
 Defending a Free Nation 155

monopolize access to weapons in the hands of the central government. But

Machiavelli advised the opposite, since he saw an armed populace as an integral
part of national defense; thus, like such earlier political thinkers as Xenophon, he
would have regarded today’s advocates of gun control as unwisely weakening their
nation’s security against invasion.2 In any case, whether a government or would-be
government can succeed in disarming the people ultimately depends on the vigi-
lance of the people themselves; and for this I know no automatic formula.)
Defense via the Charity Economy
People donate money all the time to causes they care about. And the more
prosperous they are, the more they donate. Unless libertarian economics is
hopelessly wrong—in which case we might as well give up now—people in a
free nation would be extremely prosperous. And they would presumably care
about national security. So we can predict that a great deal of money could be
collected for purposes of national defense by charity alone. Since, as mentioned
above, the financial needs of a truly defensive national defense are relatively
modest, charity could easily be a major source of defense funds.
Let me mention two problems that occur to me. First, there’s the matter
of determining the appropriate recipient of these donations. How could such
a recipient be prevented from misusing the weapons it purchases? In essence
this is simply the problem of a consortium turning into a government, which
was discussed above. The subject of how to prevent libertarian anarchy from
evolving into government again—and perhaps a worse government than the
one the anarchist system displaced—is a vitally important issue, but one too
vast to consider in depth here. (I think this would be an excellent subject for a
future FNF Forum.)
The second, related difficulty is this: As I mentioned in “Funding Public
Goods: Six Solutions” (Formulations, Vol. II, No. 1 [Autumn 1994]), large
companies will have a motive—namely, good publicity—to donate large sums
to national defense (just as they now improve their image by donating to envi-
ronmental causes, etc.). That’s the good news. But the bad news, seemingly, is
that these contributions might enable such companies to skew national security
decisions in their favor (analogous to large corporations like United Fruit/United
Brands getting the U.S. military to intervene to promote corporate interests in
Guatemala—or oil companies getting the CIA to oust Mossadegh in Iran; for
details, see Jonathan Kwitny’s Endless Enemies).
But I think this would be much less of a problem in a market anarchist so-
ciety than it is today. Government magnifies the influence of the rich, because
government decision-makers do not own the money they control, and so are
willing to spend a larger sum to promote corporate interests than they actually
receive from those interests in the way of bribes and campaign contributions.
Private protection agencies’ costs would be internalized, and so the corporate
class would be deprived of this crucial lever. (This would not make it utterly
156 Anarchy and the Law

ineffective; for my worries on this score, see my article “Can We Escape the
Ruling Class?” (Formulations, Vol. II, No. 1 [Autumn 1994]). But it would
significantly decrease its power.)
Defense via the Labor Economy: An Armed Populace
I think both the Profit Economy and the Charity Economy are viable as
providers of defense services. There are admittedly problems about trusting the
providers of those services, but I think those problems may be soluble.
But to the extent that it is dangerous to delegate the power of national defense,
perhaps a significant degree of self-help should be an important ingredient
in any national security package. As mentioned above, an armed populace is
the ultimate safeguard of a nation’s liberties, against threats both foreign and
domestic.
A possible drawback to a heavy reliance on armed civilian-based defense is
that it cannot take effect until the enemy has already entered the country—at
which point it might seem that the cause is hopeless. But Machiavelli, in his
Discourses on Livy, argues persuasively that it is better to meet the enemy on
your own home ground rather than his—if, he adds, you have an armed popu-
lace. If your populace is not armed, he warns, you should engage the enemy as
far from your own soil as possible.
I have often heard it said that it takes roughly three times as many troops to
invade a country as to defend it; the defender knows the territory better, does not
face hostile locals, and has a much shorter and so less vulnerable supply line.
Many military theorists have argued that the South might have won the Civil
War if they had stayed put and relied on sniping and guerilla warfare against
the invader instead of marching forward to meet the Northern troops on equal
terms, in regular battle array. The armed citizenry of Switzerland has long posed
a powerful deterrent against potential invaders, enabling that country to maintain
peace and freedom for what in comparative terms is an amazingly long time.
(Of course, having your country surrounded by Alps doesn’t hurt!)
An armed populace, then, may be a viable defense. But recall the lesson of
Alexander: unless an armed defense is organized, an invader can simply pick
off individual armed neighborhoods one at a time. What is needed, then, is some
kind of citizens’ militia. But a militia called up and directed by a centralized
government poses difficulties we’ve mentioned already. The key, remember,
is: ORGANIZATION WITHOUT CENTRALIZATION.
The best kind of militia, then, might be one organized along the following
lines. Begin with a number of local neighborhood militias, run by their mem-
bers on a democratic basis—the military equivalent of the mutual-aid societies
discussed in previous issues of Formulations. A number of these local militias
get together to form a county militia, which in turn combines with others to
form a statewide militia, and so forth—so the ultimate National Militia would be
organized as an “association of associations” (the French anarchist Proudhon’s
 Defending a Free Nation 157

formula for what should replace the state), with power and authority running
from bottom to top rather than top to bottom. (As for manpower, although many
militias have traditionally relied on conscription, this seems unnecessary;
if a nation is genuinely under attack—as opposed to engaging in foreign
interventions—there is never a shortage of volunteers. And where the popu-
lace is used to bearing and handling arms, the training period required for
new recruits would be shorter.) Members of each militia would elect their
commanding officers (as American soldiers did during the Revolutionary War),
and so on up to the commander-in-chief of the National Militia. This bottom-
up approach, replacing the top-down approach of a traditional military, would
make it much more difficult for the supreme military leader to seize power.
Such a militia might well be able to achieve the goal of organization without
centralization.3
This model might have to be changed somewhat in order to be adapted to
a minarchist rather than an anarchist society; we would need to think about
whether or not to make the commander-in-chief of the militia subordinate to the
libertarian government. Both a yes and a no seem to pose dangers. I welcome
suggestions on this topic.
Defense via the Labor Economy: Nonviolent Resistance
Another possible form of organized self-help against an invader is the
strategy of nonviolent resistance. This may sound impractical; yet sustained
and widespread nonviolent resistance ultimately drove the British out of India,
the French and Belgians out of the Ruhr, the Kapp Putschists out of power in
Weimar Germany, and racial segregation out of the United States. Nonviolent
resistance—“the secession of the plebs”—was also used effectively in ancient
Rome by the plebeians against the Senate; and nonviolent resistance by war
protestors in this country played an important role in ending the Vietnam War.
Nonviolent resistance also had a significant impact against the British in the
early phase of the American Revolution, and more recently against totalitarian
governments during the Fall of Communism.
Nonviolent resistance often fails, of course, as the blood of Tiananmen
should remind us. But violent resistance often fails, too. It’s worth considering
whether, to what extent, and under what circumstances nonviolent resistance
could be an effective tool of national defense.
Many theorists of nonviolent resistance—e.g., Tolstoy, Gandhi, LeFevre—ad-
vocate it primarily on ethical grounds, because they view the use of violence
as immoral even in self-defense. I do not share this view. (For my reasons, see
my article “Punishment vs. Restitution: A Formulation,” in Formulations, Vol.
I, No. 2 [Winter 1993-94].) But a recent article by Bryan Caplan (“The Litera-
ture of Nonviolent Resistance and Civilian-Based Defense,” Humane Studies
Review, Vol. 9, No. 1 [1994]) defends the superiority of nonviolent resistance
on purely strategic grounds:
158 Anarchy and the Law

The ability of the government to use violence greatly exceeds that of the rebels.
Indeed, violent rebellion often strengthens oppressive regimes which can plausibly
claim that rebel violence necessitates repression. Government’s comparative ad-
vantage lies in violent action. The comparative advantage of the people, in contrast,
lies in their ability to deny their cooperation without which it is nearly impossible
for government to persist. Consider the deadliness to a government of tax strikes,
boycotts, general strikes, and widespread refusal to obey the law. While these tactics
are nonviolent, their universal and unyielding use should terrify any government.
Nonviolence has other advantages as well. Because it seems less dangerous and radical
than violence, it more easily…wins broad public support. The costs of participation
are lower, so more people are likely to participate. Traditional non-combatants like
children, women, and the old can effectively participate in nonviolent struggle. It is
more likely to convert opponents and produce internal disagreement within the rul-
ing class. It generally leads to far fewer casualties and material losses than violence.
And since it is more decentralized than violent action, it is less likely to give rise to
an even more oppressive state if it succeeds. (Caplan, p. 6)
To those who object that an oppressive government can simply mow down
such defenseless dissenters, making nonviolent resistance impractical, Caplan
replies that
…ideology and consent—whether grudging or enthusiastic—rather than brute force
are the ultimate basis of political power. If a large enough segment of the population
refuses to comply with the government, it will lose its ability to rule. Merely the threat
of non-compliance is often serious enough to provoke the government to redress
grievances. Moreover, when governments use violence against protesters who are
clearly committed to nonviolence, they undermine their ideological foundations and
often make uncontested rule even more difficult…. [T]he very fact that the protest-
ers remain committed to nonviolence even as the government turns to repression to
combat them tends to win over previously neutral groups, and inspire and involve
other members of persecuted groups. [Gene Sharp] refers to this as “political jiu-
jitsu”—jiu-jitsu being a style of martial art that uses an opponent’s aggressiveness
and ferocity against him…. [I]nsofar as it succeeds, it usually does so by converting
opponents, making repression too costly to maintain, and threatening the very ability
of the government to maintain power. (Caplan, pp. 4-5)
The rise of Christianity might be a good example of what Caplan is talking
about; through their nonviolent resistance to persecution, the tiny sect won
the sympathy and admiration of many Romans, and ultimately secured their
conversion. (Unfortunately, after the Christians gained power, their attachment
to nonviolence waned…)
Caplan extends the idea of nonviolent resistance to the arena of national
defense:
…deterrents are not limited to standard military ones. Rather, it is merely necessary
to make occupation so difficult that the costs of conquest exceed the benefits. Massive
tax resistance, boycotts, incitement of desertion, and strikes might accomplish this.
And, if a would-be conqueror realized that nonviolent techniques might make the
costs of occupation skyrocket, he might be deterred from trying. (Caplan, p. 7)
Nonviolent resistance to foreign invasion has had a surprisingly strong history
of success, and Caplan cites many fascinating examples. He also notes that
 Defending a Free Nation 159

nonviolent resistance has sometimes been effective, at least in a limited way,

even against the most brutal and totalitarian of invaders: “The nations which
nonviolently resisted National Socialist racial persecutions [e.g., Norway,
Denmark, Belgium] saved almost all of their Jews, while Jews in other Nazi-
controlled nations were vastly more likely to be placed in concentration camps
and killed” (p. 10). But he stresses that nonviolent resistance could be far more
effective through organization:
…since most nonviolence has historically been sporadic and unorganized, it might
be possible to increase its effectiveness through training and strategic and tactical
planning…. What would happen if countries spent as much energy preparing for a
nonviolent struggle as they do for a military struggle? (Caplan, p. 6)
Among possible stratagems for increasing the effectiveness of nonviolent
resistance, Caplan suggests
general education and training in the techniques of nonviolence, as well as a “West
Point” for training specialists; the wide-spread dissemination of publishing and broad-
casting equipment to prevent invaders from seizing all of the means of communication;
and local stockpiles…to ease the pain of a general strike. (Caplan, p. 7)
Caplan’s main source for the ideas he discusses is Gene Sharp, who has
devoted his career to investigating how the techniques of nonviolent resistance
might be applied to the problem of national defense. Among the works by Sharp
cited by Caplan are: The Politics of Nonviolent Action; Exploring Nonviolent Re-
sistance; Gandhi as a Political Strategist; Social Power and Political Freedom:
Making Europe Unconquerable; National Security Through Civilian-Based
Defense; and Civilian-Based Defense: A Post-Military Weapons System. Caplan
also cites dozens of other works on the subject; I shall simply mention two of the
ones that sounded most interesting: Civilian Resistance as a National Defense
by Adam Roberts, and War Without Weapons by Anders Boserup and Andrew
Mack. I have not read any of these books, but I intend to.
I can also recommend two delightful science-fiction novels that illustrate
these ideas: Eric Frank Russell’s The Great Explosion and James Hogan’s
Voyage From Yesteryear. In The Great Explosion, a very funny and satirical
book, bureaucrats and military brass from Earth attempt to reestablish Earth’s
control over the planet Gand, a world of anarcho-pacifists who successfully
apply the techniques of nonviolent resistance to frustrate and/or win over the
would-be invaders. In Voyage From Yesteryear, a less satirical, more realistic
work, the basic plot is the same, except that the anarchist planet (now Chiron,
not Gand)4 is not pacifist, and its inhabitants are willing and able to use violence
to defend their freedom. They do not rely on violence alone, however, but suc-
cessfully blend violent with nonviolent techniques to frustrate and/or win over
the invaders, with the same result as in Russell’s book. (On a rather different
note, Vernor Vinge’s novel Across Realtime tells the story of a government
whose invasion of an anarchist society fails because rich crackpots holed up
in the anarchist wilderness turn out to have been stockpiling privately owned
160 Anarchy and the Law

nuclear weapons! Different strokes for different folks, I guess. All three books
are well worth reading.)
I am, I suspect, somewhat less optimistic than Bryan Caplan is about the ef-
fectiveness of a purely nonviolent approach to national defense. I’m still inclined
to rely on an armed populace, private protection agencies, and an organized
but decentralized militia. (For a more cautious assessment than Caplan’s of the
effectiveness of nonviolent techniques, see Ted Galen Carpenter’s “Resistance
Tactics: A Review of Strategic Nonviolent Conflict: The Dynamics of People
Power in the Twentieth Century by Peter Ackerman and Christopher Kruegler,”
in Reason, January 1995.) But Caplan’s suggestions deserve our serious consid-
eration. Perhaps the best solution would be one that, rather than either rejecting
nonviolence altogether or relying on nonviolence alone, managed to integrate
aspects of nonviolent resistance into a violent-if-necessary militia framework
(thus following the example of Chiron rather than of Gand).5
In any case, I strongly endorse Caplan’s closing plea for further research by
libertarians into this area:

Despite their distrust of state power and interventionist foreign policy, classical liber-
als have had a difficult time envisioning specific alternatives to violence to combat
tyranny. The literature of nonviolent resistance is filled with penetrating insights in
this area. And, while classical liberals frequently long for alternatives to both electoral
politics and violence, specific suggestions have been sparse. These are merely a few
gaps that the nonviolence literature may fill. On a more aesthetic note, many of the
historical examples of nonviolence are beautiful illustrations of the power of voluntary
institutions to supplement or replace the role of the state. (Caplan, p. 12)

Who Will Defend Against the Defenders?

On surveying the options, then, I would argue that as libertarians we have
reason to place confidence—albeit cautious confidence—in a three-pronged strat-
egy for defending our free nation, should we be fortunate enough to get one.

• First prong: a regular high-tech military defense, supported by paying

customers and charitable contributions alike.
• Second prong: an armed citizenry, organized into a decentralized mili-
tia.
• Third prong: organized nonviolent resistance.
These prongs might well be combined into a single fearful scimitar: a militia,
collecting dues from its combatant members and contributions from noncom-
batants or nonmembers, and coordinating violent and nonviolent resistance
through one and the same democratic structure.
This would be an impressive military force, I think. And it makes me won-
der: What will protect other nations from us? As I read more and more ancient
and mediæval history, I come to realize that anarchic, decentralized, egalitar-
ian, individualistic societies are not necessarily peaceful societies. The Celtic
 Defending a Free Nation 161

and Viking societies we admire so much as libertarian models were among

the most effective raiders and conquerors in history. What is to prevent our
free nation from itself becoming a threat to the security of other nations (and
thus ultimately a threat to its own security, as those nations are provoked into
attacking us)?
This worry might be reinforced by reading Machiavelli’s Discourses on Livy,
a book I have already cited several times now—and a much more interesting and
important book, I think, than his more famous (or notorious) work The Prince.
(The Discourses on Livy is not a libertarian book by any means; but it contains
much for libertarians to ponder. What strikes a libertarian in reading it is the
odd way in which Machiavelli manages to combine the political insight and
perspicacity of an Isabel Paterson—with the economic insight of a log.)
Machiavelli argues that a free nation is the greatest possible threat to the
freedom of other nations:
• free nations are more prosperous, and thus better armed;
• they are more politically stable, and thus harder to defeat through
treachery;
• there is higher morale among their citizens, thus making them better
soldiers;
• equal opportunity and free competition among citizens tend to reward,
and thus to foster, what Machiavelli calls virtù (by which he means, not
“virtue” in our sense, but a combination of self-discipline, boldness, and
ingenuity—which are nice things to have in your own nation, but can
be dangerous traits in a vigorous and aggressive nation next door);
• and the high standard of living enjoyed by free nations leads to an in-
crease in population, thus creating a pressure to expand into the territory
of their neighbors.
Machiavelli cites Rome and Athens as instances (see also the account of
Athens in Thucydides’ History of the Peloponnesian War, in particular com-
paring Pericles’ panegyric to Athenian libertarianism at II. 34-46 with the
Corinthian speech on the restless energy and virtù of Athenian imperialism
at I. 68-71); today Machiavelli might add the United States. Of course there
are counterexamples: Switzerland, for instance. And despite Machiavelli’s
brilliance, he seems to have little understanding of the free market; his no-
tion of a free society thus does not appear to include the concept of free
trade, which nineteenth-century classical liberals favored in part because of
its tendency to create ties of mutual dependence that discouraged war. Still,
it is true that freedom, together with the technological progress that freedom
brings in its train, has the effect of increasing people’s options; and one goal
one can better pursue when one’s options have increased, is the decreasing of
one’s neighbors’ options.
But maybe the solution is that the free nation’s neighbors had better become
free nations themselves!
162 Anarchy and the Law

Notes
1. Jacobson, Philip, “Three Voluntary Economies,” Formulations Vol. 2, No. 1: 405-
409.
2. Though Machiavelli may not be consistent on this point. He insists that it weak-
ens a nation militarily to have a disarmed populace; but he also insists that it’s
dangerous in peacetime to have an armed populace—since, in the absence of an
external enemy, they might turn their arms against the government. (Oh no!) But I
suspect Machiavelli’s solution would be to keep the nation constantly at war—since
his model of an ideal nation is the Roman Republic, which Machiavelli praises
precisely for its policy of permanent war, whereby it constantly and unceasingly
expanded and gobbled up other people’s territory. That way, since pesky peacetime
never arrives, you get all the advantages of an armed populace with none of the
disadvantages. Since my aims are rather different from Machiavelli’s (I want to
discourage imperialism and encourage resistance to government, not the other way
around), I can accept his analysis without sharing his precise recommendations!
3. Phil Jacobson has pointed out to me that volunteer fire departments have histori-
cally succeeded in coordinating their activities with one another without centralized
control; an unusually large fire in town A will bring in fire departments from towns
B, C, and D as well. This example makes me wonder whether an association-of-
associations militia would need a commander-in-chief at all.
4. Gand is named, of course, after Gandhi. The significance of the name Chiron is
harder to guess. In Greek mythology, Chiron was the centaur who tutored Achilles,
and Hogan’s use of the name may be a reference to the fact that the first generation
of his Chironians were reared by robots rather than humans. Another hypothesis
(somewhat less likely given Hogan’s militant antipathy toward Christianity) is that
Chiron is a pun on Chi-Rho, the traditional Greek abbreviation for Christ, signifying
that the Chironians embody the true essence of Christianity.
5. As this issue goes to press, the secessionist rebels in Chechnya are having a surpris-
ing, though sadly limited, degree of success in employing a mixture of violent and
nonviolent techniques against Russian troops.
 9
The Myth of the Rule of Law
John Hasnas
Commitment to the rule of law is one of the core values of a liberal legal
system. The adherents of such a system usually regard the concept of a “gov-
ernment of laws and not people” as the chief protector of the citizens’ liberty.
This article argues that such is not the case. It begins with what is intended as
an entertaining reprise of the main jurisprudential arguments designed to show
that there is, in fact, no such thing as a government of laws and not people and
that the belief that there is constitutes a myth that serves to maintain the public’s
support for society’s power structure. It then suggests that the maintenance of
liberty requires not only the abandonment of the ideal of the rule of law, but
the commitment to a monopolistic legal system as well. The article concludes
by suggesting, in a somewhat fanciful way, that the preservation of a truly free
society requires liberating the law from state control to allow for the develop-
ment of a market for law.
I.
Stop! Before reading this Article, please take the following quiz.
The First Amendment to the Constitution of the United States provides, in
part: “Congress shall make no law…abridging the freedom of speech, or of
the press;…”1 On the basis of your personal understanding of this sentence’s
meaning (not your knowledge of constitutional law), please indicate whether
you believe the following sentences to be true or false.

1) In time of war, a federal statute may be passed prohibiting citizens from

revealing military secrets to the enemy.
2) The President may issue an executive order prohibiting public criticism of
his administration.
3) Congress may pass a law prohibiting museums from exhibiting photographs
and paintings depicting homosexual activity.
4) A federal statute may be passed prohibiting a citizen from falsely shouting
“fire” in a crowded theater.
5) Congress may pass a law prohibiting dancing to rock and roll music.
6) The Internal Revenue Service may issue a regulation prohibiting the publica-
tion of a book explaining how to cheat on your taxes and get away with it.
7) Congress may pass a statute prohibiting flag burning.

163
164 Anarchy and the Law

Thank you. You may now read on.

In his novel 1984, George Orwell created a nightmare vision of the future
in which an all-powerful Party exerts totalitarian control over society by forc-
ing the citizens to master the technique of “doublethink,” which requires them
“to hold simultaneously two opinions which cancel[] out, knowing them to be
contradictory and believing in both of them.”2 Orwell’s doublethink is usually
regarded as a wonderful literary device, but, of course, one with no referent in
reality since it is obviously impossible to believe both halves of a contradiction.
In my opinion, this assessment is quite mistaken. Not only is it possible for
people to believe both halves of a contradiction, it is something they do every
day with no apparent difficulty.
Consider, for example, people’s beliefs about the legal system. They are
obviously aware that the law is inherently political. The common complaint that
members of Congress are corrupt, or are legislating for their own political benefit
or for that of special interest groups demonstrates that citizens understand that
the laws under which they live are a product of political forces rather than the
embodiment of the ideal of justice. Further, as evidenced by the political battles
fought over the recent nominations of Robert Bork and Clarence Thomas to the
Supreme Court, the public obviously believes that the ideology of the people
who serve as judges influences the way the law is interpreted.
This, however, in no way prevents people from simultaneously regarding
the law as a body of definite, politically neutral rules amenable to an impartial
application which all citizens have a moral obligation to obey. Thus, they seem
both surprised and dismayed to learn that the Clean Air Act might have been
written, not to produce the cleanest air possible, but to favor the economic
interests of the miners of dirty burning West Virginia coal (West Virginia coin-
cidentally being the home of Robert Byrd, who was then chairman of the Senate
Appropriations Committee) over those of the miners of cleaner-burning western
coal.3 And, when the Supreme Court hands down a controversial ruling on a
subject such as abortion, civil rights, or capital punishment, then, like Louis
in Casablanca, the public is shocked, shocked to find that the Court may have
let political considerations influence its decision. The frequent condemnation
of the judiciary for “undemocratic judicial activism” or “unprincipled social
engineering” is merely a reflection of the public’s belief that the law consists of
a set of definite and consistent “neutral principles”4 which the judge is obligated
to apply in an objective manner, free from the influence of his or her personal
political and moral beliefs.
I believe that, much as Orwell suggested, it is the public’s ability to engage
in this type of doublethink, to be aware that the law is inherently political in
character and yet believe it to be an objective embodiment of justice, that ac-
counts for the amazing degree to which the federal government is able to exert
its control over a supposedly free people. I would argue that this ability to
maintain the belief that the law is a body of consistent, politically neutral rules
 The Myth of the Rule of Law 165

that can be objectively applied by judges in the face of overwhelming evidence

to the contrary, goes a long way toward explaining citizens’ acquiescence in the
steady erosion of their fundamental freedoms. To show that this is, in fact, the
case, I would like to direct your attention to the fiction which resides at the heart
of this incongruity and allows the public to engage in the requisite doublethink
without cognitive discomfort: the myth of the rule of law.
I refer to the myth of the rule of law because, to the extent this phrase sug-
gests a society in which all are governed by neutral rules that are objectively
applied by judges, there is no such thing. As a myth, however, the concept of
the rule of law is both powerful and dangerous. Its power derives from its great
emotive appeal. The rule of law suggests an absence of arbitrariness, an absence
of the worst abuses of tyranny. The image presented by the slogan “America is
a government of laws and not people” is one of fair and impartial rule rather
than subjugation to human whim. This is an image that can command both the
allegiance and affection of the citizenry. After all, who wouldn’t be in favor
of the rule of law if the only alternative were arbitrary rule? But this image
is also the source of the myth’s danger. For if citizens really believe that they
are being governed by fair and impartial rules and that the only alternative is
subjection to personal rule, they will be much more likely to support the state
as it progressively curtails their freedom.
In this article, I will argue that this is a false dichotomy. Specifically, I intend
to establish three points: 1) there is no such thing as a government of law and not
people, 2) the belief that there is serves to maintain public support for society’s
power structure, and 3) the establishment of a truly free society requires the
abandonment of the myth of the rule of law.
II.
Imagine the following scene. A first-year contracts course is being taught at
the prestigious Harvard Law School. The professor is a distinguished scholar
with a national reputation as one of the leading experts on Anglo-American
contract law. Let’s call him Professor Kingsfield. He instructs his class to re-
search the following hypothetical for the next day.
A woman living in a rural setting becomes ill and calls her family physi-
cian, who is also the only local doctor, for help. However, it is Wednesday, the
doctor’s day off and because she has a golf date, she does not respond. The
woman’s condition worsens and because no other physician can be procured
in time, she dies. Her estate then sues the doctor for not coming to her aid. Is
the doctor liable?
Two of the students, Arnie Becker and Ann Kelsey, resolve to make a good
impression on Kingsfield should they be called on to discuss the case. Arnie
is a somewhat conservative, considerably egocentric individual. He believes
that doctors are human beings, who like anyone else, are entitled to a day off,
and that it would be unfair to require them to be at the beck and call of their
166 Anarchy and the Law

patients. For this reason, his initial impression of the solution to the hypothetical
is that the doctor should not be liable. Through his research, he discovers the
case of Hurley v. Eddingfield,5 which establishes the rule that in the absence of
an explicit contract, i.e., when there has been no actual meeting of the minds,
there can be no liability. In the hypothetical, there was clearly no meeting of
the minds. Therefore, Arnie concludes that his initial impression was correct
and that the doctor is not legally liable. Since he has found a valid rule of law
which clearly applies to the facts of the case, he is confident that he is prepared
for tomorrow’s class.
Ann Kelsey is politically liberal and considers herself to be a caring indi-
vidual. She believes that when doctors take the Hippocratic oath, they accept a
special obligation to care for the sick, and that it would be wrong and set a ter-
rible example for doctors to ignore the needs of regular patients who depend on
them. For this reason, her initial impression of the solution to the hypothetical is
that the doctor should be liable. Through her research, she discovers the case of
Cotnam v. Wisdom,6 which establishes the rule that in the absence of an explicit
contract, the law will imply a contractual relationship where such is necessary to
avoid injustice. She believes that under the facts of the hypothetical, the failure
to imply a contractual relationship would be obviously unjust. Therefore, she
concludes that her initial impression was correct and that the doctor is legally
liable. Since she has found a valid rule of law which clearly applies to the facts
of the case, she is confident that she is prepared for tomorrow’s class.
The following day, Arnie is called upon and presents his analysis. Ann, who
knows she has found a sound legal argument for exactly the opposite outcome,
concludes that Arnie is a typical privileged white male conservative with no
sense of compassion, who has obviously missed the point of the hypothetical.
She volunteers, and when called upon by Kingsfield criticizes Arnie’s analysis
of the case and presents her own. Arnie, who knows he has found a sound legal
argument for his position, concludes that Ann is a typical female bleeding-heart
liberal, whose emotionalism has caused her to miss the point of the hypothetical.
Each expects Kingsfield to confirm his or her analysis and dismiss the other’s as
the misguided bit of illogic it so obviously is. Much to their chagrin, however,
when a third student asks, “But who is right, Professor?” Kingsfield gruffly
responds, “When you turn that mush between your ears into something useful
and begin to think like a lawyer, you will be able to answer that question for
yourself” and moves on to another subject.
What Professor Kingsfield knows but will never reveal to the students is that
both Arnie’s and Ann’s analyses are correct. How can this be?
III.
What Professor Kingsfield knows is that the legal world is not like the real
world and the type of reasoning appropriate to it is distinct from that which
human beings ordinarily employ. In the real world, people usually attempt to
 The Myth of the Rule of Law 167

solve problems by forming hypotheses and then testing them against the facts
as they know them. When the facts confirm the hypotheses, they are accepted
as true, although subject to reevaluation as new evidence is discovered. This is
a successful method of reasoning about scientific and other empirical matters
because the physical world has a definite, unique structure. It works because
the laws of nature are consistent. In the real world, it is entirely appropriate
to assume that once you have confirmed your hypothesis, all other hypotheses
inconsistent with it are incorrect.
In the legal world, however, this assumption does not hold. This is because
unlike the laws of nature, political laws are not consistent. The law human beings
create to regulate their conduct is made up of incompatible, contradictory rules
and principles; and, as anyone who has studied a little logic can demonstrate,
any conclusion can be validly derived from a set of contradictory premises. This
means that a logically sound argument can be found for any legal conclusion.
When human beings engage in legal reasoning, they usually proceed in the
same manner as they do when engaged in empirical reasoning. They begin
with a hypothesis as to how a case should be decided and test it by searching
for a sound supporting argument. After all, no one can “reason” directly to an
unimagined conclusion. Without some end in view, there is no way of knowing
what premises to employ or what direction the argument should take. When
a sound argument is found, then, as in the case of empirical reasoning, one
naturally concludes that one’s legal hypothesis has been shown to be correct,
and further, that all competing hypotheses are therefore incorrect.
This is the fallacy of legal reasoning. Because the legal world is comprised
of contradictory rules, there will be sound legal arguments available not only
for the hypothesis one is investigating, but for other, competing hypotheses as
well. The assumption that there is a unique, correct resolution, which serves
so well in empirical investigations, leads one astray when dealing with legal
matters. Kingsfield, who is well aware of this, knows that Arnie and Ann have
both produced legitimate legal arguments for their competing conclusions. He
does not reveal this knowledge to the class, however, because the fact that this
is possible is precisely what his students must discover for themselves if they
are ever to learn to “think like a lawyer.”
IV.
Imagine that Arnie and Ann have completed their first year at Harvard and
coincidentally find themselves in the same second-year class on employment
discrimination law. During the portion of the course that focuses on Title VII of
the Civil Rights Act of 1964,7 the class is asked to determine whether section
2000e-2(a)(1), which makes it unlawful “to fail or refuse to hire or to discharge
any individual, or otherwise to discriminate against any individual with respect
to his compensation, terms, conditions, or privileges of employment, because
of such individual’s race, color, religion, sex, or national origin,” permits an
employer to voluntarily institute an affirmative action program giving prefer-
168 Anarchy and the Law

ential treatment to African-Americans. Perhaps unsurprisingly, Arnie strongly

believes that affirmative action programs are morally wrong and that what the
country needs are color-blind, merit-based employment practices. In researching
the problem, he encounters the following principle of statutory construction:
When the words are plain, courts may not enter speculative fields in search of
a different meaning, and the language must be regarded as the final expression
of legislative intent and not added to or subtracted from on the basis of any
extraneous source.8 In Arnie’s opinion, this principle clearly applies to this case.
Section 2000e-2(a)(1) prohibits discrimination against any individual because
of his race. What wording could be more plain? Since giving preferential treat-
ment to African-Americans discriminates against whites because of their race,
Arnie concludes that section 2000e-2(a)(1) prohibits employers from voluntarily
instituting affirmative action plans.
Perhaps equally unsurprisingly, Ann has a strong belief that affirmative action
is moral and is absolutely necessary to bring about a racially just society. In
the course of her research, she encounters the following principle of statutory
construction: “It is a familiar rule, that a thing may be within the letter of a
statute and yet not within the statute because not within its spirit, nor within the
intention of its makers”;9 and that an interpretation which would bring about an
end at variance with the purpose of the statute must be rejected.10 Upon check-
ing the legislative history, Ann learns that the purpose of Title VII of the Civil
Rights Act is to relieve “the plight of the Negro in our economy” and “open
employment opportunities for Negroes in occupations which have been tradi-
tionally closed to them.”11 Since it would obviously contradict this purpose to
interpret section 2000e-2 to make it illegal for employers to voluntarily institute
affirmative action plans designed to economically benefit African-Americans
by opening traditionally closed employment opportunities, Ann concludes that
section 2000e-2 does not prohibit such plans.
The next day, Arnie presents his argument for the illegality of affirmative
action in class. Since Ann has found a sound legal argument for precisely the
opposite conclusion, she knows that Arnie’s position is untenable. However,
having gotten to know Arnie over the last year, this does not surprise her in the
least. She regards him as an inveterate reactionary who is completely unprin-
cipled in pursuit of his conservative (and probably racist) agenda. She believes
that he is advancing an absurdly narrow reading of the Civil Rights Act for the
purely political end of undermining the purpose of the statute. Accordingly,
she volunteers, and when called upon, makes this point and presents her own
argument demonstrating that affirmative action is legal. Arnie, who has found a
sound legal argument for his conclusion, knows that Ann’s position is untenable.
However, he expected as much. Over the past year he has come to know Ann as
a knee-jerk liberal who is willing to do anything to advance her mushy-headed,
left-wing agenda. He believes that she is perversely manipulating the patently
clear language of the statute for the purely political end of extending the statute
beyond its legitimate purpose.
 The Myth of the Rule of Law 169

Both Arnie and Ann know that they have found a logically sound argument
for their conclusion. But both have also committed the fallacy of legal reasoning
by assuming that under the law there is a uniquely correct resolution of the case.
Because of this assumption, both believe that their argument demonstrates that
they have found the objectively correct answer, and that therefore, the other is
simply playing politics with the law.
The truth is, of course, that both are engaging in politics. Because the law is
made up of contradictory rules that can generate any conclusion, what conclu-
sion one finds will be determined by what conclusion one looks for, i.e., by the
hypothesis one decides to test. This will invariably be the one that intuitively
“feels” right, the one that is most congruent with one’s antecedent, underlying
political and moral beliefs. Thus, legal conclusions are always determined by the
normative assumptions of the decision-maker. The knowledge that Kingsfield
possesses and Arnie and Ann have not yet discovered is that the law is never
neutral and objective.
V.
I have suggested that because the law consists of contradictory rules and
principles, sound legal arguments will be available for all legal conclusions, and
hence, the normative predispositions of the decision-makers, rather than the law
itself, determine the outcome of cases. It should be noted, however, that this
vastly understates the degree to which the law is indeterminate. For even if the
law were consistent, the individual rules and principles are expressed in such
vague and general language that the decision-maker is able to interpret them as
broadly or as narrowly as necessary to achieve any desired result.
To see that this is the case, imagine that Arnie and Ann have graduated from
Harvard Law School, gone on to distinguished careers as attorneys, and later in
life find, to their amazement and despair, that they have both been appointed as
judges to the same appellate court. The first case to come before them involves
the following facts:
A bankrupt was auctioning off his personal possessions to raise money to
cover his debts. One of the items put up for auction was a painting that had been
in his family for years. A buyer attending the auction purchased the painting
for a bid of $100. When the buyer had the painting appraised, it turned out to
be a lost masterpiece worth millions. Upon learning of this, the seller sued to
rescind the contract of sale. The trial court granted the rescission. The question
on appeal is whether this judgment is legally correct.
Counsel for both the plaintiff seller and defendant buyer agree that the rule
of law governing this case holds that a contract of sale may be rescinded when
there has been a mutual mistake concerning a fact that was material to the agree-
ment. The seller claims that in the instant case there has been such a mistake,
citing as precedent the case of Sherwood v. Walker.12 In Sherwood, one farmer
sold another farmer a cow which both farmers believed to be sterile. When the
cow turned out to be fertile, the seller was granted rescission of the contract
170 Anarchy and the Law

of sale on the ground of mutual mistake.13 The seller argues that Sherwood is
exactly analogous to the present controversy. Both he and the buyer believed
the contract of sale was for an inexpensive painting. Thus, both were mistaken
as to the true nature of the object being sold. Since this was obviously material
to the agreement, the seller claims that the trial court was correct in granting
rescission.
The buyer claims that the instant case is not one of mutual mistake, citing
as precedent the case of Wood v. Boynton.14 In Wood, a woman sold a small
stone she had found to a jeweler for one dollar. At the time of the sale, neither
party knew what type of stone it was. When it subsequently turned out to be
an uncut diamond worth $700, the seller sued for rescission claiming mutual
mistake. The court upheld the contract, finding that since both parties knew that
they were bargaining over a stone of unknown value, there was no mistake.15
The buyer argues that this is exactly analogous to the present controversy.
Both the seller and the buyer knew that the painting being sold was a work of
unknown value. This is precisely what is to be expected at an auction. Thus,
the buyer claims that this is not a case of mutual mistake and the contract
should be upheld.
Following oral argument, Arnie, Ann, and the third judge on the court, Ben-
nie Stolwitz, a non-lawyer appointed to the bench predominantly because the
governor is his uncle, retire to consider their ruling. Arnie believes that one of
the essential purposes of contract law is to encourage people to be self-reliant
and careful in their transactions, since with the freedom to enter into binding
arrangements comes the responsibility for doing so. He regards as crucial to
his decision the facts that the seller had the opportunity to have the painting ap-
praised and that by exercising due care he could have discovered its true value.
Hence, he regards the contract in this case as one for a painting of unknown
value and votes to overturn the trial court and uphold the contract. On the other
hand, Ann believes that the essential purpose of contract law is to ensure that
all parties receive a fair bargain. She regards as crucial to her decision the fact
that the buyer in this case is receiving a massive windfall at the expense of the
unfortunate seller. Hence, she regards the contract as one for an inexpensive
painting and votes to uphold the trial court’s decision and grant rescission. This
leaves the deciding vote up to Bennie, who has no idea what the purpose of
contract law is, but thinks that it just doesn’t seem right for the bankrupt guy
to lose out, and votes for rescission.
Both Arnie and Ann can see that the present situation bodes ill for their
judicial tenure. Each believes that the other’s unprincipled political manipula-
tions of the law will leave Bennie, who is not even a lawyer, with control of the
court. As a result, they hold a meeting to discuss the situation. At this meeting,
they both promise to put politics aside and decide all future cases strictly on
the basis of the law. Relieved, they return to court to confront the next case on
the docket, which involves the following facts:
 The Myth of the Rule of Law 171

A philosophy professor who supplements her academic salary during the

summer by giving lectures on political philosophy had contracted to deliver
a lecture on the rule of law to the Future Republicans of America (FRA) on
July 20, for $500. She was subsequently contacted by the Young Socialists of
America, who offered her $1000 for a lecture to be delivered on the same day.
She thereupon called the FRA, informing them of her desire to accept the better
offer. The FRA then agreed to pay $1000 for her lecture. After the professor
delivered the lecture, the FRA paid only the originally stipulated $500. The
professor sued and the trial court ruled she was entitled to the additional $500.
The question on appeal is whether this judgment is legally correct.
Counsel for both the plaintiff professor and defendant FRA agree that the
rule of law governing this case holds that a promise to pay more for services one
is already contractually bound to perform is not enforceable, but if an existing
contract is rescinded by both parties and a new one is negotiated, the promise
is enforceable. The FRA claims that in the instant case, it had promised to pay
more for a service the professor was already contractually bound to perform,
citing Davis & Co. v. Morgan16 as precedent. In Davis, a laborer employed for
a year at $40 per month was offered $65 per month by another company. The
employer then promised to pay the employee an additional $120 at the end of
the year if he stayed with the firm. At the end of the year, the employer failed
to pay the $120, and when the employee sued, the court held that because he
was already obligated to work for $40 per month for the year, there was no
consideration for the employer’s promise; hence, it was unenforceable.17 The
FRA argues that this is exactly analogous to the present controversy. The pro-
fessor was already obligated to deliver the lecture for $500. Therefore, there
was no consideration for the FRA’s promise to pay an additional $500 and the
promise is unenforceable.
The professor claims that in the instant case, the original contract was re-
scinded and a new one negotiated, citing Schwartzreich v. BaumanBasch, Inc.
18
as precedent. In Schwartzreich, a clothing designer who had contracted for
a year’s work at $90 per week was subsequently offered $115 per week by
another company. When the designer informed his employer of his intention
to leave, the employer offered the designer $100 per week if he would stay and
the designer agreed. When the designer sued for the additional compensation,
the court held that since the parties had simultaneously rescinded the original
contract by mutual consent and entered into a new one for the higher salary,
the promise to pay was enforceable.19 The professor argues that this is exactly
analogous to the present controversy. When the FRA offered to pay her an ad-
ditional $500 to give the lecture, they were obviously offering to rescind the
former contract and enter a new one on different terms. Hence, the promise to
pay the extra $500 is enforceable.
Following oral argument, the judges retire to consider their ruling. Arnie,
mindful of his agreement with Ann, is scrupulously careful not to let political
172 Anarchy and the Law

considerations enter into his analysis of the case. Thus, he begins by asking
himself why society needs contract law in the first place. He decides that the
objective, nonpolitical answer is obviously that society needs some mechanism
to ensure that individuals honor their voluntarily undertaken commitments. From
this perspective, the resolution of the present case is clear. Since the professor is
obviously threatening to go back on her voluntarily undertaken commitment in
order to extort more money from the FRA, Arnie characterizes the case as one
in which a promise has been made to pay more for services which the profes-
sor is already contractually bound to perform, and decides that the promise is
unenforceable. Hence, he votes to overturn the trial court’s decision. Ann, also
mindful of her agreement with Arnie, is meticulous in her efforts to ensure that
she decides this case purely on the law. Accordingly, she begins her analysis
by asking herself why society needs contract law in the first place. She decides
that the objective, nonpolitical answer is obviously that it provides an environ-
ment within which people can exercise the freedom to arrange their lives as
they see fit. From this perspective, the resolution of the present case is clear.
Since the FRA is essentially attempting to prevent the professor from arranging
her life as she sees fit, Ann characterizes the case as one in which the parties
have simultaneously rescinded an existing contract and negotiated a new one,
and decides that the promise is enforceable. Hence, she votes to uphold the
trial court’s decision. This once again leaves the deciding vote up to Bennie,
who has no idea why society needs contract law, but thinks that the professor
is taking advantage of the situation in an unfair way and votes to overturn the
trial court’s ruling.
Both Arnie and Ann now believe that the other is an incorrigible ideologue
who is destined to torment him or her throughout his or her judicial existence.
Each is quite unhappy at the prospect. Each blames the other for his or her un-
happiness. But, in fact, the blame lies within each. For they have never learned
Professor Kingsfield’s lesson that it is impossible to reach an objective decision
based solely on the law. This is because the law is always open to interpretation
and there is no such thing as a normatively neutral interpretation. The way one
interprets the rules of law is always determined by one’s underlying moral and
political beliefs.
VI.
I have been arguing that the law is not a body of determinate rules that can
be objectively and impersonally applied by judges; that what the law prescribes
is necessarily determined by the normative predispositions of the one who is
interpreting it. In short, I have been arguing that law is inherently political. If
you, my reader, are like most people, you are far from convinced of this. In
fact, I dare say I can read your thoughts. You are thinking that even if I have
shown that the present legal system is somewhat indeterminate, I certainly have
not shown that the law is inherently political. Although you may agree that the
 The Myth of the Rule of Law 173

law as presently constituted is too vague or contains too many contradictions,

you probably believe that this state of affairs is due to the actions of the liberal
judicial activists, or the Reaganite adherents of the doctrine of original intent,
or the self-serving politicians, or the (feel free to fill in your favorite candidate
for the group that is responsible for the legal system’s ills). However, you do
not believe that the law must be this way, that it can never be definite and po-
litically neutral. You believe that the law can be reformed; that to bring about
an end to political strife and institute a true rule of law, we merely need to
create a legal system comprised of consistent rules that are expressed in clear,
definite language.
It is my sad duty to inform you that this cannot be done. Even with all the
good will in the world, we could not produce such a legal code because there
is simply no such thing as uninterpretable language. Now I could attempt to
convince you of this by the conventional method of regaling you with myriad
examples of the manipulation of legal language (e.g., an account of how the
relatively straightforward language of the Commerce Clause giving Congress
the power to “regulate Commerce…among the several States”20 has been inter-
preted to permit the regulation of both farmers growing wheat for use on their
own farms21 and the nature of male-female relationships in all private businesses
that employ more than fifteen persons22). However, I prefer to try a more direct
approach. Accordingly, let me direct your attention to the quiz you completed
at the beginning of this article. Please consider your responses.
If your response to question one was “True,” you chose to interpret the word
“no” as used in the First Amendment to mean “some.”
If your response to question two was “False,” you chose to interpret the word
“Congress” to refer to the President of the United States and the word “law”
to refer to an executive order.
If your response to question three was “False,” you chose to interpret the
words “speech” and “press” to refer to the exhibition of photographs and
paintings.
If your response to question four was “True,” you have underscored your
belief that the word “no” really means “some.”
If your response to question five was “False,” you chose to interpret the words
“speech” and “press” to refer to dancing to rock and roll music.
If your response to question six was “False,” you chose to interpret the word
“Congress” to refer to the Internal Revenue Service and the word “law” to refer
to an IRS regulation.
If your response to question seven was “False,” you chose to interpret the
words “speech” and “press” to refer to the act of burning a flag.
Unless your responses were: 1) False, 2) True, 3) True, 4) False, 5) True, 6)
True, and 7) True, you chose to interpret at least one of the words “Congress,”
“no,” “law,” “speech,” and “press” in what can only be described as something
other than its ordinary sense. Why did you do this? Were your responses based
174 Anarchy and the Law

on the “plain meaning” of the words or on certain normative beliefs you hold
about the extent to which the federal government should be allowed to interfere
with citizens’ expressive activities? Were your responses objective and neutral
or were they influenced by your “politics”?
I chose this portion of the First Amendment for my example because it
contains the clearest, most definite legal language of which I am aware. If a
provision as clearly drafted as this may be subjected to political interpretation,
what legal provision may not be? But this explains why the legal system cannot
be reformed to consist of a body of definite rules yielding unique, objectively
verifiable resolutions of cases. What a legal rule means is always determined
by the political assumptions of the person applying it.23
VII.
Let us assume that I have failed to convince you of the impossibility of
reforming the law into a body of definite, consistent rules that produces deter-
minate results. Even if the law could be reformed in this way, it clearly should
not be. There is nothing perverse in the fact that the law is indeterminate.
Society is not the victim of some nefarious conspiracy to undermine legal cer-
tainty to further ulterior motives. As long as law remains a state monopoly, as
long as it is created and enforced exclusively through governmental bodies, it
must remain indeterminate if it is to serve its purpose. Its indeterminacy gives
the law its flexibility. And since, as a monopoly product, the law must apply
to all members of society in a one-size-fits-all manner, flexibility is its most
essential feature.
It is certainly true that one of the purposes of law is to ensure a stable social
environment, to provide order. But not just any order will suffice. Another pur-
pose of the law must be to do justice. The goal of the law is to provide a social
environment which is both orderly and just. Unfortunately, these two purposes
are always in tension. For the more definite and rigidly-determined the rules
of law become, the less the legal system is able to do justice to the individual.
Thus, if the law were fully determinate, it would have no ability to consider
the equities of the particular case. This is why even if we could reform the law
to make it wholly definite and consistent, we should not.
Consider one of the favorite proposals of those who disagree. Those who
believe that the law can and should be rendered fully determinate usually
propose that contracts be rigorously enforced. Thus, they advocate a rule of
law stating that in the absence of physical compulsion or explicit fraud, parties
should be absolutely bound to keep their agreements. They believe that as long
as no rules inconsistent with this definite, clearly-drawn provision are allowed
to enter the law, politics may be eliminated from contract law and commercial
transactions greatly facilitated.
Let us assume, contrary to fact, that the terms “fraud” and “physical com-
pulsion” have a plain meaning not subject to interpretation. The question then
 The Myth of the Rule of Law 175

becomes what should be done about Agnes Syester.24 Agnes was “a lonely
and elderly widow who fell for the blandishments and flattery of those who”
ran an Arthur Murray Dance Studio in Des Moines, Iowa.25 This studio used
some highly innovative sales techniques to sell this 68-year-old woman 4,057
hours of dance instruction, including three life memberships and a course in
Gold Star dancing, which was “the type of dancing done by Ginger Rogers
and Fred Astaire only about twice as difficult,”26 for a total cost of $33,497 in
1960 dollars. Of course, Agnes did voluntarily agree to purchase that number
of hours. Now, in a case such as this, one might be tempted to “interpret” the
overreaching and unfair sales practices of the studio as fraudulent27 and allow
Agnes to recover her money. However, this is precisely the sort of solution
that our reformed, determinate contract law is designed to outlaw. Therefore, it
would seem that since Agnes has voluntarily contracted for the dance lessons,
she is liable to pay the full amount for them. This might seem to be a harsh
result for Agnes, but from now on, vulnerable little old ladies will be on notice
to be more careful in their dealings.
Or consider a proposal that is often advanced by those who wish to
render probate law more determinate. They advocate a rule of law declar-
ing a handwritten will that is signed before two witnesses to be absolutely
binding. They believe that by depriving the court of the ability to “inter-
pret” the state of mind of the testator, the judges’ personal moral opinions
may be eliminated from the law and most probate matters brought to a
timely conclusion. Of course, the problem then becomes what to do with
Elmer Palmer, a young man who murdered his grandfather to gain the
inheritance due him under the old man’s will a bit earlier than might oth-
erwise have been the case.28 In a case such as this, one might be tempted
to deny Elmer the fruits of his nefarious labor despite the fact that the will
was validly drawn, by appealing to the legal principle that no one should
profit from his or her own wrong.29 However, this is precisely the sort of
vaguely-expressed counter-rule that our reformers seek to purge from the
legal system in order to ensure that the law remains consistent. Therefore,
it would seem that although Elmer may spend a considerable amount of
time behind bars, he will do so as a wealthy man. This may send a bad
message to other young men of Elmer’s temperament, but from now on
the probate process will be considerably streamlined.
The proposed reforms certainly render the law more determinate. However,
they do so by eliminating the law’s ability to consider the equities of the indi-
vidual case. This observation raises the following interesting question: If this
is what a determinate legal system is like, who would want to live under one?
The fact is that the greater the degree of certainty we build into the law, the less
able the law becomes to do justice. For this reason, a monopolistic legal system
composed entirely of clear, consistent rules could not function in a manner ac-
ceptable to the general public. It could not serve as a system of justice.
176 Anarchy and the Law

VIII.
I have been arguing that the law is inherently indeterminate, and further,
that this may not be such a bad thing. I realize, however, that you may still not
be convinced. Even if you are now willing to admit that the law is somewhat
indeterminate, you probably believe that I have vastly exaggerated the degree
to which this is true. After all, it is obvious that the law cannot be radically
indeterminate. If this were the case, the law would be completely unpredictable.
Judges hearing similar cases would render wildly divergent decisions. There
would be no stability or uniformity in the law. But, as imperfect as the current
legal system may be, this is clearly not the case.
The observation that the legal system is highly stable is, of course, correct,
but it is a mistake to believe that this is because the law is determinate. The
stability of the law derives not from any feature of the law itself, but from the
overwhelming uniformity of ideological background among those empowered
to make legal decisions. Consider who the judges are in this country. Typically,
they are people from a solid middle- to upper-class background who performed
well at an appropriately prestigious undergraduate institution; demonstrated
the ability to engage in the type of analytical reasoning that is measured by
the standardized Law School Admissions Test; passed through the crucible
of law school, complete with its methodological and political indoctrination;
and went on to high-profile careers as attorneys, probably with a prestigious
Wall Street-style law firm. To have been appointed to the bench, it is virtually
certain that they were both politically moderate and well-connected, and, until
recently, white males of the correct ethnic and religious pedigree. It should be
clear that, culturally speaking, such a group will tend to be quite homogeneous,
sharing a great many moral, spiritual, and political beliefs and values. Given
this, it can hardly be surprising that there will be a high degree of agreement
among judges as to how cases ought to be decided. But this agreement is due
to the common set of normative presuppositions the judges share, not some
immanent, objective meaning that exists within the rules of law.
In fact, however, the law is not truly stable, since it is continually, if slowly,
evolving in response to changing social mores and conditions. This evolution
occurs because each new generation of judges brings with it its own set of
“progressive” normative assumptions. As the older generation passes from the
scene, these assumptions come to be shared by an ever-increasing percentage of
the judiciary. Eventually, they become the consensus of opinion among judicial
decision-makers, and the law changes to reflect them. Thus, a generation of
judges that regarded “separate but equal” as a perfectly legitimate interpreta-
tion of the Equal Protection Clause of the Fourteenth Amendment30 gave way
to one which interpreted that clause as prohibiting virtually all governmental
actions that classify individuals by race, which, in turn, gave way to one which
interpreted the same language to permit “benign” racial classifications designed
to advance the social status of minority groups. In this way, as the moral and
 The Myth of the Rule of Law 177

political values conventionally accepted by society change over time, so too

do those embedded in the law.
The law appears to be stable because of the slowness with which it evolves.
But the slow pace of legal development is not due to any inherent character-
istic of the law itself. Logically speaking, any conclusion, however radical, is
derivable from the rules of law. It is simply that, even between generations,
the range of ideological opinion represented on the bench is so narrow that
anything more than incremental departures from conventional wisdom and
morality will not be respected within the profession. Such decisions are virtu-
ally certain to be overturned on appeal, and thus, are rarely even rendered in
the first instance.
Confirming evidence for this thesis can be found in our contemporary ju-
dicial history. Over the past quarter-century, the “diversity” movement has
produced a bar, and concomitantly a bench, somewhat more open to people
of different racial, sexual, ethnic, and socioeconomic backgrounds. To some
extent, this movement has produced a judiciary that represents a broader
range of ideological viewpoints than has been the case in the past. Over the
same time period, we have seen an accelerated rate of legal change. Today,
long-standing precedents are more freely overruled, novel theories of liability
are more frequently accepted by the courts, and different courts hand down
different, and seemingly irreconcilable, decisions more often. In addition, it is
worth noting that recently, the chief complaint about the legal system seems
to concern the degree to which it has become “politicized.” This suggests
that as the ideological solidarity of the judiciary breaks down, so too does the
predictability of legal decision-making, and hence, the stability of the law.
Regardless of this trend, I hope it is now apparent that to assume that the
law is stable because it is determinate is to reverse cause and effect. Rather,
it is because the law is basically stable that it appears to be determinate. It
is not rule of law that gives us a stable legal system; it is the stability of the
culturally shared values of the judiciary that gives rise to and supports the
myth of the rule of law.
IX.
It is worth noting that there is nothing new or startling about the claim
that the law is indeterminate. This has been the hallmark of the Critical Legal
Studies movement since the mid-1970s. The “Crits,” however, were merely
reviving the earlier contention of the legal realists who made the same point
in the 1920s and ’30s. And the realists were themselves merely repeating the
claim of earlier jurisprudential thinkers. For example, as early as 1897, Oliver
Wendell Holmes had pointed out:

The language of judicial decision is mainly the language of logic. And the logical
method and form flatter that longing for certainty and for repose which is in every
human mind. But certainty generally is illusion, and repose is not the destiny of man.
178 Anarchy and the Law

Behind the logical form lies a judgment as to the relative worth and importance of
competing legislative grounds, often an inarticulate and unconscious judgment, it
is true, and yet the very root and nerve of the whole proceeding. You can give any
conclusion a logical form.31
This raises an interesting question. If it has been known for 100 years that
the law does not consist of a body of determinate rules, why is the belief that
it does still so widespread? If four generations of jurisprudential scholars have
shown that the rule of law is a myth, why does the concept still command such
fervent commitment? The answer is implicit in the question itself, for the ques-
tion recognizes that the rule of law is a myth and, like all myths, it is designed to
serve an emotive, rather than cognitive, function. The purpose of a myth is not
to persuade one’s reason, but to enlist one’s emotions in support of an idea. And
this is precisely the case for the myth of the rule of law; its purpose is to enlist
the emotions of the public in support of society’s political power structure.
People are more willing to support the exercise of authority over themselves
when they believe it to be an objective, neutral feature of the natural world.
This was the idea behind the concept of the divine right of kings. By making
the king appear to be an integral part of God’s plan for the world rather than an
ordinary human being dominating his fellows by brute force, the public could
be more easily persuaded to bow to his authority. However, when the doctrine
of divine right became discredited, a replacement was needed to ensure that the
public did not view political authority as merely the exercise of naked power.
That replacement is the concept of the rule of law.
People who believe they live under “a government of laws and not people”
tend to view their nation’s legal system as objective and impartial. They tend to
see the rules under which they must live not as expressions of human will, but as
embodiments of neutral principles of justice, i.e., as natural features of the social
world. Once they believe that they are being commanded by an impersonal law
rather than other human beings, they view their obedience to political author-
ity as a public-spirited acceptance of the requirements of social life rather than
mere acquiescence to superior power. In this way, the concept of the rule of law
functions much like the use of the passive voice by the politician who describes
a delict on his or her part with the assertion “mistakes were made.” It allows
people to hide the agency of power behind a facade of words; to believe that it
is the law which compels their compliance, not self-aggrandizing politicians,
or highly capitalized special interests, or wealthy white Anglo-Saxon Protestant
males, or (fill in your favorite culprit).
But the myth of the rule of law does more than render the people submis-
sive to state authority; it also turns them into the state’s accomplices in the
exercise of its power. For people who would ordinarily consider it a great evil
to deprive individuals of their rights or oppress politically powerless minority
groups will respond with patriotic fervor when these same actions are described
as upholding the rule of law.
 The Myth of the Rule of Law 179

Consider the situation in India toward the end of British colonial rule. At that
time, the followers of Mohandas Gandhi engaged in nonviolent civil disobedi-
ence by manufacturing salt for their own use in contravention of the British
monopoly on such manufacture. The British administration and army responded
with mass imprisonments and shocking brutality. It is difficult to understand this
behavior on the part of the highly moralistic, ever-so-civilized British unless
one keeps in mind that they were able to view their activities not as violently
repressing the indigenous population, but as upholding the rule of law.
The same is true of the violence directed against the nonviolent civil rights
protestors in the American South during the civil rights movement. Although
much of the white population of the southern states held racist beliefs, one
cannot account for the overwhelming support given to the violent repres-
sion of these protests on the assumption that the vast majority of the white
Southerners were sadistic racists devoid of moral sensibilities. The true
explanation is that most of these people were able to view themselves not
as perpetuating racial oppression and injustice, but as upholding the rule of
law against criminals and outside agitators. Similarly, since despite the ’60s
rhetoric, all police officers are not “fascist pigs,” some other explanation is
needed for their willingness to participate in the “police riot” at the 1968
Democratic convention, or the campaign of illegal arrests and civil rights
violations against those demonstrating in Washington against President
Nixon’s policies in Vietnam, or the effort to infiltrate and destroy the sanctu-
ary movement that sheltered refugees from Salvadorian death squads during
the Reagan era or, for that matter, the attack on and destruction of the Branch
Davidian compound in Waco. It is only when these officers have fully bought
into the myth that “we are a government of laws and not people,” when they
truly believe that their actions are commanded by some impersonal body of
just rules, that they can fail to see that they are the agency used by those in
power to oppress others.
The reason why the myth of the rule of law has survived for 100 years despite
the knowledge of its falsity is that it is too valuable a tool to relinquish. The
myth of impersonal government is simply the most effective means of social
control available to the state.
X.
During the past two decades, the legal scholars identified with the Critical
Legal Studies movement have gained a great deal of notoriety for their unrelent-
ing attacks on traditional, “liberal” legal theory. The modus operandi of these
scholars has been to select a specific area of the law and show that because the
rules and principles that comprise it are logically incoherent, legal outcomes can
always be manipulated by those in power to favor their interests at the expense
of the politically “subordinated” classes. The Crits then argue that the claim
that the law consists of determinate, just rules which are impartially applied
to all is a ruse employed by the powerful to cause these subordinated classes
180 Anarchy and the Law

to view the oppressive legal rulings as the necessary outcomes of an objective

system of justice. This renders the oppressed more willing to accept their so-
cially subordinated status. Thus, the Crits maintain that the concept of the rule
of law is simply a facade used to maintain the socially dominant position of
white males in an oppressive and illegitimate capitalist system.
In taking this approach, the Crits recognize that the law is indeterminate,
and thus, that it necessarily reflects the moral and political values of those em-
powered to render legal decisions. Their objection is that those who currently
wield this power subscribe to the wrong set of values. They wish to change the
legal system from one which embodies what they regard as the hierarchical,
oppressive values of capitalism to one which embodies the more egalitarian,
“democratic” values that they usually associate with socialism. The Crits accept
that the law must be provided exclusively by the state, and hence, that it must
impose one set of values on all members of society. Their contention is that the
particular set of values currently being imposed is the wrong one.
Although they have been subjected to much derision by mainstream legal
theorists,32 as long as we continue to believe that the law must be a state mo-
nopoly, there really is nothing wrong, or even particularly unique, about the
Crits’ line of argument. There has always been a political struggle for control
of the law, and as long as all must be governed by the same law, as long as one
set of values must be imposed upon everyone, there always will be. It is true
that the Crits want to impose “democratic” or socialistic values on everyone
through the mechanism of the law. But this does not distinguish them from
anyone else. Religious fundamentalists want to impose “Christian” values on
all via the law. Liberal Democrats want the law to ensure that everyone acts so
as to realize a “compassionate” society, while conservative Republicans want it
to ensure the realization of “family values” or “civic virtue.” Even libertarians
insist that all should be governed by a law that enshrines respect for individual
liberty as its preeminent value.
The Crits may believe that the law should embody a different set of values
than liberals, or conservatives, or libertarians, but this is the only thing that dif-
ferentiates them from these other groups. Because the other groups have accepted
the myth of the rule of law, they perceive what they are doing not as a struggle
for political control, but as an attempt to depoliticize the law and return it to its
proper form as the neutral embodiment of objective principles of justice. But
the rule of law is a myth, and perception does not change reality. Although only
the Crits may recognize it, all are engaged in a political struggle to impose their
version of “the good” on the rest of society. And as long as the law remains the
exclusive province of the state, this will always be the case.
XI.
What is the significance of these observations? Are we condemned to a
continual political struggle for control of the legal system? Well, yes; as long
 The Myth of the Rule of Law 181

as the law remains a state monopoly, we are. But I would ask you to note that
this is a conditional statement while you consider the following parable.
A long time ago in a galaxy far away, there existed a parallel Earth that
contained a nation called Monosizea. Monosizea was remarkably similar to the
present-day United States. It had the same level of technological development,
the same social problems, and was governed by the same type of common law
legal system. In fact, Monosizea had a federal constitution that was identical
to that of the United States in all respects except one. However, that distinction
was quite an odd one. For some reason lost to history, the Monosizean found-
ing fathers had included a provision in the constitution that required all shoes
manufactured or imported into Monosizea to be the same size. The particular size
could be determined by Congress, but whatever size was selected represented
the only size shoe permitted in the country.
As you may imagine, in Monosizea, shoe size was a serious political issue.
Although there were a few radical fringe groups which argued for either ex-
tremely small or extremely large sizes, Monosizea was essentially a two-party
system with most of the electorate divided between the Liberal Democratic
party and the Conservative Republican party. The Liberal Democratic po-
sition on shoe size was that social justice demanded the legal size to be a
large size such as a nine or ten. They presented the egalitarian argument
that everyone should have equal access to shoes, and that this could only
be achieved by legislating a large shoe size. After all, people with small
feet could still use shoes that were too large (even if they did have to stuff
some newspaper into them), but people with large feet would be completely
disenfranchised if the legal size was a small one. Interestingly, the Liberal
Democratic party contained a larger than average number of people who
were tall. The Conservative Republican position on shoe size was that
respect for family values and the traditional role of government required
that the legal size be a small size such as a four or five. They presented the
moralistic argument that society’s obligation to the next generation and
government’s duty to protect the weak demanded that the legal size be set
so that children could have adequate footwear. They contended that children
needed reasonably well-fitting shoes while they were in their formative years
and their feet were tender. Later, when they were adults and their feet were
fully developed, they would be able to cope with the rigors of barefoot life.
Interestingly, the Conservative Republican party contained a larger than average
number of people who were short.
Every two years as congressional elections approached, and especially
when this corresponded with a presidential election, the rhetoric over the shoe
size issue heated up. The Liberal Democrats would accuse the Conservative
Republicans of being under the control of the fundamentalist Christians and
of intolerantly attempting to impose their religious values on society. The
Conservative Republicans would accuse the Liberal Democrats of being mis-
182 Anarchy and the Law

guided, bleeding-heart do-gooders who were either the dupes of the socialists
or socialists themselves. However, after the elections, the shoe size legislation
actually hammered out by the President and Congress always seemed to set the
legal shoe size close to a seven, which was the average foot size in Monosizea.
Further, this legislation always defined the size in broad terms so that it might
encompass a size or two on either side, and authorized the manufacture of shoes
made of extremely flexible materials that could stretch or contract as necessary.
For this reason, most averaged-sized Monosizeans, who were predominantly
politically moderate, had acceptable footwear.
This state of affairs seemed quite natural to everyone in Monosizea except
a boy named Socrates. Socrates was a pensive, shy young man who, when not
reading a book, was often lost in thought. His contemplative nature caused his
parents to think of him as a dreamer, his schoolmates to think of him as a nerd,
and everyone else to think of him as a bit odd. One day, after learning about
the Monosizean Constitution in school and listening to his parents discuss the
latest public opinion poll on the shoe size issue, Socrates approached his par-
ents and said: “I have an idea. Why don’t we amend the constitution to permit
shoemakers to manufacture and sell more than one size shoe. Then everyone
could have shoes that fit and we wouldn’t have to argue about what the legal
shoe size should be anymore.”
Socrates’ parents found his naive idealism amusing and were proud that their
son was so imaginative. For this reason, they tried to show him that his idea
was a silly one in a way that would not discourage him from future creative
thinking. Thus, Socrates’ father said: “That’s a very interesting idea, son, but
it’s simply not practical. There’s always been only one size shoe in Monosizea,
so that’s just the way things have to be. People are used to living this way, and
you can’t fight city hall. I’m afraid your idea is just too radical.”
Although Socrates eventually dropped the subject with his parents, he was
never satisfied with their response. During his teenage years, he became more
interested in politics and decided to take his idea to the Liberal Democrats.
He thought that because they believed all citizens were entitled to adequate
footwear, they would surely see the value of his proposal. However, although
they seemed to listen with interest and thanked him for his input, they were
not impressed with his idea. As the leader of the local party explained: “Your
idea is fine in theory, but it will never work in practice. If manufacturers could
make whatever size shoes they wanted, consumers would be at the mercy of
unscrupulous business people. Each manufacturer would set up his or her own
scale of sizes and consumers would have no way of determining what their
foot size truly was. In such a case, profit-hungry shoe sales people could easily
trick the unwary consumer into buying the wrong size. Without the government
setting the size, there would be no guarantee that any shoe was really the size
it purported to be. We simply cannot abandon the public to the vicissitudes of
an unregulated market in shoes.”
 The Myth of the Rule of Law 183

To Socrates’ protests that people didn’t seem to be exploited in other cloth-

ing markets and that the shoes manufactured under the present system didn’t
really fit very well anyway, the party leader responded: “The shoe market is
unique. Adequate shoes are absolutely essential to public welfare. Therefore,
the ordinary laws of supply and demand cannot be relied upon. And even if
we could somehow get around the practical problems, your idea is simply not
politically feasible. To make any progress, we must focus on what can actually
be accomplished in the current political climate. If we begin advocating radical
constitutional changes, we’ll be routed in the next election.”
Disillusioned by this response, Socrates approached the Conservative Re-
publicans with his idea, explaining that if shoes could be manufactured in any
size, all children could be provided with the well-fitting shoes they needed.
However, the Conservative Republicans were even less receptive than the
Liberal Democrats had been. The leader of their local party responded quite
contemptuously, saying: “Look, Monosizea is the greatest, freest country on
the face of the planet, and it’s respect for our traditional values that has made
it that way. Our constitution is based on these values, and it has served us well
for the past 200 years. Who are you to question the wisdom of the founding
fathers? If you don’t like it in this country, why don’t you just leave?”
Somewhat taken aback, Socrates explained that he respected the Mono-
sizean Constitution as much as they did, but that did not mean it could not be
improved. Even the founding fathers included a process by which it could be
amended. However, this did nothing to ameliorate the party leader’s disdain.
He responded: “It’s one thing to propose amending the constitution; it’s another
to undermine it entirely. Doing away with the shoe size provision would rend
the very fabric of our society. If people could make whatever size shoes they
wanted whenever they wanted, there would be no way to maintain order in the
industry. What you’re proposing is not liberty, it’s license. Were we to adopt
your proposal, we would be abandoning the rule of law itself. Can’t you see
that what you are advocating is not freedom, but anarchy?”
After this experience, Socrates came to realize that there was no place for
him in the political realm. As a result, he went off to college where he took
up the study of philosophy. Eventually, he got a Ph.D., became a philosophy
professor, and was never heard from again.
So, what is the point of this outlandish parable? I stated at the beginning of
this section that as long as the law remains a state monopoly, there will always be
a political struggle for its control. This sounds like a cynical conclusion because
we naturally assume that the law is necessarily the province of the state. Just
as the Monosizeans could not conceive of a world in which shoe size was not
set by the government, we cannot conceive of one in which law is not provided
exclusively by it. But what if we are wrong? What if, just as Monosizea could
eliminate the politics of shoe size by allowing individuals to produce and buy
whatever size shoes they pleased, we could eliminate the politics of law by
184 Anarchy and the Law

allowing individuals to adopt whatever rules of behavior best fit their needs?
What if law is not a unique product that must be supplied on a one-size-fits-all
basis by the state, but one which could be adequately supplied by the ordinary
play of market forces? What if we were to try Socrates’ solution and end the
monopoly of law?
XII.
The problem with this suggestion is that most people are unable to understand
what it could possibly mean. This is chiefly because the language necessary
to express the idea clearly does not really exist. Most people have been raised
to identify law with the state. They cannot even conceive of the idea of legal
services apart from the government. The very notion of a free market in legal
services conjures up the image of anarchic gang warfare or rule by organized
crime. In our system, an advocate of free market law is treated the same way
Socrates was treated in Monosizea, and is confronted with the same types of
arguments.
The primary reason for this is that the public has been politically indoctrinated
to fail to recognize the distinction between order and law. Order is what people
need if they are to live together in peace and security. Law, on the other hand,
is a particular method of producing order. As it is presently constituted, law is
the production of order by requiring all members of society to live under the
same set of state-generated rules; it is order produced by centralized planning.
Yet, from childhood, citizens are taught to invariably link the words “law” and
“order.” Political discourse conditions them to hear and use the terms as though
they were synonymous and to express the desire for a safer, more peaceful
society as a desire for “law and order.”
The state nurtures this confusion because it is the public’s inability to dis-
tinguish order from law that generates its fundamental support for the state.
As long as the public identifies order with law, it will believe that an orderly
society is impossible without the law the state provides. And as long as the
public believes this, it will continue to support the state almost without regard
to how oppressive it may become.
The public’s identification of order with law makes it impossible for the public
to ask for one without asking for the other. There is clearly a public demand
for an orderly society. One of human beings’ most fundamental desires is for
a peaceful existence secure from violence. But because the public has been
conditioned to express its desire for order as one for law, all calls for a more
orderly society are interpreted as calls for more law. And since under our current
political system, all law is supplied by the state, all such calls are interpreted
as calls for a more active and powerful state. The identification of order with
law eliminates from public consciousness the very concept of the decentralized
provision of order. With regard to legal services, it renders the classical liberal
idea of a market-generated, spontaneous order incomprehensible.
 The Myth of the Rule of Law 185

I began this article with a reference to Orwell’s concept of doublethink.

But I am now describing the most effective contemporary example we have
of Orwellian “newspeak,” the process by which words are redefined to render
certain thoughts unthinkable.33 Were the distinction between order and law well
understood, the question of whether a state monopoly of law is the best way to
ensure an orderly society could be intelligently discussed. But this is precisely
the question that the state does not wish to see raised. By collapsing the con-
cept of order into that of law, the state can ensure that it is not, for it will have
effectively eliminated the idea of a non-state generated order from the public
mind. Under such circumstances, we can hardly be surprised if the advocates
of a free market in law are treated like Socrates of Monosizea.
XIII.
I am aware that this explanation probably appears as initially unconvinc-
ing as was my earlier contention that the law is inherently political. Even if
you found my Monosizea parable entertaining, it is likely that you regard it
as irrelevant. You probably believe that the analogy fails because shoes are
qualitatively different from legal services. After all, law is a public good which,
unlike shoes, really is crucial to public welfare. It is easy to see how the free
market can adequately supply the public with shoes. But how can it possibly
provide the order-generating and maintaining processes necessary for the
peaceful coexistence of human beings in society? What would a free market
in legal services be like?
I am always tempted to give the honest and accurate response to this chal-
lenge, which is that to ask the question is to miss the point. If human beings had
the wisdom and knowledge-generating capacity to be able to describe how a free
market would work, that would be the strongest possible argument for central
planning. One advocates a free market not because of some moral imprimatur
written across the heavens, but because it is impossible for human beings to
amass the knowledge of local conditions and the predictive capacity necessary
to effectively organize economic relationships among millions of individuals.
It is possible to describe what a free market in shoes would be like because we
have one. But such a description is merely an observation of the current state
of a functioning market, not a projection of how human beings would organize
themselves to supply a currently non-marketed good. To demand that an ad-
vocate of free market law (or Socrates of Monosizea, for that matter) describe
in advance how markets would supply legal services (or shoes) is to issue an
impossible challenge. Further, for an advocate of free market law (or Socrates)
to even accept this challenge would be to engage in self-defeating activity since
the more successfully he or she could describe how the law (or shoe) market
would function, the more he or she would prove that it could be run by state plan-
ners. Free markets supply human wants better than state monopolies precisely
because they allow an unlimited number of suppliers to attempt to do so. By
186 Anarchy and the Law

patronizing those who most effectively meet their particular needs and causing
those who do not to fail, consumers determine the optimal method of supply.
If it were possible to specify in advance what the outcome of this process of
selection would be, there would be no need for the process itself.
Although I am tempted to give this response, I never do. This is because,
although true, it never persuades. Instead, it is usually interpreted as an appeal
for blind faith in the free market, and the failure to provide a specific explanation
as to how such a market would provide legal services is interpreted as proof that
it cannot. Therefore, despite the self-defeating nature of the attempt, I usually
do try to suggest how a free market in law might work.
So, what would a free market in legal services be like? As Sherlock Holmes
would regularly say to the good doctor, “You see, Watson, but you do not ob-
serve.” Examples of non-state law are all around us. Consider labor-management
collective bargaining agreements. In addition to setting wage rates, such agree-
ments typically determine both the work rules the parties must abide by and
the grievance procedures they must follow to resolve disputes. In essence, such
contracts create the substantive law of the workplace as well as the workplace
judiciary. A similar situation exists with regard to homeowner agreements, which
create both the rules and dispute settlement procedures within a condominium
or housing development, i.e., the law and judicial procedure of the residential
community. Perhaps a better example is supplied by universities. These institu-
tions create their own codes of conduct for both students and faculty that cover
everything from academic dishonesty to what constitutes acceptable speech and
dating behavior. In addition, they not only devise their own elaborate judicial
procedures to deal with violations of these codes, but typically supply their own
campus police forces as well. A final example may be supplied by the many
commercial enterprises that voluntarily opt out of the state judicial system by
writing clauses in their contracts that require disputes to be settled through
binding arbitration or mediation rather than through a lawsuit. In this vein, the
variegated “legal” procedures that have recently been assigned the sobriquet
of Alternative Dispute Resolution (ADR) do a good job of suggesting what a
free market in legal service might be like.34
Of course, it is not merely that we fail to observe what is presently all around
us. We also act as though we have no knowledge of our own cultural or legal
history. Consider, for example, the situation of African-American communities
in the segregated South or the immigrant communities in New York in the first
quarter of the twentieth century. Because of prejudice, poverty, and the language
barrier, these groups were essentially cut off from the state legal system. And
yet, rather than disintegrate into chaotic disorder, they were able to privately
supply themselves with the rules of behavior and dispute-settlement procedures
necessary to maintain peaceful, stable, and highly structured communities. Fur-
thermore, virtually none of the law that orders our interpersonal relationships
was produced by the intentional actions of central governments. Our commercial
 The Myth of the Rule of Law 187

law arose almost entirely from the Law Merchant, a non-governmental set of
rules and procedures developed by merchants to quickly and peacefully resolve
disputes and facilitate commercial relations. Property, tort, and criminal law are
all the products of common law processes by which rules of behavior evolve out
of and are informed by the particular circumstances of actual human controver-
sies. In fact, a careful study of Anglo-American legal history will demonstrate
that almost all of the law which facilitates peaceful human interaction arose in
this way. On the other hand, the source of the law which produces oppression
and social division is almost always the state. Measures that impose religious
or racial intolerance, economic exploitation, one group’s idea of “fairness,”
or another’s of “community” or “family” values virtually always originate in
legislation, the law consciously made by the central government. If the purpose
of the law really is to bring order to human existence, then it is fair to say that
the law actually made by the state is precisely the law that does not work.
Unfortunately, no matter how suggestive these examples might be, they
represent only what can develop within a state-dominated system. Since, for the
reasons indicated above, it is impossible to out-think a free market, any attempt
to account for what would result from a true free market in law would be pure
speculation. However, if I must engage in such speculation, I will try to avoid
what might be called “static thinking” in doing so. Static thinking occurs when
we imagine changing one feature of a dynamic system without appreciating
how doing so will alter the character of all other features of the system. For
example, I would be engaging in static thinking were I to ask how, if the state
did not provide the law and courts, the free market could provide them in their
present form. It is this type of thinking that is responsible for the conventional
assumption that free market legal services would be “competing governments”
which would be the equivalent of organized gang warfare. Once this static think-
ing is rejected, it becomes apparent that if the state did not provide the law and
courts, they simply would not exist in their present form. This, however, only
highlights the difficulty of describing free market order-generating services and
reinforces the speculative nature of all attempts to do so.
One thing it seems safe to assume is that there would not be any universally
binding, society-wide set of “legal” rules. In a free market, the law would not
come in one-size-fits-all. Although the rules necessary to the maintenance of a
minimal level of order, such as prohibitions against murder, assault, and theft,
would be common to most systems, different communities of interest would
assuredly adopt those rules and dispute-settlement procedures that would best
fit their needs. For example, it seems extremely unlikely that there would be
anything resembling a uniform body of contract law. Consider, as just one
illustration, the differences between commercial and consumer contracts.
Commercial contracts are usually between corporate entities with specialized
knowledge of industrial practices and a financial interest in minimizing the inter-
ruption of business. On the other hand, consumer contracts are those in which
188 Anarchy and the Law

one or both parties lack commercial sophistication and large sums do not rest
upon a speedy resolution of any dispute that might arise. In a free market for
legal services, the rules that govern these types of contracts would necessarily
be radically different.
This example can also illustrate the different types of dispute-settlement
procedures that would be likely to arise. In disputes over consumer contracts,
the parties might well be satisfied with the current system of litigation in which
the parties present their cases to an impartial judge or jury who renders a verdict
for one side or the other. However, in commercial disputes, the parties might
prefer a mediational process with a negotiated settlement in order to preserve
an ongoing commercial relationship or a quick and informal arbitration in or-
der to avoid the losses associated with excessive delay. Further, it is virtually
certain that they would want mediators, arbitrators, or judges who are highly
knowledgeable about commercial practice, rather than the typical generalist
judge or a jury of lay people.
The problem with trying to specify the individuated “legal systems” which
would develop is that there is no limit to the number of dimensions along which
individuals may choose to order their lives, and hence no limit to the number
of overlapping sets of rules and dispute resolution procedures to which they
may subscribe. An individual might settle his or her disputes with neighbors
according to voluntarily adopted homeowner association rules and procedures,
with coworkers according to the rules and procedures described in a collec-
tive bargaining agreement, with members of his or her religious congregation
according to scriptural law and tribunal, with other drivers according to the
processes agreed to in his or her automobile insurance contract, and with total
strangers by selecting a dispute resolution company from the yellow pages of
the phone book. Given the current thinking about racial and sexual identity, it
seems likely that many disputes among members of the same minority group
or among women would be brought to “niche” dispute resolution companies
composed predominantly of members of the relevant group, who would use
their specialized knowledge of group “culture” to devise superior rules and
procedures for intra-group dispute resolution.35
I suspect that in many ways a free market in law would resemble the situa-
tion in Medieval Europe before the rise of strong central governments in which
disputants could select among several fora. Depending upon the nature of the
dispute, its geographical location, the parties’ status, and what was convenient,
the parties could bring their case in either village, shire, urban, merchant, ma-
norial, ecclesiastical, or royal courts. Even with the limited mobility and com-
munications of the time, this restricted market for dispute-settlement services
was able to generate the order necessary for both the commercial and civil
advancement of society. Consider how much more effectively such a market
could function given the current level of travel and telecommunication technol-
ogy. Under contemporary conditions, there would be an explosion of alternative
 The Myth of the Rule of Law 189

order-providing organizations. I would expect that, late at night, wedged between

commercials for Veg-o-matic and Slim Whitman albums, we would find televi-
sion ads with messages such as, “Upset with your neighbor for playing rock
and roll music all night long? Is his dog digging up your flowerbeds? Come to
Acme Arbitration Company’s grand opening two-for-one sale.”
I should point out that, despite my earlier disclaimer, even these suggestions
embody static thinking since they assume that a free market would produce a
choice among confrontational systems of justice similar to the one we are most
familiar with. In fact, I strongly believe that this would not be the case. The
current state-supplied legal system is adversarial in nature, pitting the plaintiff
or prosecution against the defendant in a winner-take-all, loser-get-nothing
contest. The reason for this arrangement has absolutely nothing to do with this
procedure’s effectiveness in settling disputes and everything to do with the
medieval English kings’ desire to centralize power. For historical reasons well
beyond the scope of this article, the Crown was able to extend its temporal power
relative to the feudal lords as well as raise significant revenue by commanding
or enticing the parties to local disputes to bring their case before the king or
other royal official for decision.36 Our current system of adversarial presentation
to a third-party decision-maker is an outgrowth of these early “public choice”
considerations, not its ability to successfully provide mutually satisfactory
resolutions to interpersonal disputes.
In fact, this system is a terrible one for peacefully resolving disputes and
would be extremely unlikely to have many adherents in a free market. Its
adversarial nature causes each party to view the other as an enemy to be de-
feated, and its winner-take-all character motivates each to fight as hard as he
or she can to the bitter end. Since the loser gets nothing, he or she has every
reason to attempt to reopen the dispute, which gives rise to frequent appeals.
The incentives of the system make it in each party’s interest to do whatever
he or she can to wear down the opponent while being uniformly opposed
to cooperation, compromise, and reconciliation. That this is not the kind of
dispute-settlement procedure people are likely to employ if given a choice is
evidenced by the large percentage of litigants who are turning to ADR in an
effort to avoid it.
My personal belief is that under free-market conditions, most people would
adopt compositional, rather than confrontational, dispute settlement procedures,
i.e., procedures designed to compose disputes and reconcile the parties rather
than render third party judgments. This was, in fact, the essential character of the
ancient “legal system” that was replaced by the extension of royal jurisdiction.
Before the rise of the European nation-states, what we might anachronistically
call judicial procedure was chiefly a set of complex negotiations between the par-
ties mediated by the members of the local community in an effort to reestablish
a harmonious relationship. Essentially, public pressure was brought upon the
parties to settle their dispute peacefully through negotiation and compromise.
190 Anarchy and the Law

The incentives of this ancient system favored cooperation and conciliation rather
than defeating one’s opponent.37
Although I have no crystal ball, I suspect that a free market in law would
resemble the ancient system a great deal more than the modern one. Recent
experiments with negotiated dispute-settlement have demonstrated that media-
tion 1) produces a higher level of participant satisfaction with regard to both
process and result, 2) resolves cases more quickly and at significantly lower
cost, and 3) results in a higher rate of voluntary compliance with the final decree
than was the case with traditional litigation.38 This is perhaps unsurprising,
given that mediation’s lack of a winner-take-all format encourages the parties
to seek common ground rather than attempt to vanquish the opponent and that,
since both parties must agree to any solution, there is a reduced likelihood that
either will wish to reopen the dispute. Given human beings’ manifest desire
to retain control over their lives, I suspect that, if given a choice, few would
willingly place their fate in the hands of third-party decision-makers. Thus, I
believe that a free market in law would produce a system that is essentially
compositional in nature.
XIV.
In this article, I have suggested that when it comes to the idea of the rule of
law, the American public is in a state of deep denial. Despite being surrounded
by evidence that the law is inherently political in nature, most people are never-
theless able to convince themselves that it is an embodiment of objective rules
of justice which they have a moral obligation to obey. As in all cases of denial,
people participate in this fiction because of the psychological comfort that can be
gained by refusing to see the truth. As we saw with our friends Arnie and Ann, belief
in the existence of an objective, non-ideological law enables average citizens to see
those advocating legal positions inconsistent with their values as inappropriately
manipulating the law for political purposes, while viewing their own position as
neutrally capturing the plain meaning immanent within the law. The citizens’ faith
in the rule of law allows them to hide from themselves both that their position is as
politically motivated as is their opponents’ and that they are attempting to impose
their values on their opponents as much as their opponents are attempting to im-
pose their values on them. But, again, as in all cases of denial, the comfort gained
comes at a price. For with the acceptance of the myth of the rule of law comes a
blindness to the fact that laws are merely the commands of those with political
power, and an increased willingness to submit oneself to the yoke of the state.
Once one is truly convinced that the law is an impersonal, objective code of justice
rather than an expression of the will of the powerful, one is likely to be willing not
only to relinquish a large measure of one’s own freedom, but to enthusiastically
support the state in the suppression of others’ freedom as well.
The fact is that there is no such thing as a government of law and not people.
The law is an amalgam of contradictory rules and counter-rules expressed in
 The Myth of the Rule of Law 191

inherently vague language that can yield a legitimate legal argument for any
desired conclusion. For this reason, as long as the law remains a state monopoly,
it will always reflect the political ideology of those invested with decision-mak-
ing power. Like it or not, we are faced with only two choices. We can continue
the ideological power struggle for control of the law in which the group that
gains dominance is empowered to impose its will on the rest of society, or we
can end the monopoly.
Our long-standing love affair with the myth of the rule of law has made us
blind to the latter possibility. Like the Monosizeans, who after centuries of state
control cannot imagine a society in which people can buy whatever size shoes
they wish, we cannot conceive of a society in which individuals may purchase
the legal services they desire. The very idea of a free market in law makes us
uncomfortable. But it is time for us to overcome this discomfort and consider
adopting Socrates’ approach. We must recognize that our love for the rule of
law is unrequited, and that, as so often happens in such cases, we have become
enslaved to the object of our desire. No clearer example of this exists than the
legal process by which our Constitution was transformed from a document
creating a government of limited powers and guaranteed rights into one which
provides the justification for the activities of the all-encompassing super-state
of today. However heart wrenching it may be, we must break off this one-sided
affair. The time has come for those committed to individual liberty to realize
that the establishment of a truly free society requires the abandonment of the
myth of the rule of law.
Notes
1. U.S. Const. amend. I.
2. George Orwell, 1984, at 32 (Commemorative 1984 ed., The New Am. Library 1983
[1949]).
3. See Iain McLean, Public Choice 71-76 (1987)
4. See Herbert Wechsler, “Toward Neutral Principles of Constitutional Law,” 73 Harv.
L. Rev. 1 (1959).
5. 59 N.E. 1058 (Ind. 1901).
6. 104 S.W. 164 (Ark. 1907).
7. 42 U.S.C. section 2000e-2 (1988).
8. See United Steelworkers v. Weber, 443 U.S. 193, 228 n.9 (1979) (Rehnquist, J.,
dissenting).
9. Id. at 201 (quoting Holy Trinity Church v. United States, 143 U.S. 457, 459
(1892)).
10. Id. at 202.
11. 110 Cong. Rec. 6548 (1964).
12. 33 N.W. 919 (Mich. 1887).
13. Id. at 923-24.
14. 64 Wis. 265, 25 N.W. 42 (1885).
15. Id. at 45.
16. 43 S.E. 732 (Ga. 1903).
17. Id. at 733.
192 Anarchy and the Law

18. 131 N.E. 887 (N.Y. 1921).

19. Id. at 890.
20. U.S. Const. art. I, section 8, cl. 3.
21. See Wickard v. Filburn, 317 U.S. 111, 128-29 (1942).
22. The federal government regulates sexual harassment in the workplace under Title
VII of the Civil Rights Act of 1964, 42 U.S.C. section 2000e(b) (1988), which was
enacted pursuant to the Commerce Clause.
23. On this point, it may be relevant to observe that as I write these words, the President
and Congress of the United States are engaged in a vigorous debate over what per-
centage of the American public must have health insurance for there to be universal
coverage.
24. The facts of the case being described are drawn from Syester v. Banta, 133 N.W.2d
666 (Iowa 1965).
25. Id. at 668.
26. Id. at 671.
27. As the court did in the actual case. Id. at 674-75.
28. See Riggs v. Palmer, 22 N.E. 188 (N.Y. 1889).
29. As the court did in the actual case. Id. at 191.
30. U.S. Const. amend. XIV, section 1.
31. Oliver Wendell Holmes, “The Path of the Law,” 10 Harv. L. Rev. 457, 465-66
(1897).
32. The Crits have been accused of being intellectual nihilists and attacked for under-
mining the commitment to the rule of law that is necessary for the next generation
of lawyers to engage in the principled, ethical practice of law. For this reason, their
mainstream critics have suggested that the Crits have no business teaching in the
nation’s law schools. See, e.g., Paul D. Carrington, “Of Law and the River,” 34 J.
Legal Educ. 222, 227 (1984).
33. See Orwell, supra note 2, at 46.
34. The National Law Journal has noted, “Much of corporate America is creating its
own private business ‘courts’ that are far removed from the public courthouses.”
William H. Schroder Jr., “Private ADR May Offer Increased Confidentiality,” Nat’l
L.J., July 25, 1994, at C14.
35. I am fairly confident that the parties to such disputes will not choose to have them
resolved by a panel composed almost exclusively of White Anglo-Saxon Protestants
as is the case today.
36. The story of how royal jurisdiction came to supplant all others and why the ad-
versarial system of litigation replaced the earlier methods of settling disputes is
fascinating one, but one which obviously cannot be recounted here. Those interested
in pursuing it may wish to consult Harold J. Berman, Law and Revolution (1983);
Leonard W. Levy, Origins of the Fifth Amendment (1986).
37. Once again, any extended account of the roots of our legal system is beyond the
scope of this article. For a useful general description, see Berman, supra note 36,
at 49-84.
38. See Joshua D. Rosenberg, “Court Studies Confirm That Mandatory Mediation
Works,” Nat’l L.J., Apr. 11, 1994, at C7
 The State 193

Section II: Debate

10
The State
Robert Nozick
Prohibiting Private Enforcement of Justice
An independent might be prohibited from privately exacting justice because
his procedure is known to be too risky and dangerous—that is, it involves a
higher risk (than another procedure) of punishing an innocent person or over-
punishing a guilty one—or because his procedure isn’t known not to be risky.
(His procedure would exhibit another mode of unreliability if its chances were
much greater of not punishing a guilty person, but this would not be a reason
for prohibiting his private enforcement.)
Let us consider these in turn. If the independent’s procedure is very unreli-
able and imposes high risk on others (perhaps he consults tea leaves), then
if he does it frequently, he may make all fearful, even those not his victims.
Anyone, acting in self-defense, may stop him from engaging in his high-risk
activity. But surely the independent may be stopped from using a very unre-
liable procedure, even if he is not a constant menace. If it is known that the
independent will enforce his own rights by his very unreliable procedure only
once every ten years, this will not create general fear and apprehension in the
society. The ground for prohibiting his widely intermittent use of his procedure
is not, therefore, to avoid any widespread uncompensated apprehension and fear
which otherwise would exist.1
If there were many independents who were all liable to punish wrongly, the
probabilities would add up to create a dangerous situation for all. Then, others
would be entitled to group together and prohibit the totality of such activities.
But how would this prohibition work? Would they prohibit each of the individu-
ally non-fear-creating activities? Within a state of nature by what procedure
can they pick and choose which of the totality is to continue, and what would
give them the right to do this? No protective association, however dominant,
would have this right. For the legitimate powers of a protective association are
merely the sum of the individual rights that its members or clients transfer to
the association. No new rights and powers arise; each right of the association
is decomposable without residue into those individual rights held by distinct
individuals acting alone in a state of nature. A combination of individuals may
have the right to do some action C, which no individual alone had the right to
do, if C is identical to D and E, and persons who individually have the right to

193
194 Anarchy and the Law

do D and the right to do E combine. If some rights of individuals were of the

form “You have the right to do A provided 51 percent or 85 percent or whatever
of the others agree you may,” then a combination of individuals would have the
right to do A, even though none separately had this right. But no individual’s
rights are of this form. No person or group is entitled to pick who in the total-
ity will be allowed to continue. All the independents might group together and
decide this. They might, for example, use some random procedure to allocate
a number of (sellable?) rights to continue private enforcement so as to reduce
the total danger to a point below the threshold. The difficulty is that, if a large
number of independents do this, it will be in the interests of an individual to
abstain from this arrangement. It will be in his interests to continue his risky
activities as he chooses, while the others mutually limit theirs so as to bring
the totality of acts including his to below the danger level. For the others prob-
ably would limit themselves some distance away from the danger boundary,
leaving him room to squeeze in. Even were the others to rest adjacent to the
line of danger so that his activities would bring the totality across it, on which
grounds could his activities be picked out as the ones to prohibit? Similarly, it
will be in the interests of any individual to refrain from otherwise unanimous
agreements in the state of nature: for example, the agreement to set up a state.
Anything an individual can gain by such a unanimous agreement he can gain
through separate bilateral agreements. Any contract which really needs almost
unanimity, any contract which is essentially joint, will serve its purpose whether
or not a given individual participates; so it will be in his interests not to bind
himself to participate.
“The Principle of Fairness”
A principle suggested by Herbert Hart, which (following John Rawls) we
shall call the principle of fairness, would be of service here if it were adequate.
This principle holds that when a number of persons engage in a just, mutually
advantageous, cooperative venture according to rules and thus restrain their
liberty in ways necessary to yield advantages for all, those who have submitted
to these restrictions have a right to similar acquiescence on the part of those who
have benefited from their submission. Acceptance of benefits (even when this is
not a giving of express or tacit undertaking to cooperate) is enough, according
to this principle, to bind one. If one adds to the principle of fairness the claim
that the others to whom the obligations are owed or their agents may enforce the
obligations arising under this principle (including the obligation to limit one’s
actions), then groups of people in a state of nature who agree to a procedure to
pick those to engage in certain acts will have legitimate rights to prohibit “free
riders.” Such a right may be crucial to the viability of such agreements. We
should scrutinize such a powerful right very carefully, especially as it seems to
make unanimous consent to coercive government in a state of nature unneces-
sary! Yet a further reason to examine it is its plausibility as a counterexample
to my claim that no new rights emerge at the group level, that individuals in
 The State 195

combination cannot create new rights which are not the sum of preexisting ones.
A right to enforce others’ obligation to limit their conduct in specified ways
might stem from some special feature of the obligation or might be thought
to follow from some general principle that all obligations owed to others may
be enforced. In the absence of argument for the special enforcement-justifying
nature of the obligation supposedly arising under the principle of fairness, I shall
consider first the principle of the enforceability of all obligations and then turn
to the adequacy of the principle of fairness itself. If either of these principles is
rejected, the right to enforce the cooperation of others in these situations totters.
I shall argue that both of these principles must be rejected.
Herbert Hart’s argument for the existence of a natural right2 depends upon
particularizing the principle of the enforceability of all obligations: someone’s
being under a special obligation to you to do A (which might have arisen, for
example, by their promising to you that they would do A) gives you, not only
the right that they do A, but also the right to force them to do A. Only against
a background in which people may not force you to do A or other actions you
may promise to do can we understand, says Hare, the point and purpose of
special obligations. Since special obligations do have a point and purpose, Hare
continues, there is a natural right not to be forced to do something unless cer-
tain specified conditions pertain; this natural right is built into the background
against which special obligations exist.
This well-known argument of Hart’s is puzzling. I may release someone from
an obligation not to force me to do A. (“I now release you from the obligation
not to force me to do A. You now are free to force me to do A.”) Yet so releasing
them does not create in me an obligation to them to do A. Since Hart supposes
that my being under an obligation to someone to do A gives him (entails that
he has) the right to force me to do A, and since we “have seen the converse
does not hold, we may consider that component of being under an obligation to
someone to do something over and above his having the right to force you to do
it. (May we suppose there is this distinguishable component without facing the
charge of “logical atomism”?) An alternative view which rejects Hart’s inclu-
sion of the right to force in the notion of being owed an obligation might hold
that this additional component is the whole of the content of being obligated to
someone to do something. If I don’t do it, then (all things being equal) I’m doing
something wrong; control over the situation is in his hands; he has the power
to release me from the obligation unless he’s promised to someone else that he
won’t; and so on. Perhaps all this looks too ephemeral without the additional
presence of rights of enforcement. Yet rights of enforcement are themselves
merely rights; that is, permissions to do something and obligations on others
not to interfere. True, one has the right to enforce these further obligations,
but it is not clear that including rights of enforcing really shores up the whole
structure if one assumes it to be insubstantial to begin with. Perhaps one must
merely take the moral realm seriously and think one component amounts to
196 Anarchy and the Law

something even without a connection to enforcement. (Of course, this is not to

say that this component never is connected with enforcement!) On this view,
we can explain the point of obligations without bringing in rights of enforce-
ment and hence without supposing a general background of obligation not to
force from which this stands out. (Of course, even though Hart’s argument
does not demonstrate the existence of such an obligation not to force, it may
exist nevertheless.)
Apart from these general considerations against the principle of the enforce-
ability of all special obligations, puzzle cases can be produced. For example,
if I promise to you that I will not murder someone, this does not give you the
right to force me not to, for you already have this right, though it does create
a particular obligation to you. Or, if I cautiously insist that you first promise to
me that you won’t force me to do A before I will make my promise to you to
do A, and I do receive this promise from you first, it would be implausible to
say that in promising I give you the right to force me to do A. (Though consider
the situation which results if I am so foolish as to release you unilaterally from
your promise to me.)
If there were cogency to Hart’s claim that only against a background of re-
quired nonforcing can we understand the point of special rights, then there would
seem to be equal cogency to the claim that only against a background of permitted
forcing can we understand the point of general rights. For according to Hart, a
person has a general right to do A if and only if for all persons P and Q, Q may
not interfere with P’s doing A or force him not to do A, unless P has acted to give
Q a special right to do this. But not every act can be substituted for “A”; people
have general rights to do only particular types of action. So, one might argue, if
there is to be a point to having general rights, to having rights to do a particular
type of act A, to other’s being under an obligation not to force you not to do A,
then it must be against a contrasting background, in which there is no obligation
on people to refrain from forcing you to do, or not to do, things, that is, against
a background in which, for actions generally, people do not have a general right
to do them. If Hart can argue to a presumption against forcing from there being
a point to particular rights, then it seems he can equally well argue to the absence
of such a presumption from there being a point to general rights.3
An argument for an enforceable obligation has two stages: the first leads
to the existence of the obligation, and the second, to its enforceability. Hav-
ing disposed of the second stage (at least insofar as it is supposed generally
to follow from the first), let us turn to the supposed obligation to cooperate in
the joint decisions of others to limit their activities. The principle of fairness,
as we stated it following Hart and Rawls, is objectionable and unacceptable.
Suppose some of the people in your neighborhood (there are 364 other adults)
have found a public address system and decide to institute a system of public
entertainment. They post a list of names, one for each day, yours among them.
On his assigned day (one can easily switch days) a person is to run the public
 The State 197

address system, play records over it, give news bulletins, tell amusing stories
he has heard, and so on. After 138 days on which each person has done his
part, your day arrives. Are you obligated to take your turn? You have benefited
from it, occasionally opening your window to listen, enjoying some music or
chuckling at someone’s funny story. The other people have put themselves out.
But must you answer the call when it is your turn to do so? As it stands surely
not. Though you benefit from the arrangement, you may know all along that
364 days of entertainment supplied by other will not be worth your giving up
one day. You would rather not have any of it and not give up a day than have
it all and spend one of your days at it. Given these preferences, how can it be
that you are required to participate when your scheduled time comes? It would
be nice to have philosophy readings on the radio to which one could tune in at
any time, perhaps late at night when tired. But it may not be nice enough for
you to want to give up a whole day of your own as a reader on the program.
Whatever you want, can others create an obligation for you to do so by going
ahead and starting the program themselves? In this case you can choose to
forgo the benefit by not turning on the radio; in other cases the benefits may
be unavoidable. If each day a different person on your street sweeps the entire
street, must you do so when your time comes? Even if you don’t care that
much about a clean street? Must you imagine dirt as you traverse the street, so
as not to benefit as a free rider? Must you refrain from turning on the radio to
hear the philosophy readings? Must you mow your front lawn as often as your
neighbors mow theirs?
At the very least one wants to build into the principle of fairness the con-
dition that the benefits to a person from the actions of the others are greater
than the costs to him of doing his share. How are we to imagine this? Is the
condition satisfied if you do enjoy the daily broadcasts over the PA system in
your neighborhood but would prefer a day off hiking, rather than hearing these
broadcasts all year? For you to be obligated to give up your day to broadcast
mustn’t it be true, at least, that there is nothing you could do with a day (with
that day, with the increment in any other day by shifting some activities to that
day) which you would prefer to hearing broadcasts for the year? If the only way
to get the broadcasts was to spend the day participating in the arrangement, in
order for the condition that the benefits outweigh the costs to be satisfied, you
would have to be willing to spend it on the broadcasts rather than to gain any
other available thing.
If the principle of fairness were modified so as to contain this very strong
condition, it still would be objectionable. The benefits might only barely be
worth the costs to you of doing your share, yet others might benefit from this
institution much more than you do; they all treasure listening to the public
broadcasts. As the person least benefited by the practice, are you obligated to
do an equal amount for it? Or perhaps you would prefer that all cooperated in
another venture, limiting their conduct and making sacrifices for it. It is true,
198 Anarchy and the Law

given that they are not following your plan and thus limiting what other options
are available to you, that the benefits of their venture are worth to you the costs
of your cooperation. However, you do not wish to cooperate, as part of your plan
to focus their attention on your alternative proposal which they have ignored or
not given, in your view at least, its proper due. (You want them, for example,
to read the Talmud on the radio instead of the philosophy they are reading.) By
lending the institution (their institution) the support of your cooperating in it,
you will only make it harder to change or alter.4
On the face of it, enforcing the principle of fairness is objectionable. You
may not decide to give me something, for example a book, and then grab
money from me to pay for it, even if I have nothing better to spend the money
on. You have, if anything, even less reason to demand payment if your activity
that gives me the book also benefits you; suppose that your best way of getting
exercise is by throwing books into people’s houses, or that some other activ-
ity of yours thrusts books into people’s houses as an unavoidable side effect.
Nor are things changed if your inability to collect money or payments for the
books which unavoidably spill over into others’ houses makes it inadvisable or
too expensive for you to carryon the activity with this side effect. One cannot,
whatever one’s purposes, just act so as to give people benefits and then demand
(or seize) payment. Nor can a group of persons do this. If you may not charge
and collect for benefits you bestow without prior agreement, you certainly may
not do so for benefits whose bestowal costs you nothing, and most certainly
people need not repay you for costless-to-provide benefits which yet others
provided them. So the fact that we partially are “social products” in that we
benefit from current patterns and forms created by the multitudinous actions of
a long string of long-forgotten people, forms which include institutions, ways
of doing things, and language (whose social nature may involve our current
use depending upon Wittgensteinian matching of the speech of others), does
not create in us a general Boating debt which the current society can collect
and use as it will.
Perhaps a modified principle of fairness can be stated which would be
free from these and similar difficulties. What seems certain is that any such
principle, if possible, would be so complex and involuted that one could not
combine it with a special principle legitimating enforcement within a state of
nature of the obligations that have arisen under it. Hence, even if the principle
could be formulated so that it was no longer open to objection, it would not
serve to obviate the need for other persons consenting to cooperate and limit
their own activities.
Procedural Rights
Let us return to our independent. Apart from other nonindependents’ fear
(perhaps they will not be so worried), may not the person about to be punished
defend himself? Must he allow the punishment to take place, collecting com-
 The State 199

pensation afterwards if he can show that it was unjust? But show to whom?
If he knows he’s innocent, may he demand compensation immediately and
enforce his rights to collect it? And so on. The notions of procedural rights,
public demonstration of guilt, and the like, have a very unclear status within
state-of-nature theory.
It might be said that each person has a right to have his guilt determined by
the least dangerous of the known procedures for ascertaining guilt, that is, by the
one having the lowest probability of finding an innocent person guilty. There are
well-known maxims of the following form: better m guilty persons go free than
n innocent persons be punished. For each n, each maxim will countenance an
upper limit to the ratio m/n. It will say: better m, but not better m + 1. (A system
may pick differing upper limits for different crimes.) On the greatly implausible
assumption that we know each system of procedures’ precise probability of
finding an innocent person guilty,5 and a guilty person innocent, we will opt for
those procedures whose long-run ratio of the two kinds of errors comes closest,
from below, to the highest ratio we find acceptable. It is far from obvious where
to set the ratio. To say it is better that any number of guilty go free rather than
that one innocent person be punished presumably would require not having any
system of punishment at all. For any system we can devise which sometimes
does actually punish someone will involve some appreciable risk of punishing
an innocent person, and it almost certainly will do so as it operates on large
numbers of people. And any system S can be transformed into one having a
lower probability of punishing an innocent person, for example, by conjoining
to it a roulette procedure whereby the probability is only 1 that anyone found
guilty by S actually gets punished. (This procedure is iterative.)
If a person objects that the independent’s procedure yields too high a prob-
ability of an innocent person’s being punished, how can it be determined what
probabilities are too high? We can imagine that each individual goes through
the following reasoning: The greater the procedural safeguards, the less my
chances of getting unjustly convicted, and also the greater the chances that a
guilty person goes free; hence the less effectively the system deters crime and
so the greater my chances of being a victim of a crime. That system is most
effective which minimizes the expected value of unearned harm to me, either
through my being unjustly punished or through my being a victim of a crime.
If we simplify greatly by assuming that penalties and victimization costs bal-
ance out, one would want the safeguards at that most stringent point where any
lowering of them would increase one’s probability of being unjustly punished
more than it would lower (through added deterrence) one’s vulnerability to be-
ing victimized by a crime; and where any increasing of the safeguards would
increase one’s probability of being victimized by a crime (through lessened
deterrence) more than it would lessen one’s probability of being punished
though innocent. Since utilities differ among persons, there is no reason to
expect individuals who make such an expected value calculation to converge
200 Anarchy and the Law

upon the identical set of procedures. Furthermore, some persons may think it
important in itself that guilty people be punished and may be willing to run
some increased risks of being punished themselves in order to accomplish this.
These people will consider it more of a drawback, the greater the probability a
procedure gives guilty people of going unpunished, and they will incorporate
this in their calculations, apart from its effects on deterrence. It is, to say the
least, very doubtful that any provision of the law of nature will (and will be
known to) settle the question of how much weight is to be given to such con-
siderations, or will reconcile people’s different assessments of the seriousness
of being punished when innocent as compared to being victimized by a crime
(even if both involve the same physical thing happening to them). With the best
will in the world, individuals will favor differing procedures yielding differing
probabilities of an innocent person’s being punished.
One could not, it seems, permissibly prohibit someone from using a pro-
cedure solely because it yields a marginally higher probability of punishing
an innocent person than does the procedure you deem optimal. After all, your
favorite procedure also will stand in this relation to that of someone else. Nor
are matters changed by the fact that many other persons use your procedure.
It seems that persons in a state of nature must tolerate (that is, not forbid) the
use of procedures in the “neighborhood” of their own; but it seems they may
forbid the use of far more risky procedures. An acute problem is presented if
two groups each believe their own procedures to be reliable while believing
that of the other group to be very dangerous. No procedure to resolve their
disagreement seems likely to work; and presenting the nonprocedural principle
that the group which is right should triumph (and the other should give in to it)
seems unlikely to produce peace when each group, firmly believing itself to be
the one that is right, acts on the principle.
When sincere and good persons differ, we are prone to think they must
accept some procedure to decide their differences, some procedure they both
agree to be reliable or fair. Here we see the possibility that this disagreement
may extend all the way up the ladder of procedures. Also, one sometimes will
refuse to let issues stay settled by the adverse decision of such a procedure,
specifically when the wrong decision is worse even than the disruption and
costs (including fighting) of refusing to accept it, when the wrong decision is
worse than conflict with those on the other side. It is dismaying to contemplate
situations where both of the opposed parties feel that conflict is preferable to
an adverse decision by any procedure. Each views the situation as one in which
he who is right must act, and the other should give in. It will be of little avail
for a neutral party to say to both, “Look, you both think you’re right, so on that
principle, as you will apply it, you’ll fight. Therefore you must agree to some
procedure to decide the matter.” For they each believe that conflict is better than
losing the issue.6 And one of them may be right in this. Shouldn’t he engage in
the conflict? Shouldn’t he engage in the conflict? (True, both of them will think
 The State 201

the one is themselves.) One might try to avoid these painful issues by a commit-
ment to procedures, come what may. (May one possible result of applying the
procedures be that they themselves are rejected?) Some view the state as such
a device for shifting the ultimate burden of moral decision, so that there never
comes to be that sort of conflict among individuals. But what sort of individual
could so abdicate? Who could turn every decision over to an external procedure,
accepting whatever results come? The possibility of such conflict is part of the
human condition. Though this problem in the state of nature is an unavoidable
one, given suitable institutional elaboration it need be no more pressing in the
state of nature than under a state, where it also exists.7
The issue of which decisions can be left to an external binding procedure
connects with the interesting question of what moral obligations someone is
under who is being punished for a crime of which he knows himself to be
innocent. The judicial system (containing no procedural unfairness, let us sup-
pose) has sentenced him to life imprisonment, or death. May he escape? May
he harm another in order to escape? These questions differ from the one of
whether someone wrongfully attacking (or participating in the attack of) another
may claim self-defense as justifying his killing the other when the other, in
self-defense, acts so as to endanger his own attacker’s life. Here the answer is,
“No.” The attacker should not be attacking in the first place, nor does someone
else’s threatening him with death unless he does attack make it permissible for
him to do so. His job is to get out of that situation; if he fails to do so he is at a
moral disadvantage. Soldiers who know their country is waging an aggressive
war and who are manning antiaircraft guns in defense of a military emplace-
ment may not in self-defense fire upon the planes of the attacked nation which
is acting in self-defense, even though the planes are over their heads and are
about to bomb them. It is a soldier’s responsibility to determine if his side’s
cause is just; if he finds the issue tangled, unclear, or confusing, he may not
shift the responsibility to his leaders, who will certainly tell him their cause is
just. The selective conscientious objector may be right in his claim that he has
a moral duty not to fight; and if he is, may not another acquiescent soldier be
punished for doing what it was his moral duty not to do? Thus we return to the
point that some bucks stop with each of us; and we reject the morally elitist
view that some soldiers cannot be expected to think for themselves. (They are
certainly not encouraged to think for themselves by the practice of absolving
them of all responsibility for their actions within the rules of war.) Nor do we
see why the political realm is special. Why, precisely, is one specially absolved
of responsibility for actions when these are performed jointly with others from
political motives under the direction or orders of political leaders?8
We thus far have supposed that you know that another’s procedure of justice
differs from your own for the worse. Suppose now that you have no reliable
knowledge about another’s procedure of justice. May you stop him in self-
defense and may your protective agency act for you, solely because you or
202 Anarchy and the Law

it does not know whether his procedure is reliable? Do you have the right to
have your guilt, innocence, and punishment, determined by a system known
to be reliable and fair? Known to whom? Those wielding it may know it to
be reliable and fair. Do you have a right to have your guilt or innocence, and
punishment, determined by a system you know to be reliable and fair? Are
someone’s rights violated if he thinks that only the use of tea leaves is reliable
or if he is incapable of concentrating on the description of the system others use
so that he doesn’t know whether it’s reliable, and so on? One may think of the
state as the authoritative settler of doubts about reliability and fairness. But of
course there is no guarantee that it will settle them (the president of Yale didn’t
think Black Panthers could get a fair trial), and there is no reason to suppose it
will manage to do so more effectively than another scheme. The natural-rights
tradition offers little guidance on precisely what one’s procedural rights are in a
state of nature, on how principles specifying how one is to act have knowledge
built into their various clauses, and so on. Yet persons within this tradition do
not hold that there are no procedural rights; that is, that one may not defend
oneself against being handled by unreliable or unfair procedures.
How May the Dominant Agency Act?
What then may a dominant protective association forbid other individuals
to do? The dominant protective association may reserve for itself the right to
judge any procedure of justice to be applied to its clients. It may announce,
and act on the announcement, that it will punish anyone who uses on one of its
clients a procedure that it finds to be unreliable or unfair. It will punish anyone
who uses on one of its clients a procedure that it already knows to be unreli-
able or unfair, and it will defend its clients against the application of such a
procedure. May it announce that it will punish anyone who uses on one of its
clients a procedure that it has not, at the time of punishment, already approved
as reliable and fair? May it set itself up as having to pass, in advance, on any
procedure to be used on one of its clients, so that anyone using on one of its
clients any procedure that has not already received the protective association’s
seal of approval will be punished? Clearly, individuals themselves do not have
this right. To say that an individual may punish anyone who applies to him a
procedure of justice that has not met his approval would be to say that a criminal
who refuses to approve anyone’s procedure of justice could legitimately pun-
ish anyone who attempted to punish him. It might be thought that a protective
association legitimately can do this, for it would not be partial to its clients in
this manner. But there is no guarantee of this impartiality. Nor have we seen
any way that such a new right might arise from the combining of individuals’
preexisting rights. We must conclude that protective associations do not have
this right, including the sole dominant one. Every individual does have the right
that information sufficient to show that a procedure of justice about to be applied
to him is reliable and fair (or no less so than other procedures in use) be made
 The State 203

publicly available or made available to him. He has the right to be shown that
he is being handled by some reliable and fair system. In the absence of such
a showing he may defend himself and resist the imposition of the relatively
unknown system. When the information is made publicly available or made
available to him, he is in a position to know about the reliability and fairness of
the procedure.9 He examines this information, and if he finds the system within
the bounds of reliability and fairness he must submit to it; finding it unreliable
and unfair he may resist. His submission means that he refrains from punish-
ing another for using this system. He may resist the imposition of its particular
decision though, on the grounds that he is innocent. If he chooses not to, he
need not participate in the process whereby the system determines his guilt or
innocence. Since it has not yet been established that he is guilty, he may not be
aggressed against and forced to participate. However, prudence might suggest
to him that his chances of being found innocent are increased if he cooperates
in the offering of some defense.
The principle is that a person may resist, in self-defense, if others try to apply
to him an unreliable or unfair procedure of justice. In applying this principle, an
individual will resist those systems which after all conscientious consideration
he finds to be unfair or unreliable. An individual may empower his protective
agency to exercise for him his rights to resist the imposition of any procedure
which has not made its reliability and fairness known, and to resist any procedure
that is unfair or unreliable. In Chapter 2 we described briefly the processes that
would lead to the dominance of one protective association in a given area, or
to a dominant federation of protective associations using rules to peacefully
adjudicate disputes among themselves. This dominant protective association
will prohibit anyone from applying to its members any procedure about which
insufficient information is available as to its reliability and fairness. It also will
prohibit anyone from applying to its members an unreliable or unfair procedure;
which means, since they are applying the principle and have the muscle to do
so, that others are prohibited from applying to the protective association’s
members any procedure the protective association deems unfair or unreliable.
Leaving aside the chances of evading the system’s operation, anyone violating
this prohibition will be punished. The protective association will publish a list
of those procedures it deems fair and reliable (and perhaps of those it deems
otherwise); and it would take a brave soul indeed to proceed to apply a known
procedure not yet on its approved list. Since an association’s clients will expect
it to do all it can to discourage unreliable procedures, the protective association
will keep its list up-to-date, covering all publicly known procedures.
It might be claimed that our assumption that procedural rights exist makes
our argument too easy. Does a person who did violate another’s rights himself
have a right that this fact be determined by a fair and reliable procedure? It is
true that an unreliable procedure will too often find an innocent person guilty.
But does applying such an unreliable procedure to a guilty person violate any
204 Anarchy and the Law

right of his? May he, in self-defense, resist the imposition of such a procedure
upon himself? But what would he be defending himself against? Too high a
probability of a punishment he deserves? These questions are important ones
for our argument. If a guilty person may not defend himself against such pro-
cedures and also may not punish someone else for using them upon him, then
may his protective agency defend him against the procedures or punish someone
afterwards for having used them upon him, independently of whether or not
(and therefore even if) he turns out to be guilty? One would have thought the
agency’s only rights of action are those its clients transfer to it. But if a guilty
client has no such right, he cannot transfer it to the agency.
The agency does not, of course, know that its client is guilty, whereas the
client himself does know (let us suppose) of his own guilt. But does this dif-
ference in knowledge make the requisite difference? Isn’t the ignorant agency
required to investigate the question of its client’s guilt, instead of proceeding
on the assumption of his innocence? The difference in epistemic situation
between agency and client can make the following difference. The agency
may under some circumstances defend its client against the imposition of a
penalty while promptly proceeding to investigate the question of his guilt. If
the agency knows that the punishing party has used a reliable procedure, it
accepts its verdict of guilty, and it cannot intervene on the assumption that its
client is, or well might be, innocent. If the agency deems the procedure unreli-
able or doesn’t know how reliable it is, it need not presume its client guilty,
and it may investigate the matter itself. If upon investigation it determines
that its client is guilty, it allows him to be punished. This protection of its cli-
ent against the actual imposition of the penalty is relatively straightforward,
except for the question of whether the agency must compensate the prospec-
tive punishers for any costs imposed upon them by having to delay while the
protective agency determines to its satisfaction its own client’s guilt. It would
seem that the protective agency does have to pay compensation to users of
relatively unreliable procedures for any disadvantages caused by the enforced
delay; and to the users of procedures of unknown reliability it must pay full
compensation if the procedures are reliable, otherwise compensation for dis-
advantages. (Who bears the burden of proof in the question of the reliability
of the procedures?) Since the agency may recover this amount (forcibly) from
its client who asserted his innocence, this will be something of a deterrent to
false pleas of innocence.10
The agency’s temporary protection and defense against the infliction of
the penalty is relatively straightforward. Less straightforward is the protective
agency’s appropriate action after a penalty has been inflicted. If the punisher’s
procedure was a reliable one, the agency does not act against the punisher. But
may the agency punish someone who punishes its client, acting on the basis of
an unreliable procedure? May it punish that person independently of whether or
not its client is guilty? Or must it investigate, using its own reliable procedure,
 The State 205

to determine his guilt or innocence, punishing his punishers only if it determines

its client innocent? (Or is it: if it fails to find him guilty?) By what right could
the protective agency announce that it will punish anyone using an unreliable
procedure who punishes its clients, independently of the guilt or innocence of
the clients?
The person who uses an unreliable procedure, acting upon its result, imposes
risks upon others, whether or not his procedure misfires in a particular case.
Someone playing Russian roulette upon another does the same thing if when
he pulls the trigger the gun does not fire. The protective agency may treat the
unreliable enforcer of justice as it treats any performer of a risky action. We
distinguished in Chapter 4 a range of possible responses to a risky action, which
were appropriate in different sorts of circumstances: prohibition, compensa-
tion to those whose boundaries are crossed, and compensation to all those who
undergo a risk of a boundary crossing. The unreliable enforcer of justice might
either perform actions others are fearful of, or not; and either might be done
to obtain compensation for some previous wrong, or to exact retribution.11
A person who uses an unreliable procedure of enforcing justice and is led to
perform some unfeared action will not be punished afterwards. If it turns out
that the person on whom he acted was guilty and that the compensation taken
was appropriate, the situation will be left as is. If the person on whom he acted
turns out to be innocent, the unreliable enforcer of justice may be forced fully
to compensate him for the action.
On the other hand, the unreliable enforcer of justice may be forbidden to
impose those consequences that would be feared if expected. Why? If done
frequently enough so as to create general fear, such unreliable enforcement
may be forbidden in order to avoid the general uncompensated-for fear. Even
if done rarely, the unreliable enforcer may be punished for imposing this
feared consequence upon an innocent person. But if the unreliable enforcer
acts rarely and creates no general fear, why may he be punished for imposing
a feared consequence upon a person who is guilty? A system of punishing
unreliable punishers for their punishment of guilty persons would help deter
them from using their unreliable system upon anyone and therefore from
using it upon innocent people. But not everything that would aid in such
deterrence may be inflicted. The question is whether it would be legitimate
in this case to punish after the fact the unreliable punisher of someone who
turned out to be guilty.
No one has a right to use a relatively unreliable procedure in order to decide
whether to punish another. Using such a system, he is in no position to know
that the other deserves punishment; hence he has no right to punish him. But
how can we say this? If the other has committed a crime, doesn’t everyone in a
state of nature have a right to punish him? And therefore doesn’t someone who
doesn’t know that this other person has committed the crime? Here, it seems to
me, we face a terminological issue about how to merge epistemic considerations
206 Anarchy and the Law

with rights. Shall we say that someone doesn’t have a right to do certain things
unless he knows certain facts, or shall we say that he does have a right but he
does wrong in exercising it unless he knows certain facts? It may be neater to
decide it one way, but we can still say all we wish in the other mode; there is
a simple translation between the two modes of discourse.12 We shall pick the
latter mode of speech; if anything, this makes our argument look less compel-
ling. If we assume that anyone has a right to take something that a thief has
stolen, then under this latter terminology someone who takes a stolen object
from a thief, without knowing it had been stolen, had a right to take the object;
but since he didn’t know he had this right, his taking the object was wrong and
impermissible. Even though no right of the first thief is violated, the second
didn’t know this and so acted wrongly and impermissibly.
Having taken this terminological fork, we might propose an epistemic
principle of border crossing: If doing act A would violate Q’s rights unless
condition C obtained, then someone who does not know that C obtains may
not do A. Since we may assume that all know that inflicting a punishment upon
someone violates his rights unless he is guilty of an offense, we may make do
with the weaker principle: If someone knows that doing act A would violate Q’s
rights unless condition C obtained, he may not do A if he does not know that C
obtains. Weaker still, but sufficient for our purposes, is: If someone knows that
doing act A would violate Q’s rights unless condition C obtained, he may not
do A if he has not ascertained that C obtains through being in the best feasible
position for ascertaining this. (This weakening of the consequent also avoids
various problems connected with epistemological skepticism.) Anyone may
punish a violator of this prohibition. More precisely, anyone has the right so to
punish a violator; people may do so only if they themselves don’t run afoul of
the prohibition, that is, only if they themselves have ascertained that another
violated the prohibition, being in the best position to have ascertained this.
On this view, what a person may do is not limited only by the rights of others.
An unreliable punisher violates no right of the guilty person; but still he may not
punish him. This extra space is created by epistemic considerations. (It would
be a fertile area for investigation, if one could avoid drowning in the morass of
considerations about “subjective-ought” and “objective-ought.”) Note that on
this construal, a person does not have a right that he be punished only by use
of a relatively reliable procedure. (Even though he may, if he so chooses, give
another permission to use a less reliable procedure on him.) On this view, many
procedural rights stem not from rights of the person acted upon, but rather from
moral considerations about the person or persons doing the acting.
It is not clear to me that this is the proper focus. Perhaps the person acted
upon does have such procedural rights against the user of an unreliable proce-
dure. (But what is a guilty person’s complaint against an unreliable procedure?
That it is too likely to mispunish him? Would we have the user of an unreliable
procedure compensate the guilty person he punished, for violating his right?) We
 The State 207

have seen that our argument for a protective agency’s punishing the wielder of
the unreliable procedure for inflicting a penalty upon its client would go much
more smoothly were this so. The client merely would authorize his agency to act
to enforce his procedural right. For the purposes of our subargument here, we
have shown that our conclusion stands, even without the facilitating assumption
of procedural rights. (We do not mean to imply that there aren’t such rights.)
In either case, a protective agency may punish a wielder of an unreliable or
unfair procedure who (against the client’s will) has punished one of its clients,
independently of whether or not its client actually is guilty and therefore even
if its client is guilty.
The De Facto Monopoly
The tradition of theorizing about the state we discussed briefly Chapter 2 has
a state claiming a monopoly on the use of force. Has any monopoly element
yet entered our account of the dominant protective agency? Everyone may de-
fend himself against unknown or unreliable procedures and may punish those
who use or attempt to use such procedures against him. As its client’s agent,
the protective association has the right to do this for its clients. It grants that
every individual, including those not affiliated with the association, has this
right. So far, no monopoly is claimed. To be sure, there is a universal element
in the content of the claim: the right to pass on anyone’s procedure. But it does
not claim to be the possessor of this right; everyone has it. Since no claim is
made that there is some right which it and only it has, no monopoly is claimed.
With regard to its own clients, however, it applies and enforces these rights
which it grants that everyone has. It deems its own procedures reliable and fair.
There will be a strong tendency for it to deem all other procedures, or even the
“same” procedures run by others, either unreliable or unfair. But we need not
suppose it excludes every other procedure. Everyone has right to defend against
procedures that are in fact not, or known to be, both reliable and fair. Since the
dominant protective association judges its own procedures to be both reliable
and fair, and believes this to be generally known, it will not allow anyone to
defend against them; that is, it will punish anyone who does so. The dominant
protective association will act freely on its own understanding of the situation,
whereas no one else will be able to do so with impunity. Although no monopoly
is claimed, the dominant agency does occupy a unique position by virtue of its
power. It, and it alone, enforces prohibitions on others’ procedures of justice,
as it sees fit. It does not claim the right to prohibit others arbitrarily; it claims
only the right to prohibit anyone’s using actually defective procedures on its
clients But when it sees itself as acting against actually defective procedures,
others may see it as acting against what it thinks are defective procedures. It
alone will act freely against what it thinks are defective procedures, whatever
anyone else thinks. As the most powerful applier of principles which it grants
everyone the right to apply correctly, it enforces its will, which, from the inside,
it thinks is correct. From its strength stems its actual position as the ultimate
208 Anarchy and the Law

enforcer and the ultimate judge with regard to its own clients. Claiming only
the universal right to act correctly, it acts correctly by its own lights. It alone
is in a position to act solely by its own lights.
Does this unique position constitute a monopoly? There is no right the domi-
nant protective association claims uniquely to possess. But its strength leads it
to be the unique agent acting across the board to enforce a particular right. It
is not merely that it happens to be the only exerciser of a right it grants that all
possess; the nature of the right is such that once a dominant power emerges, it
alone will actually exercise that right. For the right includes the right to stop
others from wrongfully exercising the right, and only the dominant power will
be able to exercise this right against all others. Here, if anywhere, is the place
for applying some notion of a de facto monopoly: a monopoly that is not de jure
because it is not the result of some unique grant of exclusive right while others
are excluded from exercising a similar privilege. Other protective agencies, to
be sure, can enter the market and attempt to wean customers away from the
dominant protective agency. They can attempt to replace it as the dominant one.
But being the already dominant protective agency gives an agency a significant
market advantage in the competition for clients. The dominant agency can of-
fer its customers a guarantee that no other agencies can match: “Only those
procedures we deem appropriate will be used on our customers.”
The dominant protective agency’s domain does not extend to quarrels of
nonclients among themselves. If one independent is about to use his procedure
of justice upon another independent, then presumably the protective association
would have no right to intervene. It would have the right we all do to intervene
to aid an unwilling victim whose rights are threatened. But since it may not
intervene on paternalistic grounds, the protective association would have no
proper business interfering if both independents were satisfied with their pro-
cedure of justice. This does not show that the dominant protective association is
not a state. A state, too, could abstain from disputes where all concerned parties
chose to opt out of the state’s apparatus. (Though it is more difficult for people
to opt out of the state in a limited way, by choosing some other procedure for
settling a particular quarrel of theirs. For that procedure’s settlement, and their
reactions to it, might involve areas that not all parties concerned have removed
voluntarily from the state’s concern.) And shouldn’t (and mustn’t) each state
allow that option to its citizens?
Protecting Others
If the protective agency deems the independents’ procedures for enforcing
their own rights insufficiently reliable or fair when applied to its clients, it
will prohibit the independents from such self-help enforcement. The grounds
for this prohibition are that the self-help enforcement imposes risks of danger
on its clients. Since the prohibition makes it impossible for the independents
credibly to threaten to punish clients who violate their rights, it makes them
 The State 209

unable to protect themselves from harm and seriously disadvantages the inde-
pendents in their daily activities and life. Yet it is perfectly possible that the
independents’ activities including self-help enforcement could proceed without
anyone’s rights being violated (leaving aside the question of procedural rights).
According to our principle of compensation given in Chapter 4, in these circum-
stances those persons promulgating and benefiting from the prohibition must
compensate those disadvantaged by it. The clients of the protective agency,
then, must compensate the independents for the disadvantages imposed upon
them by being prohibited self-help enforcement of their own rights against
the agency’s clients. Undoubtedly, the least expensive way to compensate the
independents would be to supply them with protective services to cover those
situations of conflict with the paying customers of the protective agency. This
will be less expensive than leaving them unprotected against violations of their
rights (by not punishing any client who does so) and then attempting to pay
them afterwards to cover their losses through having (and being in a position
in which they were exposed to having) their rights violated. If it were not less
expensive, then instead of buying protective services, people would save their
money and use it to cover their losses, perhaps by jointly pooling their money
in an insurance scheme.
Must the members of the protective agency pay for protective services (vis-
à-vis its clients) for the independents? Can they insist that the independents
purchase the services themselves? After all, using self-help procedures would
not have been without costs for the independent. The principle of compensa-
tion does not require those who prohibit an epileptic from driving to pay his
full cost of taxis, chauffeurs, and so on. If the epileptic were allowed to run his
own automobile, this too would have its costs: money for the car, insurance,
gasoline, repair bills, and aggravation. In compensating for disadvantages im-
posed, the prohibitors need pay only an amount sufficient to compensate for
the disadvantages of the prohibition minus an amount representing the costs
the prohibited party would have borne were it not for the prohibition. The
prohibitors needn’t pay the complete costs of taxis; they must pay only the
amount which when combined with the costs to the prohibited party of run-
ning his own private automobile is sufficient for taxis. They may find it less
expensive to compensate in kind for the disadvantages they impose than to
supply monetary compensation; they may engage in some activity that removes
or partially lessens the disadvantages, compensating in money only for the net
disadvantages remaining.
If the prohibitor pays to the person prohibited monetary compensation
equal to an amount that covers the disadvantages imposed minus the costs of
the activity where it permitted, this amount may be insufficient to enable the
prohibited party to overcome the disadvantages. If his costs in performing the
prohibited action would have been monetary, he can combine the compensation
payment with this money unspent and purchase the equivalent service. But if
210 Anarchy and the Law

his costs would not have been directly monetary but involve energy, time, and
the like, as in the case of the independent’s self-help enforcement of rights, then
this monetary payment of the difference will not by itself enable the prohibited
party to overcome the disadvantage by purchasing the equivalent of what he is
prohibited. If the independent has other financial resources he can use without
disadvantaging himself, then this payment of the difference will suffice to leave
the prohibited party undisadvantaged. But if the independent has no such other
financial resources, a protective agency may not pay him an amount less than the
cost of its least expensive protective policy, and so leave him only the alternatives
of being defenseless against the wrongs of its clients or having to work in the
cash market to earn sufficient funds to total the premium on a policy. For this
financially pressed prohibited individual, the agency must make up the difference
between the monetary costs to him of the unprohibited activity and the amount
necessary to purchase an overcoming or counterbalancing of the disadvantage
imposed. The prohibitor must completely supply enough, in money or in kind,
to overcome the disadvantages. No compensation need be provided to someone
who would not be disadvantaged by buying protection for himself. For those of
scanter resources, to whom the unprohibited activity had no monetary costs, the
agency must provide the difference between the resources they can spare without
disadvantage and the cost of protection. For someone for whom it had some
monetary costs, the prohibitor must supply the additional monetary amount (over
and above what they can spare without disadvantage) necessary to overcome
the disadvantages. If the prohibitors compensate in kind, they may charge the
financially pressed prohibited party for this, up to the monetary costs to him of
his unprohibited activity provided this amount is not greater than the price of
the good.13 As the only effective supplier, the dominant protective agency must
offer in compensation the difference between its own fee and monetary costs
to this prohibited party of self-help enforcement. It almost always will receive
this amount back in partial payment for the purchase of a protection policy. It
goes without saying that these dealings and prohibitions apply only to those
using unreliable or unfair enforcement procedures.
Thus the dominant protective agency must supply the independents—that
is, everyone it prohibits from self-help enforcement against its clients on the
grounds that their procedures of enforcement are unreliable or unfair—with
protective services against its clients; it may have to provide some persons
services for a fee that is less than the price of these services. These persons may,
of course, choose to refuse to pay the fee and so do without these compensatory
services. If the dominant protective agency provides protective services in this
way for independents, won’t this lead people to leave the agency in order to
receive its services without paying? Not to any great extent, since compensation
is paid only to those who would be disadvantaged by purchasing protection
for themselves, and only in the amount that will equal the cost of an unfancy
policy when added to the sum of the monetary costs of self-help protection plus
 The State 211

whatever amount the person comfortably could pay. Furthermore, the agency
protects these independents it compensates only against its own paying clients
on whom the independents are forbidden to use self-help enforcement. The more
free riders there are, the more desirable it is to be a client always protected by
the agency. This factor, along with the others, acts to reduce the number of free
riders and to move the equilibrium toward almost universal participation.
The State
We set ourselves the task, in Chapter 3, of showing that the dominant protec-
tive association within a territory satisfied two crucial necessary conditions for
being a state: that it had the requisite sort of monopoly over the use of force in
the territory, and that it protected the rights of everyone in the territory, even if
this universal protection could be provided only in a “redistributive” fashion.
These very crucial facets of the state constituted the subject of the individualist
anarchists’ condemnation of the state as immoral. We also set ourselves the task
of showing that these monopoly and redistributive elements were themselves
morally legitimate, of showing that the transition from a state of nature to an
ultraminimal state (the monopoly element) was morally legitimate and violated
no one’s rights and that the transition from an ultraminimal to a minimal state
(the “redistributive” element) also was morally legitimate and violated no
one’s rights.
A protective agency dominant in a territory does satisfy the two crucial neces-
sary conditions for being a state. It is the only generally effective enforcer of a
prohibition on others using unreliable enforcement procedures (calling them as
it sees them), and it oversees these procedures. And the agency protects those
nonclients in its territory whom it prohibits from using self-help enforcement
procedures on its clients, in their dealings with its clients, even if such protection
must be financed (in apparent redistributive fashion) by its clients. It is morally
required to do this by the principle of compensation, which requires those who
act in self-protection in order to increase their own security to compensate those
they prohibit from doing risky acts which might actually have turned out to be
harmless14 for the disadvantages imposed upon them.
We noted in beginning Chapter 3 that whether the provision of protective
services for some by others was “redistributive” would depend upon the reasons
for it. We now see that such provision need not be redistributive since it can
be justified on other than redistributive grounds, namely, those provided in the
principle of compensation. (Recall that “redistributive” applies to reasons for
a practice or institution, and only elliptically and derivatively to the institution
itself.) To sharpen this point, we can imagine that protective agencies offer two
types of protection policies: those protecting clients against risky private enforce-
ment of justice and those not doing so but protecting only against theft, assault,
and so forth (provided these are not done in the course of private enforcement
of justice). Since it is only with regard to those with the first type of policy that
212 Anarchy and the Law

others are prohibited from privately enforcing justice, only they will be required
to compensate the persons prohibited private enforcement for the disadvantages
imposed upon them. The holders of only the second type of policy will not have
to pay for the protection of others, there being nothing they have to compensate
these others for. Since the reasons for wanting to be protected against private
enforcement of justice are compelling, almost all who purchase protection will
purchase this type of protection, despite its extra costs, and therefore will be
involved in providing protection for the independents.
We have discharged our task of explaining how a state would arise from a
state of nature without anyone’s rights being violated. The moral objections of
the individualist anarchist to the minimal state are overcome. It is not an unjust
imposition of a monopoly; the de facto monopoly grows by an invisible-hand
process and by morally permissible means, without anyone’s rights being
violated and without any claims being made to a special right that others do
not possess. And requiring the clients of the de facto monopoly to pay for the
protection of those they prohibit from self-help enforcement against them,
far from being immoral, is morally required by the principle of compensation
adumbrated in Chapter 4.
We canvassed, in Chapter 4, the possibility of forbidding people to per-
form acts if they lack the means to compensate others for possible harmful
consequences of these acts or if they lack liability insurance to cover these
consequences. Were such prohibition legitimate, according to the principle
of compensation the persons prohibited would have to be compensated for
the disadvantages imposed upon them, and they could use the compensatory
payments to purchase the liability insurance! Only those disadvantaged by the
prohibition would be compensated: namely, those who lack other resources they
can shift (without disadvantaging sacrifice) to purchase the liability insurance.
When these people spend their compensatory payments for liability insurance,
we have what amounts to public provision of special liability insurance. It is
provided to those unable to afford it and covers only those risky actions which
fall under the principle of compensation—those actions which are legitimately
prohibited when uncovered (provided disadvantages are compensated for), ac-
tions whose prohibition would seriously disadvantage persons. Providing such
insurance almost certainly would be the least expensive way to compensate
people who present only normal danger to others for the disadvantages of the
prohibition. Since they then would be insured against the eventuation of certain
of their risks to others, these actions then would not be prohibited to them. Thus
we see how, if it were legitimate to prohibit some actions to those uncovered by
liability insurance, and were this done, another apparent redistributive aspect
of the state would enter by solid libertarian moral principles! (The exclamation
point stands for my surprise.)
Does the dominant protective agency in a given geographical territory con-
stitute the state of that territory? We have seen in Chapter 2 how the notion of a
 The State 213

monopoly on the use of force is difficult to state precisely so that it does not fall
before obvious counterexamples. This notion, as usually explained, cannot be
used with any confidence to answer our question. We should accept a decision
yielded by the precise wording of a definition in some text only if that defini-
tion had been devised for application to cases as complicated as ours and had
stood up to tests against a range of such cases. No classification, in passing, by
accident can answer our question in any useful manner.
Consider the following discursive description by an anthropologist:
The concentration of all physical force in the hands of the central authority is the
primary function of the state and is its decisive characteristic. In order to make this
clear, consider what may not be done under the state form of rule: no one in the so-
ciety governed by the state may take another’s life, do him physical harm, touch his
property, or damage his reputation save by permission of the state. The officers of the
state have powers to take life, inflict corporal punishment, seize property as fine or by
expropriation, and affect the standing and reputation of a member of the society.
This is not to say that in societies without the state one may take life with impu-
nity. But in such societies (e.g., among Bushmen, Eskimo, and the tribes of central
Australia) the central authority that protects the household against wrongdoers is
nonexistent, weak, or sporadic, and it was applied among the Crow and other Indians
of the western Plains only as situations arose. The household or the individual is
protected in societies without the state by nonexplicit means, by total group participa-
tion in suppression of the wrongdoer, by temporarily or sporadically applied force
that is no longer needed (and so no longer used) when the cause for its application
is past. The state has means for the suppression of what the society considers to be
wrongs or crimes: police, courts of law, prisons, institutions which explicitly and
specifically function in this area of activity. Moreover, these institutions are stable
within the frame of reference of the society, and permanent.
When the state was formed in ancient Russia, the ruling prince asserted the power
to impose fines and to wreak physical pain and death, but allowed no one else to act
thus. He asserted once again the monopolistic nature of the state power by withholding
its power from any other person or body. If harm was done by one subject to another
without the prince’s express permission, this was a wrong, and the wrongdoer was
punished. Moreover, the prince’s power could only be explicitly delegated. The class
of subject thus protected was thereby carefully defined, of course; by no means were
all those within his realm so protected.
No one person or group can stand in place of the state; the state’s acts can only be
performed directly or by express delegation. The state if delegating its power makes its
delegate an agent (organ) of the state. Policemen, judges, jail guards derive their power
to coerce, according to the rules of the society, directly from the central authority;
so do the tax-collectors, the military, frontier guards, and the like. The authoritative
function of the state rests on its command of these forces as its agents.15
The writer does not claim that the features he lists all are necessary features of
the state; divergence in one feature would not serve to show that the dominant
protective agency of a territory was not a state. Clearly the dominant agency has
almost all of the features specified; and its enduring administrative structures,
with full-time specialized personnel, make it diverge greatly—in the direction
of a state—from what anthropologists call a stateless society. On the basis of
the many writings like that quoted, one would call it a state.
214 Anarchy and the Law

It is plausible to conclude that the dominant protective association in a

territory is its state, only for a territory of some size containing more than a
few people. We do not claim that each person who, under anarchy, retains a
monopoly on the use of force on his quarter acre of property is its state; nor
are the only three inhabitants of an island one square block in size. It would be
futile, and would serve no useful purpose, to attempt to specify conditions or the
size of population and territory necessary for a state to exist. Also, we speak of
cases where almost all of the people in the territory are clients of the dominant
agency and where independent are in a subordinate power position in conflicts
with the agency and its clients. (We have argued that this will occur.) Precisely
what percentage must be clients and how subordinate the power position of the
independents must be are more interesting questions, but concerning these I
have nothing especially interesting to say.
One additional necessary condition for a state was extracted from the We-
berian tradition by our discussion in Chapter 2: namely, that it claims to be the
sole authorizer of violence. The dominant protective association makes no such
claim. Having described the position of the dominant protective association, and
having seen how closely it fits anthropologists’ notions, should we weaken the
Weberian necessary condition so that it includes a de facto monopoly which is
the territory’s sole effective judge over the permissibility of violence, having a
right (to be sure, one had by all) to make judgments on the matter and to act on
correct ones? The case is very strong for doing so, and it is wholly desirable and
appropriate. We therefore conclude that the protective association dominant in
a territory, as described, is a state. However, to remind the reader of our slight
weakening of the Weberian condition, we occasionally shall refer to the domi-
nant protective agency as “a statelike entity,” instead of simply as “a state.”
The Invisible-Hand Explanation of the State
Have we provided an invisible-hand explanation (see Chapter 2) of the state’s
arising within a state of nature; have we given an invisible-hand explanation
of the state? The rights possessed by the state are already possessed by each
individual in a state of nature. These rights, since they are already contained
whole in the explanatory parts, are not provided an invisible-hand explanation.
Nor have we provided an invisible-hand explanation of how the state acquires
rights unique to it. This is fortunate; for since the state has no special rights,
there is nothing of that sort to be explained.
We have explained how, without anyone having this in mind, the self-inter-
ested and rational actions of persons in a Lockean state of nature will lead to
single protective agencies dominant over geographical territories; each territory
will have either one dominant agency or a number of agencies federally affiliated
so as to constitute, in essence, one. And we have explained how, without claim-
ing to possess any rights uniquely, a protective agency dominant in a territory
will occupy a unique position. Though each person has a right to act correctly
to prohibit others from violating rights (including the right not to be punished
 The State 215

unless shown to deserve it), only the dominant protective association will be
able, without sanction, to enforce correctness as it sees it. Its power makes it the
arbiter of correctness; it determines what, for purposes of punishment, counts
as a breach of correctness. Our explanation does not assume or claim that might
makes right. But might does make enforced prohibitions, even if no one thinks
the mighty have a special entitlement to have realized in the world their own
view of which prohibitions are correctly enforced.
Our explanation of this de facto monopoly is an invisible-hand explanation. If
the state is an institution (1) that has the right to enforce rights, prohibit danger-
ous private enforcement of justice, pass upon such private procedures, and so
forth, and (2) that effectively is the sole wielder within a geographical territory
of the right in (1), then by offering an invisible-hand explanation of (2), though
not of (1), we have partially explained in invisible-hand fashion the existence
of the state. More precisely, we have partially explained in invisible-hand fash-
ion the existence of the ultraminimal state. What is the explanation of how a
minimal state arises? The dominant protective association with the monopoly
element is morally required to compensate for the disadvantages it imposes upon
those it prohibits from self-help activities against its clients. However, it actu-
ally might fail to provide this compensation. Those operating an ultraminimal
state are morally required to transform it into a minimal state, but they might
choose not to do so. We have assumed that generally people will do what they
are morally required to do. Explaining how a state could arise from a state of
nature without violating anyone’s rights refutes the principled objections of the
anarchist. But one would feel more confidence if an explanation of how a state
would arise from a state of nature also specified reasons why an ultraminimal
state would be transformed into a minimal one, in addition to moral reasons,
if it specified incentives for providing the compensation or the causes of its
being provided in addition to people’s desire to do what they ought. We should
note that even in the event that no nonmoral incentives or causes are found to
be sufficient for the transition from an ultraminimal to a minimal state, and the
explanation continues to lean heavily upon people’s moral motivations, it does
not specify people’s objective as that of establishing a state. Instead, persons
view themselves as providing particular other persons with compensation for
particular prohibitions they have imposed upon them. The explanation remains
an invisible-hand one.
Notes
1. Herbert Hart, “Are There Any Natural Rights?” Philosophical Review, 1955; John
Rawls, A Theory of Justice (Cambridge, Mass.: Harvard University Press, 1971),
sect. 18. My statement of the principle stays close to Rawls’. The argument Rawls
offers for this principle constitutes an argument only for the narrower principle of
fidelity (bona fide promises are to be kept). Though if there were no way to avoid
“can’t get started” difficulties about the principle of fidelity (p. 349) other than by
appealing to the principle of fairness, it would be an argument for the principle of
fairness.
216 Anarchy and the Law

2. Hart, “Are There Any Natural Rights?”

3. I have formulated my remarks in terms of the admittedly vague notion of there be-
ing a “point” to certain kinds of rights because this, I think, gives Hart’s argument
its most plausible construction.
4. I have skirted making the institution one that you didn’t get a fair say in setting up
or deciding its nature, for here Rawls would object that it doesn’t satisfy his two
principles of justice. Though Rawls does not require that every microinstitution
satisfy his two principles of justice, but only the basic structure of the society, he
seems to hold that a microinstitution must satisfy these two principles if it is to
give rise to obligations under the principle of fairness.
5. The acceptability of our procedures to us may depend on our not knowing this
information. See Lawrence Tribe, “Trial by Mathematics,” Harvard Law Review,
1971.
6. Must their calculation about which is better include their chances of success? There
is some temptation to define this area of conflict as one where such chances of
wrong are for certain purposes thought to be as bad as the wrong for sure. A theory
of how probability interacts with the moral weight of wrongs is sorely needed.
In treating the question as one of whether the benefits of conflict outweigh
costs, the text seriously oversimplifies the issue. Instead of a simple cost-benefit
principle, the correct principle requites for an act to be morally permissible, not
merely that its moral benefits outweigh its moral costs, but that there is no other
alternative action available with less moral cost, such that the additional moral
cost of the contemplated action over the alternative outweighs its additional moral
benefit. (For a detailed discussion of these issues see my “Moral Complications
and Moral Structures,” Natural Law Forum, 1968, pp. 1-5, especially the discus-
sion of Principle VII.) One would be in a position to advance the discussion of
many issues if one combined such a principle with a theory of the moral weight of
harms or wrongs with certain specified probabilities, to get an explicitly probabili-
fied version of this principle. I mention only one application here that might not
spring to mind. It is often assumed that the only pacifist position which is a moral
position absolutely forbids violent action. Any pacifist position that considers the
effectiveness of pacifist techniques is labeled tactical rather than moral. But if a
pacifist holds that because certain techniques of significant effectiveness are avail-
able (civilian resistance, nonviolent defense, satyagraha, and so on) it is morally
wrong to wage or prepare for war, he is putting forth a comprehensible position that
is a moral one, and which does require appeal to facts about the effectiveness of
pacifist techniques. Given the lack of certainty about the effects of various actions
(wars, pacifist techniques) the principle to govern the moral discussion of whether
nonpacifist actions are morally permitted is a probabilified version of the principle
(Principle VII) described briefly above.
7. It is a consequence of Locke’s view that each citizen is in a state of nature with
respect to the highest appeal procedure of the state, since there is no further appeal.
Hence he is in a state of nature with respect to the state as a whole. Also, citizens
have “a liberty to appeal to Heaven, whenever they judge the cause of sufficient
moment. And therefore, though the people cannot be judge, so as to have by the
constitution of that society any superior power, to determine and give effective
sentence in the case; yet they have, by a Law antecedent and paramount to all
positive laws of men, reserved that ultimate determination to themselves, which
belongs to all mankind, where there lies no appeal on earth, viz. to judge whether
they have just cause to make their appeal to Heaven. And this judgment they cannot
part with….” Two Treatises of Government, ed. Peter Laslett (New York: Cambridge
 The State 217

University Press, 1967), II, sect. 168; see also sects. 20, 21, 90-93, 176, 207, 241,
242.
8. The considerations of this paragraph, though I find them powerful, do not completely
remove my uneasiness about the position argued in the text. The reader who wishes
to claim, against this book, that special moral principles emerge with regard to the
state might find this issue a fruitful one to press. Though if I do make a mistake
here, it may be one concerning responsibility rather than concerning the state.
9. May someone in a position to know say that he hasn’t gotten around to examining
the information, and so he will defend himself against anyone’s now coming to
apply the procedure to him? Presumably not, if the procedure is well known and not
of recent origin. But even here, perhaps, a gift of some extra time may be made.
10. Clients no doubt would empower their agency to proceed as described in the text, if
the client himself is unable to say whether he is guilty or innocent, perhaps because
he is unconscious, agreeing to replace any compensating amount the agency must
pay to the prospective punisher.
This deterrent to false pleas of innocence might act also to deter some innocent
people against whom the evidence is overwhelming from protesting their innocence.
There will be few such cases, but it may be to avoid this undesirable deterrence
that a person who is found guilty beyond a reasonable doubt after having pleaded
innocent is not also penalized for perjury.
11. The category of feared exaction of compensation will be small but nonempty. Exact-
ing compensation may involve activities people fear because it involves compelling
them to do compensatory forced labor; might it even be the direct imposition of a
feared consequence, because only this can raise the victim to his previous indif-
ference curve?
12. Gilbert Harman proposes simple intertranslatability as a criterion of merely verbal
difference in “Quine on Meaning and Existence,” Review of Metaphysics, 21,
no. 1 (September 1967). If we wish to say that two persons with the same beliefs
who speak different languages differ only verbally, then Harman’s criterion will
include as “simple,” translations as complex as those between languages. Whatever
is to be decided about such cases, the criterion serves in the present instance.
13. May the prohibitors charge the prohibited party for the other costs to him of per-
forming the activity were it unprohibited, such as time, energy, and so on?
14. Here, as at all other places in this essay, “harm” refers only to border crossings.
15. Lawrence Krader, Formation of the State (Englewood Cliffs, N.J.: Prentice-Hall,
1968), pp. 21-22.
 11
The Invisible Hand Strikes Back
Roy A. Childs, Jr.
Surely one of the most significant occurrences on the intellectual scene dur-
ing the past few years has been the emergence of a professor of philosophy at
Harvard University as an eloquent and forceful spokesman for the doctrine of
Libertarianism. Indeed, so much attention and praise has been lately showered
upon the man, Robert Nozick, and his National Book-Award-winning treatise,
Anarchy, State and Utopia, that all who uphold the doctrine of human liberty
have been cheered.
If they have been cheered by the reception given to the book, however, and to
the new concern of portions of the intellectual establishment with libertarianism,
they have not been equally cheered by the content of the book itself. For amidst
the book’s subtle and wide ranging critiques of doctrines such as Marx’s theory
of exploitation, egalitarianism, and John Rawls’ theory of justice (so hailed by
intellectuals in recent years), appears an argument so central to Nozick’s thinking
that it dominates the first third of the treatise itself: a defense of the “minimal
State” against the claims and arguments of anarchism.
Part of the consternation caused by this section is due to the fact that Nozick’s
argument is often of brain-cracking complexity, using against the reader all of the
techniques and tools of contemporary philosophy—with not a few other technical
insights from other fields, such as economics, thrown in for good measure—giv-
ing the reader oftentimes the feeling of being on a merry-go-round moving at a
dizzying pace, changing speed and direction in unpredictable ways.
But part of the consternation is caused equally by the nature of the arguments
themselves, with their seemingly anti-libertarian bent; arguments resting on
notions such as the “compensation principle,” the principle of “risk,” and the
alleged “right” to prohibit certain risky activities of others.
It is no accident, then, that Anarchy, State, and Utopia has raised a storm of
controversy in Libertarian circles. While the media and the intellectual world in
general have focused, appropriately enough, on Nozick’s persuasive critiques of
the conventional wisdom, particularly the section devoted to examining Rawls’
theory of justice, and to Nozick’s defense of “capitalist acts between consent-
ing adults,” Libertarians have focused more on Nozick’s frame of reference,
the absence of a theory of rights (upon which much of the book tacitly rests its
case), and the attack on anarchism.

218
 The Invisible Hand Strikes Back 219

It is obvious that any persuasive and comprehensive critique of this profound

and complex work would have to be as long as the book itself. We aspire to no
such grandiose heights here. What we shall do instead is to attempt to answer
Nozick’s main argument in defense of the “minimal state.” Nozick begins with
the Lockeian “state-of-nature” to show how, by means of a series of “invisible
hand” processes which violate the rights of no one, a legitimate “minimal state”
may arise. We shall, on the contrary, maintain that, beginning with a “minimal
state,” and moving through a series of stages (which process violates the rights
of no one), we may properly arrive back at a state of anarchy. In short, we shall
maintain that the only good minimal state is a dead minimal state, one which
avows those processes to operate which would, if continued over a period of
time, dissolve the minimal state into anarchism.
In clarifying this, we shall have to discuss Nozick’s concept of “risk,” his
principle of “compensation,” and his view that the explanation offered for
the origin of the state is an “invisible hand” explanation. We shall see that,
on the contrary, there is instead a very visible hand: in fact, a veritable iron
fist. Professor Nozick’s defense of the minimal state unfolds in three stages.
Firstly, he argues that, “given” an anarchistic system of competing protective
associations within a free market, one dominant agency will emerge, through
market procedures and by economic necessity. This “dominant agency” will
in turn “evolve” into an “ultraminimal state” by an invisible hand process
in a morally permissible way which violates the rights of no one. This “ul-
traminimal state” differs from the dominant agency in that it maintains a
monopoly on force in a given geographical area (except that necessary in
immediate self-defense). It therefore “excludes private (or agency) retaliation
for wrong and exaction of compensation; but it provides protection and en-
forcement services only to those who purchase its protection and enforcement
policies.” Professor Nozick then shows how this ultraminimal state evolves
into a minimal state, which is “equivalent to the ultraminimal state conjoined
with a (clearly redistributive) Friedmanesque voucher plan, financed from tax
revenues. Under this plan all people, or some (for example, those in need)
are given tax-funded vouchers that can be used only for their purchase of a
protection policy from the ultraminimal state.” Professor Nozick holds that
“the operators of the ultraminimal state are morally obligated to produce
the minimal state,” since “it would be morally impermissible for persons to
maintain the monopoly in the ultraminimal state without providing protective
services for all…”
This last is, of course, especially interesting. The successful transformation
of the ultraminimal state into the minimal state is dependent upon the ultra-
minimal state’s allegiance to Professor Nozick’s principle of compensation. The
ultraminimal state is obligated to “compensate” those whose risky activities
they forcibly prohibit. Adequate compensation is taken to be, quite without
reason, as we shall see, the provision of protective services. Professor Nozick
grants that the ultraminimal state “might fail to provide this compensation,”
220 Anarchy and the Law

but he assumes that “generally people will do what they are morally required
to do.” This assumption, unfortunately, is only made by Professor Nozick in
considering the actions of the state apparatus, not in pausing to consider the
actions of competing protective associations. This naiveté is charming indeed,
but not very heartwarming, reassuring or realistic. That such an assumption
should find its way to make a crucially important bridge in Professor Nozick’s
argument is, in many ways, symptomatic of the book, and much of contemporary
philosophical discussion of the state.
Why must one “dominant agency” develop, within the free market system of
competing protection agencies? “Initially,” Professor Nozick writes, “several
different protective associations or companies will offer their services in the
same geographical area. What will happen when there is a conflict between
clients of different agencies?” We learn that “only three possibilities are worth
considering”:
1. In such situations the forces of the two agencies do battle. One of the agen-
cies always wins such battles. Since the clients of the losing agency are ill
protected in conflicts with clients of the winning agency, they leave their
agency to do business with the winner.
2. One agency has its power centered in one geographical area, the other in
another. Each wins the battles fought close to its center of power, with
some gradient being established. People who deal with one agency but live
under the power of the other either move closer to their own agency’s home
headquarters or shift their patronage to the other protective agency…
3. The two agencies fight evenly and often. They win and lose about equally,
and their interspersed members have frequent dealings and disputes with
each other. Or perhaps without fighting or after only a few skirmishes the
agencies realize that, such battling will occur continually in the absence
of preventive measures. In any case, to avoid frequent, costly and wasteful
battles the two agencies, perhaps through their executives, agree to resolve
peacefully those cases about which they reach differing judgments. They
agree to set up, and abide by the decisions of, some third judge or court to
which they can turn when their respective judgments differ. (Or they might
establish rules determining which agency has jurisdiction under which cir-
cumstances.) Thus emerges a system of appeals courts and agreed upon rules
about jurisdiction, and the conflict of laws. Though different agencies operate,
there is one unified federal judicial system of which they are components.
What is the significance of this? “In each of these cases,” we are told, “all
the persons in a geographical area are under some common system that judges
between their competing claims and enforces their rights.”
Out of anarchy, pressed by spontaneous groupings, mutual-protection associations,
division of labor, market pressures, economics of scale, and rational self-interest there
arises something very much resembling a minimal state or a group of geographically
distinct minimal states.
According to Professor Nozick, then, if competing protection associations
make arrangements between themselves to settle disputes, we have a type of
 The Invisible Hand Strikes Back 221

“federal judicial system,” a variant of government. This is surely metaphorical

and unjustified. Surely, if we take all the protective devices in use in a given
society and lump them together, then the total has what some might call a
“monopoly” on protection. Similarly, all farmers taken collectively have a
“monopoly” on growing food. But this is tautological.
The real point which Professor Nozick wishes to make is that if either of these
alternative courses result, then we have a “legal system” resulting. Now, no one
has ever denied that there would indeed be a “legal system” under anarchism.
Many prominent anarchists have claimed that they advocate that structures and
processes (even content, in some cases), be separated from the state, and the
state abolished entirely. If one is going to term any “legal system” in this broad
sense a “state,” then there is little point in pursuing the matter.
Discussion may proceed along more productive lines if we distinguish be-
tween two radically different types of legal systems: a “market legal system”
and a “state legal system.” A “market legal system” could be designated as a
system of rules and enforcement procedures which arises from the processes
of the market economy: competition, bargaining, legal decisions, and so forth;
a legal system whose order is “spontaneous” in the Hayekian sense. A “state
legal system” on the other hand, could be designed as a system of rules and
enforcement procedures which are designed by the state apparatus, as a result
of political procedures, and imposed by force upon the rest of society.
In a society with a “market legal system,” the shape of the legal system is
determined by the processes set in motion by the actions of a number of inde-
pendent agencies whose plans may conflict, and therefore cause some adjustment
in the means-ends structure of themselves and others. Independent agencies,
then, can make agreements, reach decisions, set precedents, bargain and so forth,
producing a legal “order” which is not designated by anyone. The resulting
system is not a “federal system” in the traditional manner: we may have ad hoc
decisions for individual disputes, procedures agreed upon in advance, such as
drawing the names of arbitrators out of a hat, alternating arbitrators chosen by
each agency, ad infinitum. We need not suppose that any permanent, distinct,
appeals system has been erected. (If one had, it would not change our essential
argument.) Anarchism, then, can have a legal system, a “market legal system”
as opposed to a “state legal system.” The analogy is to the distinction drawn
between state-economic systems and unhampered market economic systems.
Both are systems, but not of the same sort; they are built on different principles
of organization and are the manifestations of different processes altogether.
What we shall conclude, then, is that if the third of Professor Nozick’s three
alternatives results, then there will not be a state apparatus as the result.
Several other objections to this reasoning arise here; Professor Nozick’s
argument that “maximal competing protective services cannot coexist” lacks
force, because he merely assumes that violent conflicts between agencies will
be the norm. Now, if such conflicts do begin to develop, economics gives us
every reason to assume that it will be more in the interest of competing parties to
222 Anarchy and the Law

develop a means of arbitrating disputes rather than to engage in violent actions.

Finally, there is no reason to regard the concept of “protective services” with
holistic awe. An infinite variety of institutions can develop in society, concerned
with as many different aspects of protection. Some institutions may patrol the
neighborhood block, some might focus on copyrights, some on violations of
contracts, some merely on insuring against crime, rather than on apprehending
criminals (for cases where customers in society do not think that retribution or
punishment is justified or worthwhile). Here again, there is no reason to expect
a single agency to dominate the field.
The “invisible hand” has indeed gotten itself entangled in a very strong web.
Let us examine the process by which the “dominant agency” would evolve
into an “ultraminimal state,” which is in turn morally obliged to become the
“minimal state.”
“An ultraminimal state,” writes Nozick, “maintains a monopoly over all use of force
except that necessary in immediate self-defense, and so excludes private (or agency)
retaliation for wrong and exaction of compensation; but it provides protection and
enforcement services only to those who purchase its protection and enforcement
policies.
“The minimal (night watchman) state,” on the other hand is, as he writes, “equiva-
lent to the ultraminimal state conjoined with a (clearly redistributive) Friedmanesque
voucher plan, financed from tax revenues. Under this plan all people, or some (for
example, those in need), are given tax-funded vouchers that can be used only for
their purchase of a protection policy from the ultraminimal state.”
Professor Nozick assumes the existence of a dominant protection agency
in a field of competitors, and shows how it might evolve into the ultraminimal
state, which is in turn morally obligated to become the minimal state. The key
question to ask is: how may the dominant agency act towards independents?
To answer this, we must briefly consider the notions of risk, prohibition, and
the principle of compensation.
In Professor Nozick’s view, one is morally justified in prohibiting certain
acts, provided one compensates those who are so prohibited. What actions may
be prohibited? In Anarchy, State, and Utopia, there is no clear and unambiguous
line drawn between classes of human actions which one may justifiably prohibit,
and those which one may not. One class can be identified, however: we may
prohibit certain risky actions, providing those so prohibited are compensated.
Which risky actions? It is not too clear, but the answer seems to be: those pre-
senting “too high” a probability of harm to others. The dominant agency may
justifiably prohibit enforcement procedures of independent agencies, by this
reasoning, since these risk harming others, whether by punishing wrongly, us-
ing unreliable procedures, or anything else. In asking the question “How may
the dominant agency act?” or “What…may a dominant protective association
forbid other individuals to do?” Professor Nozick answers:
The dominant protective association may reserve for itself the right to judge any
procedure of justice to be applied to its clients. It may announce, and act on the an-
nouncement, that it will punish anyone who uses on one of its clients a procedure
that it finds to be unreliable or unfair.
 The Invisible Hand Strikes Back 223

This is based in turn on the notion of “procedural rights.” “The person who
uses an unreliable procedure, acting upon its results,” he writes, “imposes risks
upon others, whether or not his procedure misfires in a particular case.” Nozick
articulates the general principle that “everyone may defend himself against the
unknown or unreliable procedures and may punish those who use or attempt to
use such procedures against him,” and does not in principle reserve this “right”
to a monopoly agency. However:
Since the dominant protective association judges its own procedures to be both reliable
and fair and believes this to be generally known, it will not allow anyone to defend
against them; that is, it will punish anyone who does so. The dominant protective
association will act freely on its own understanding of the situation, whereas no
one else will be able to do so with impunity. Although no monopoly is claimed, the
dominant agency does occupy a unique position by virtue of its power… It is not
merely that it happens to be the only exerciser of a right it grants that all possess; the
nature of the right is such that once a dominant power emerges, it alone will actually
exercise that right. (my emphasis)
Hence: a de facto monopoly. Ergo: the ultraminimal state.
It is at this point that the principle of compensation rears its ugly head.
Professor Nozick has stated that one has a right to prohibit certain exces-
sively risky actions of others provided they are compensated. What constitutes
“compensation”?
Something fully compensates a person for a loss if and only if it makes him no
worse off than he otherwise would have been; it compensates person X for person
Y’s action if X is no worse off receiving it, Y having done A, than X would have
been without receiving it if Y had not done A. (In the terminology of economists,
something compensates X for Y’s act if receiving it leaves X on at least as high an
indifference curve as he would have been on, without it, had Y not so acted.)
Professor Nozick then proceeds to “shamelessly” ignore certain key questions
surrounding the central issues concerning the meaning of “compensation.” His
final formulation is as follows:
Y is required to raise X above his actual position (on a certain indifference curve
I) by an amount equal to the difference between his position on I and his original
position. Y compensates X for how much worse off Y’s action would have made a
reasonably prudent acting X.
This is the meaning, then, of “compensation.” “The principle of compensation
requires that people be compensated for having certain risky activities prohibited
to them.” What “risky” activities does Professor Nozick wish to prohibit? The
enforcement procedures of the non-dominant protection agencies. That is, he
wishes to prohibit us from turning to any of a number of competing agencies,
other than the dominant protection agency.
What is he willing to offer us as compensation for being so prohibited? He
is generous to a fault. He will give us nothing less than the State.
Should one wish to reject this admittedly generous offer, it would be re-
sponded that he cannot reject it. It is foisted upon one whether one likes it or
not, whether one is willing to accept the State as compensation or not. It is this
224 Anarchy and the Law

which should give us pause, and lead us to think a bit. Let us consider the nature
of Professor Nozick’s State, and then consider a few of the weak links in the
chain of arguments which will, in the end, bind us to the State. With a good yank
or two, perhaps we can snap some of these weak links, and save ourselves from
what some of us, at least, regard as certain doom. In the meantime, though, let
it be realized that we have arrived at the minimal state. The ultraminimal state
arose when non-dominant agencies were prohibited from certain activities. The
minimal state was reached when the ultraminimal state was combined with the
extension of protective services to those who were so prohibited.
(We should note that the only thing binding the minimal state to pay such
compensation is a moral principle. Professor Nozick “assumes” in this case,
that they [those in the ultraminimal state] will act as they ought, even though
they might not acknowledge this moral obligation.)
Consider the nature of the Nozickian state itself. The Randian “limited gov-
ernment” has a rather interesting economic form: it is in essence a consumer’s
co-op, with all coming under its power being “consumers,” having the right to
vote, and so on. But Professor Nozick’s State is private property. It was, one
recalls, a private firm, an agency, which developed by a series of specifiable
steps, into a State. It remains private property, then, since nothing was done to
change matters. Since it was once upon a time ago a dominant agency, and got
that way through the free market, one is justified in assuming that its owners,
the board of directors (stockholders or whatever) are aggressive businessmen,
driving towards “expansion” of their business. There is no question of a constitu-
tion, of course, merely the contracts with its clients, which in case of conflicts
it alone can judge and interpret. There is no voting. There is no separation of
powers, no checks and balances, and no longer any market checks and balances,
either. There is merely a private agency, now with a monopoly on power, on the
use of physical force to attain its ends.
This, we are told, is an agency which is going to follow certain moral prin-
ciples and (a) extend protection to those whose risky activities are prohibited
(or whose agencies were prohibited from functioning), and (b) stop with the
functions of a “minimal state.” What is to check its power? What happens in the
event of its assuming even more powers? Since it has a monopoly, any disputes
over its functions are solved exclusively by itself. Since careful prosecution
procedures are costly, the ultraminimal state may become careless without
competition. Nevertheless, only the ultraminimal state may judge the legitimacy
of its own procedures, as Professor Nozick explicitly tells us.
One might find Nozick’s argument as to why this should be taken as a less
“risky” situation than that of competing agencies, less than totally convincing.
Let us take up some of those weak links in the chain of reasoning, and see if
they can be snapped.
The fact that, as we saw, we cannot reject the State’s “protection” as justifi-
able “compensation” for being prohibited from patronizing competing agencies,
should lead us to question Professor Nozick’s view of compensation. A similar
critical glance will lead us to reexamine his view of risk as well.
 The Invisible Hand Strikes Back 225

We are justified in prohibiting the actions of competing agencies because

they are alleged to be “risky.” How “risky” does an action have to be before
it can be prohibited? Professor Nozick does not say. Nor does he give us any
indication of how risk of the kind he deals with can be calculated. As Murray
Rothbard wrote in Man, Economy and State:
“Risk” occurs when an event is a member of a class of a large number of homoge-
neous events and there is fairly certain knowledge of the frequency of occurrence
of this class of events.
In his masterwork Risk, Uncertainty and Profit, Frank Knight uses the term
“risk” to designate cases of measurable uncertainty. As applied to human ac-
tion, this becomes very dubious indeed. In fact, it involves us in innumerable
difficulties.
As Professor Knight writes, “We live only by knowing something about the
future; while the problems of life, or of conduct, at least, arise from the fact that
we know so little.” This is why we cannot calculate the risks from future human
actions. (We shall restrict the concept of “risk” to the cases of the probability of
harm resulting from certain actions.) In dealing with questions of probability of
consequences of human actions, our calculations must of necessity be vague and
inexact. While in some cases, certainly, we can say that a probability is greater
or less, a quantitative calculation is impossible. Not dealing with homogeneous
units, or with accidents distributed throughout a large number of cases with
some frequency, we lack the preconditions of quantitative calculation. This is
particularly the case with such institutions as “competing protection agencies,”
since they may differ vastly in scope of activities, procedures, or any number
of other attributes. If Nozick provided a criterion of what degree of “risk” was
permissible, and what not, then we might be able to separate those agencies
which are “too risky” from those which are not, prohibiting only the former. No
criterion is given, however. Moreover, Nozick is not even simply concerned with
“harm,” but extends his concern to a much more subjective element, namely,
fear. How much “fear” justifies what response is not discussed. It is very dif-
ficult, then, to see how one can arrive at any objective cut-off level. Not only
can “fear” not be calculated or measured, it is so subjective that it cannot even
be said to be a simple response to any one set of objective conditions. There
may be psychological and ideological factors, as well. For instance, the person
in question might at one time have had to live under a State apparatus, and that
experience might have left deep fears in his subconscious.
Since man anticipates the future without knowing what will happen, since he
modifies his plans and actions continually as new knowledge accumulates, how
can anyone predict that competing agencies will automatically and inevitably
supersede any given level of “risk” in society? Uncertainty and fear on some
level seem to be an essential (or at least central) part of the human condition;
Professor Nozick has given us no reason to believe that any one category of
uncertainty, such as the risk of unjustifiable punishment, or unreliable enforce-
ment procedures, should morally lead us to establish one set of institutions over
226 Anarchy and the Law

another. Why isn’t fear of tyranny an equally valid reason for prohibiting some-
thing? And who is to say that the procedures of the dominant protection agency
are not among the most unreliable? Only given the assumption of reliability can
we even begin to consider as “morally justifiable” any judgment and prohibi-
tion of the activities of others. Certainly a dominant agency whose procedures
were among the least reliable would be in the same position as one with reliable
procedures with respect to its power to prohibit other procedures and agencies.
But we would not defend the moral permissibility of this prohibition. In the
absence of criteria, Professor Nozick has given us few guides here.
Moreover, while there is an extent to which people can correctly anticipate
the future in human actions, including the risk of harm, there is no means of
objectively discovering, in the present, which people will correctly anticipate
the future, and which not. The best chance we have of picking those whose
expectations are likely to be most in harmony with future reality, in the area of
“risk of harm,” would be to look at objective tests. But in the realm of human
action, the closest we can come is not any science of risk-calculation, but through
a record of profit-making, that their expectations have been historically more in
harmony with reality than those of other market participants. Entrepreneurship
is the general category of such risk-taking in the area of producing goods and
services in society. But even in the case of entrepreneurs, there is no way of
predicting that those whose abilities in forecasting the future have been histori-
cally more accurate, will be more accurate in the future.
If we are concerned with risk and uncertainty, there is therefore no reason
to focus our attention on the political channel of attaining ends. If, in a free
society, there were sufficient concern with the risk imposed by some actions
of members of a market economy (or market processes or market institutions),
institutions would be developed to deal with and alleviate the fear and the risk.
The insurance firm is one such institution. We know from market analyses that
prices are more stable in those areas where futures markets exist than when they
do not. Now “prices” are merely exchange ratios between buyers and sellers
of a given commodity. Thus, insurance markets, and futures markets in related
fields, would in an unhampered market economy most probably provide the
greatest stability of the level of risk in a society, that is: risk as seen through the
eyes of a participant of the market economy. Moreover, an unhampered market
economy would provide for the optimal degree of present provision for future
risk in society. Any intervention by a minimal state would, therefore, increase
risk, and lead to a sub-optimal allocation devoted to provision for risk. It would
lead to a shift away from the optimum societal provision for risk. The minimal
state would thus create discoordination of resources in the vitally important
market of provision for risk.
What we have seen here is that risk-calculation cannot be quantitative, but
only qualitative: indeed, even then the concept is vague when we deal with the
possible consequences of precisely unknown future actions. Moreover, insofar
as there can be calculation of risks, entrepreneurs and other market participants
 The Invisible Hand Strikes Back 227

are the only ones we have a right to expect to be successful in their expectations.
The unhampered market economy is the only means of setting institutions and
processes in society free, to deal effectively with risk and fear. Any movement
away from the purely free market, from the choices and decisions of market
participants, each with limited knowledge, learning through market processes, is
a shift away from an optimal situation in the area of expectations of and provi-
sion for risk of future harm. In short, in the very process of forming a network
of competing market agencies, differentiating each from the other, risk would
be provided for tacitly, by the preferences and choices of market participants.
All of this gives us reason to believe that any attempt to prohibit certain
actions of independent agencies is not morally permissible, and cannot be
motivated by any concern with risk or fear.
The problems with the principle of compensation are much more difficult.
Professor Nozick’s notion of compensation rests upon the concept of an
“indifference curve.” The “indifference curve” is one of the saddest plagues to
hit economic science since the concept of “macroeconomics” first reared its ugly
head. Indifference curve analysis is based on interviewing people about their
relative preferences between two or more alternatives. Points of “indifference”
between different quantities of certain goods or services are placed on a “map.”
When many such points of indifference are reached, all placed neatly on a map,
the noble indifference curve analyst connects the points by a line, and applies
the techniques of mathematics to analyzing varying things.
Very little of this has anything to do with reality. A person’s value scale is
a constantly fluctuating thing, ranks shifting constantly, sometimes violently.
Even if some useful information were imparted by interviewing people in this
way, it could not be the basis of any action or expectation on our part. We need
not go into this further. Professor Nozick is a new Platonist or Rousseauean,
and is really developing a new version of “real” or “rational” interests or values,
to supplant our “actual” or concrete interests.
To “compensate” someone, we must place him, according to this view,
at a point on his indifference curve at least as high as he would have been
without any interference. The point should be made that we are talking about
the individual’s own view of things, about his evaluations, not any objective
state of affairs. It is therefore not possible to judge what would constitute full
compensation merely by looking at such states of affairs. We must look at the
value hierarchies of the individuals involved.
Professor Nozick, however, does not look at the actual evaluations of indi-
viduals. Instead, he assumes that everyone prohibited from taking certain risky
actions may be compensated in the same way, namely, by providing protective
services for them through the minimal state. The basis for this assumption is
hard to determine. Why does provision of protection constitute full compensa-
tion? Apparently, because Nozick thinks that it comes close to “copying” the
initial situation (objective), where the oppressed victim of the minimal state
could still buy alternative protection from independent agencies. But this is
entirely unjustified.
228 Anarchy and the Law

What this actually amounts to is saying that we are to judge what makes a
person “at least as well off,” rather than the person himself, through choosing
and acting. But this is paternalism, which Professor Nozick rejects elsewhere
in Anarchy, State, and Utopia.
If we take the point of view of the person whose actions are prohibited, then
we can concern ourselves only with his own value scale. This places matters
in a different light.
The only ways in which we could tell if someone was justly compensated
then would be:
4. If they will accept A in exchange for B, i.e. if they exchange one for the
other on a free market. This exchange, if it occurs, tells us that A was worth
at least as much as B to the relevant party. Obviously, this exchange needs to
be made in the absence of force, violence, aggression, or threats of either.
5. If, after the relevant agent has been aggressed against, he agrees to accept
A as compensation from an aggressor or aggressor’s agent. Again, this ac-
ceptance must be in the absence of force, violence, aggression or the threats
of them.
Apart from these, there are no objective means of measuring justifiable or
“full” compensation. The minimal state however makes both of these impos-
sible, for it does threaten such violence or punishment. Moreover, the argument
rests on a variant of the “just price” doctrine, applied to compensation. But this
is not justified anywhere.
Let us see if we can arrive at the minimal state by some legitimate method of
“compensation.” In a market society, anyone would have the right to approach
anyone who is a client of an independent agency, and buy him off, strike some
sort of a bargain with him. A certain number, no doubt, would go along with
this. But what of those who will not? We may see the problem by considering
a supply and demand chart. In this case, let “S” represent the supply of a given
service, namely, foregoing the use of independent agencies and accepting state
protection instead. Let “D” represent the demand for this service. Consider that
portion of a supply-and-demand chart below the point where exchanges of these
sorts would occur. In this situation, there is no exchange. The suppliers (those
who subscribe to independent agencies) are not willing to settle for anything
the demanders (the dominant agency) are willing to offer. Ergo, there is no
point of contact between them at which compensation would be both offered
and accepted. Even in the absence of threats of force, there would be no settle-
ment. Since there is nothing which the “S’s” would accept before prohibition,
why should one assume that compensation is possible after prohibition? If the
supply and demand curves have not shifted, the dominant agency cannot offer
more (or the non-dominant agencies accept less), than was offered before, and
still there can be no meeting of the minds. How, then, can those whose risky
activities are prohibited be compensated? How can they be raised to a situa-
tion equal in their eyes (on their own value scales) to that in which they would
have found themselves without prohibition? It appears that we have reached
a dead end.
 The Invisible Hand Strikes Back 229

(We should add that Professor Nozick makes things no less difficult by talking
about compensating only those “disadvantaged” by the prohibition. The prob-
lems of compensation remain, and there is, to boot, no theory of “disadvantage”
offered in Anarchy, State, and Utopia.)
There are, in addition, other arguments which might be made against the
principle of compensation. Professor Nozick does not deal with the problem
of compensating those for whom the creation of the minimal state would be
a vast moral and psychic trauma. What just compensation could be offered in
this case? How could they be raised to a position equal to the situation they
were in before the creation of the minimal state? Moreover, consider the case of
the clients of the dominant agency, A. They may very well benefit (or perceive
themselves as benefiting) from the existence of agencies B, C, D…, which they
may perceive as a probable check on A’s activities, fearing that A might supersede
its contractual functions in the absence of B, C, D…. Must A, in the transition
from dominant agency to minimal state, compensate its own clients after taking
those actions which eliminate this benefit? If so, what compensation? If not,
why not? Why aren’t they as “disadvantaged” as anyone else?
If we cannot assume that providing protection1 to clients of independent
agencies constitutes full compensation, but suppose instead that compensation
can be arrived at, perhaps, through higher costs to the agency, then consider
the chain of events which begins.
If the minimal state must protect everyone, even those who cannot pay, and
if it must compensate those others for prohibiting their risky actions, then this
must mean that it will charge its original customers more than it would have
in the case of the ultraminimal state. But this would, ipso facto, increase the
number of those who, because of their demand curves, would have chosen
non-dominant agencies B, C, D… over dominant agency-turned ultraminimal
state-turned minimal state. Must the minimal state then protect them (or subsi-
dize them) at no charge, or compensate them for prohibiting them from turning
to other agencies?
If so, then once again, it must either increase the cost of its service to its
remaining customers, or decrease its services. In either case, this again produces
those who, given the nature and shape of their demand curves, would have
chosen the non-dominant agencies over the dominant agency. Must these then
be compensated? If so, then the process leads on, to the point where no one
but a few wealthy fanatics advocating a minimal state would be willing to pay
for greatly reduced “services” of government. If this happened, there is reason
to believe that very soon the minimal state would be thrown into the invisible
dustbin of history, which it would richly deserve.
What would more likely happen is that the state would turn instead to its
old friend, robbery—otherwise known as “taxation” (which is, incidentally,
treated altogether too slightly in Professor Nozick’s tome). Hence, one sees
the sinister invisible hand leading us from a defense agency…to a domi-
nant agency…to an ultra-minimal state…to a minimal state…to the first
230 Anarchy and the Law

trappings of tyranny. Moreover, it is a private tyranny, since the agency is

privately owned. This being so, what can be our protection against a private
company’s monopoly on force in society? Surely the objective risks here
are immensely greater than those which led to the hesitant creation of the
minimal state.
The compensation principle, then, as is presently formulated, leads us into
difficulties. Let us then make our remaining points quickly.
Is the process which led to the creation of a minimal state an “invisible hand”
process? We maintain that it is not. The reason is that while the state may not
be intended as the end result, the state-like action of prohibiting competition
is still the outcome of a specific decision. The dominant agency must decide
to prohibit the actions, and punish offenders. At each step lies an insidious but
rather explicit decision. If this is an “invisible hand,” it nonetheless packs a
mean wallop, threatening to crush liberty in its grasp.
Finally, before we turn the Professor’s argument around, what, in our view,
is the dominant agency justified in doing? Nothing more than punishing those
who can be shown to have initiated violence against its citizens or clients, and
this only after the fact. Risks of harm in the case of human agencies cannot be
calculated except by observing the actions of men (such as those who constitute
competing protection agencies) over some considerable period of time. It is
by means of their policies that we judge the reliability of their procedures, the
threat that they do or do not constitute to innocent people, and thus decide how
to respond to irresponsible or criminal agencies. There are difficult problems
here, but there are more problems in assuming that a dominant agency is more
virtuous, more reliable in its procedures or even, of all things, less threatening
to the safety and liberty of the people than other agencies. Professor Nozick
cannot even prove that those agencies which employ reliable procedures
should be prohibited from acting along with those which do not employ such
procedures.
But if that is the case, then the invisible hand returns:
Assume the existence of the minimal state. An agency arises which copies
the procedures of the minimal state, allows the state’s agents to sit in on its
trials, proceedings, and so forth. Under this situation, it cannot be alleged that
this agency is any more “risky” than the state. If it is still too risky, then we are
also justified in saying that the state is too risky, and in prohibiting its activities,
providing we compensate those who are disadvantaged by such prohibition. If
we follow this course, the result is anarchy.
If we do not, then the dominant-agency-turned-minimal-state finds itself
competing against an admittedly watched-over competing agency.
But wait: the competing, legally subordinate, spied upon, oppressed second
agency finds that it can charge a lower price for its services, since the minimal
state is guaranteeing “risk” and has to compensate those who would have pa-
tronized agencies using risky procedures. It also has to pay the costs of spying
on the new agency, which constitutes a greater capital expenditure.
 The Invisible Hand Strikes Back 231

Since it is only morally bound to provide such compensation, it is likely to

cease doing so under competitive pressure. This sets two processes in motion:
those formerly compensated because they would have chosen agencies other
than the state, rush to subscribe to the maverick agency, thus partially reassert-
ing their old preferences.
Alas, another fateful step has also been taken: the once proud minimal state,
having ceased compensation, reverts to a mere ultraminimal state.
But the process cannot be stopped. The maverick agency must and does estab-
lish a good record, to win clients away from the mere ultraminimal state. It offers
a greater variety of services, toys with different prices, and generally becomes
a more attractive alternative, all the time letting the state spy on it, bugging its
offices, checking its procedures, processes and decisions. Other noble entre-
preneurs follow suit. Soon, the once mere ultraminimal state becomes a lowly
dominant agency. It finds that the other agencies have established noteworthy
records, with safe, non-risky procedures, and stops spying on them, preferring
less expensive arrangements instead. Its executives have, alas, grown fat and
placid without competition; their calculations of who to protect, how, by what
allocation of resources to what ends (gathering information, courts, buildings,
prisons, cops, etc.) are adversely affected, since they have taken themselves
out of a truly competitive market price system. The dominant agency grows
inefficient, when compared to the dynamic, new, improved agencies.
Soon—lo! and behold!—the lowly dominant protection agency becomes
simply one agency among many in a market legal system, or disappears alto-
gether. The sinister minimal state is reduced, by a series of morally permissible
steps which violate the rights of no one, to at best merely one agency among
many. The evil black State apparatus dissolves into the utopia of anarchy. In
short, the invisible hand strikes back. Justice is triumphant, and everyone lives
happily ever after.
I should like to end with one quotation, from Benjamin R. Tucker, and one
paraphrase, from Karl Marx, which express most clearly my own attitudes
toward the matters we have been discussing. Tucker pointed to the anarchist
definition of the State as the “embodiment of the principle aggression.”
“…we see,” he said, “that the State is antagonistic to society; and, society being es-
sential to individual life and development, the conclusion leaps to the eyes that the
relation of the State to the individual and of the individual to the State must be one
of hostility, enduring till the State shall perish.”
And, paraphrasing Marx, we may say that “traditional political philosophers have
sought only to explain and justify the State. The point, however, is to abolish it.”
Note
1. It is not clear whether this protection will be offered without cost or if the former
customers will be forced to pay for it. My interpretation is that the “minimal state”
can force clients to pay up to what they would have with another agency (what
problems this raises in a world of shifting prices!). “Compensation” would then
consist of picking up the tab for the difference between the cost with another agency
and its own “price.”
 12
Robert Nozick and the Immaculate
Conception of the State
Murray Rothbard
Robert Nozick’s Anarchy, State, and Utopia (New York: Basic Books, 1974)
is an “invisible hand” variant of a Lockean contractarian attempt to justify the
State, or at least a minimal State confined to the functions of protection. Begin-
ning with a free-market anarchist state of nature, Nozick portrays the State as
emerging, by an invisible hand process that violates no one’s rights, first as a
dominant protective agency, then to an “ultraminimal state,” and then finally
to a minimal state.
Before embarking on a detailed critique of the various Nozickian stages, let
us consider several grave fallacies in Nozick’s conception itself, each of which
would in itself be sufficient to refute his attempt to justify the State.
First, despite Nozick’s attempt (6-9) to cover his tracks, it is highly relevant
to see whether Nozick’s ingenious logical construction has ever indeed occurred
in historical reality: namely, whether any State, or most or all States, have in fact
evolved in the Nozickian manner. It is a grave defect in itself, when discussing
an institution all too well grounded in historical reality, that Nozick has failed
to make a single mention or reference to the history of actual States. In fact,
there is no evidence whatsoever that any State was founded or developed in the
Nozickian manner. On the contrary, the historical evidence cuts precisely the
other way: for every State where the facts are available originated by a process
of violence, conquest and exploitation: in short, in a manner which Nozick
himself would have to admit violated individual rights. As Thomas Paine wrote
in Common Sense, on the origin of kings and of the State:
Could we take off the dark covering of antiquity and trace them to their first rise,
we should find the first of them nothing better than the principal ruffian of some
restless gang; whose savage manners or preeminence in subtlety obtained him the
title of chief among plunder as; and who by increasing in power and extending his
depredations, overawed the quiet and defenceless to purchase their safety by frequent
contributions.1
Note that the “contract” involved in Paine’s account was of the nature of a
coerced “protection racket” rather than anything recognizable to the libertarian
as a voluntary agreement.
Since Nozick’s justification of existing States—provided they are or become
minimal—rests on their alleged immaculate conception, and since no such State

232
 Nozick and the Immaculate Conception of the State 233

exists, then none of them can be justified, even if they should later become
minimal. To go further, we can say that, at best, Nozick’s model can only justify
a State which indeed did develop by his invisible hand method. Therefore it
is incumbent upon Nozick to join anarchists in calling for the abolition of all
existing States, and then to sit back and wait for his alleged invisible hand to
operate. The only minimal State, then, which Nozick at best can justify is one
that will develop out of a future anarcho-capitalist society.
Secondly, even if an existing State had been immaculately conceived, this
would still not justify its present existence. A basic fallacy is endemic to all
social contract theories of the State, namely, that any contract based on a promise
is binding and enforceable. If, then, everyone—in itself of course a heroic as-
sumption—in a state of nature surrendered all or some of his rights to a State,
the social contract theorists consider this promise to be binding forevermore.
A correct theory of contracts, however, termed by Williamson Evers the “title
transfer” theory, states that the only valid (and therefore binding) contract is
one that surrenders what is, in fact, philosophically alienable, and that only
specific titles to property are so alienable, so that their ownership can be ceded
to someone else. While, on the contrary, other attributes of man: specifically,
his self-ownership over his own will and body, and the rights to person and
property which stem from that self-ownership, are “inalienable” and therefore
cannot be surrendered in a binding contract. If no one, then, can surrender his
own will, his body, or his rights in an enforceable contract, a fortiori he cannot
surrender the persons or the rights of his posterity. This is what the Founding
Fathers meant by the concept of rights as being “inalienable,” or, as George
Mason expressed it in his Virginia Declaration of Rights:
…all men are by nature equally free and independent, and have certain inherent
natural rights, of which when they enter into a state of society, they cannot, by any
compact, deprive or divest their posterity.2
Or, as Evers writes, “all philosophical defenses of human rights to life, liberty,
and estates…are founded upon the natural fact that each human is the proprietor of
his own will. To take rights like those of property and contractual freedom that are
based on a foundation of the absolute self-ownership of the will and then to use those
derived rights to destroy their own foundation is philosophically invalid.”3
Thus, we have seen (1) that no existing State has been immaculately con-
ceived—quite the contrary; (2) that therefore the only minimal State that could
possibly be justified is one that would emerge after a free-market anarchist world
had been established; (3) that therefore Nozick, on his own grounds, should
become an anarchist and then wait for the Nozickian invisible hand to operate
afterward, and finally (4) that even if any State had been founded immaculately,
the fallacies of social contract theory would mean that no present State, even a
minimal one, would be justified.
Let us now proceed to examine the Nozickian stages, particularly the alleged
necessity as well as the morality of the ways in which the various stages de-
234 Anarchy and the Law

velop out of the preceding ones. Nozick begins by assuming that each anarchist
protective agency acts morally and non-aggressively, that is, “attempts in good
faith to act within the limits of Locke’s law of Nature” (17).
First, Nozick assumes that each protective agency would require that each of
its clients renounce the right of private retaliation against aggression, by refusing
to protect them against counter-retaliation (15). Perhaps, perhaps not. This would
be up to the various protection agencies, acting on the market, and is certainly
not self-evident. It is certainly possible if not probable that they would be out
competed by other agencies that do not restrict their clients in that way.
Nozick then proceeds to discuss disputes between clients of different protec-
tion agencies. He offers three scenarios, on how they might proceed. But two
of these scenarios (and part of the third) involve physical battles between the
agencies. In the first place, these scenarios contradict Nozick’s own assumption
of good-faith, non-aggressive behavior by each of his agencies, since, in any
combat, clearly at least one of the agencies would be committing aggression.
Furthermore, economically, it would be absurd to expect that the protective
agencies would battle each other physically; such warfare would alienate cli-
ents and be highly expensive to boot. It is absurd to think that, on the market,
protective agencies would fail to agree in advance on private appeals courts or
arbitrators whom they would turn to, in order to resolve any dispute. Indeed, a
vital part of the protective or judicial service which a private agency or court
would offer to its clients would be that it had agreements to turn disputes over
to a certain appeals court or a certain arbitrator or group of arbitrators.
Let us turn then to Nozick’s crucial scenario 3, in which he writes that
“the two agencies…agree to resolve peacefully those cases about which they
reach differing judgments. They agree to set up, and abide by the decisions
of, some third judge or court to which they can turn when their respective
judgments differ. (Or they might establish rules determining which agency
has jurisdiction under which circumstances.)” (16) So far so good. But then
comes a giant leap: “Thus emerges a system of appeals courts and agreed
upon rules… Though different agencies operate, there is one unified federal
judicial system of which they are all components.” I submit that the “thus”
is totally illegitimate, and that the rest is a non sequitur. The fact that every
protective agency will have agreements with every other to submit disputes
to particular appeals courts or arbitrators does not imply “one unified federal
judicial system.” On the contrary, there may well be, and probably would
be, hundreds, even thousands, of arbitrators or appeals judges who would be
selected, and there is no need to consider them part of one “judicial system.”
There is no need, for example, to envision or to establish one unified Supreme
Court to decide upon disputes. Since every dispute involves only two par-
ties, there need be only one third party appeals judge or arbitrator; there are
in the United States, at the present time, for example, over 23,000 professional
arbitrators, and presumably there would be many thousands more if the present
 Nozick and the Immaculate Conception of the State 235

government court system were to be abolished. Each one of these arbitrators

could serve an appeals or arbitration function.
Nozick claims that out of anarchy there would inevitably emerge, as by an
invisible hand, one dominant protection agency in each territorial area, in which
“almost all the persons” in that area are included. But we have seen that his
major support for that conclusion is totally invalid. Nozick’s other arguments
for this proposition are equally invalid. He writes, for example, that “unlike
other goods that are comparatively evaluated, maximal competing protective
services cannot exist” (l7). Why cannot, surely a strong term? First, because
“the nature of the service brings different agencies…into violent conflict with
each other” rather than just competing for customers. But we have seen that
this conflict assumption is incorrect, first, on Nozick’s own grounds of each
agency acting non-aggressively, and, second, on his own scenario 3, that each
will enter into agreements with the others for peaceful settlement of disputes.
Nozick’s second argument for this contention is that “since the worth of the
less than maximal product declines disproportionately with the number who
purchase the maximal product, customers will not stably settle for the lesser
good, and competing companies are caught in a declining spiral.” But why?
Nozick is here making statements about the economics of a protection market
which are totally unsupported. Why is there such an “economy of scale” in
the protection business that Nozick feels will lead inevitably to a near-natural
monopoly in each geographical area? This is scarcely self-evident. On the
contrary, all the facts—and here the empirical facts of contemporary and past
history are again directly relevant—cut precisely the other way. There are, as
was mentioned above, tens of thousands of professional arbitrators in the U.S.;
there are also tens of thousands of lawyers and judges, and a large number of
private protection agencies that supply guards, night-watchmen, etc. with no
sign whatsoever of a geographical natural monopoly in any of these fields. Why
then for protection agencies under anarchism?
And, if we look at approximations to anarchist court and protective systems
in history, we again see a great deal of evidence of the falsity of Nozick’s conten-
tion. For hundreds of years, the fairs of Champagne were the major international
trade mart in Europe; a number of courts, by merchants, nobles, the Church, etc.
competed for customers; not only did no one dominant agency ever emerge, but
they did not even feel the need for appeals courts. For a thousand years ancient
Ireland, until the Cromwellian conquest, enjoyed a system of numerous jurists
and schools of jurists, and numerous protection agencies, which competed within
geographical areas without any one becoming dominant. After the fall of Rome,
various coexisting barbarian tribes peacefully adjudicated their disputes within
each area, with each tribesman coming under his own law, and with agreed-upon
peaceful adjudications between these courts and laws. Furthermore, in these days
of modern technology and low-cost transportation and communication, it would
be even easier to compete across geographical boundaries; the “Metropolitan,”
236 Anarchy and the Law

“Equitable,” and “Prudential” protection agencies, for example, could easily

maintain branch offices over a large geographical area.
In fact, there is a far better case for insurance being a natural monopoly than
protection, since a large insurance pool would tend to reduce premiums; and
yet, it is clear that there is a great deal of insurance competition and that there
would be more if it were not restricted by state regulation.
The Nozick contention that a dominant agency would develop in each geo-
graphical area, then, is an example of an illegitimate a priori attempt to decide
what the free market would do, and it is an attempt that flies in the face of
concrete historical and institutional knowledge. Certainly, a dominant protec-
tive agency could conceivably emerge in a particular geographical area, but it
is not very likely. And, as Roy Childs points out in his critique of Nozick, even
if it did, it would not likely be a “unified federal system.” Childs also correctly
points out that it is no more legitimate to lump all protective services together
and call it a unified monopoly, than it would be to be to lump all the food grow-
ers and producers on the market together and say that they have a collective
“system” or “monopoly” of food production.4
Furthermore, law and the State are both conceptually and historically sepa-
rable, and law would develop in an anarchistic market society without any form
of State. Specifically, the concrete form of anarchist legal institutions—judges,
arbitrators, procedural methods for resolving disputes, etc.—would indeed grow
by a market-invisible hand process, while the basic Law Code (requiring that no
one invade any one else’s person and property) would have to be agreed upon by
all the judicial agencies, just as all the competing judges once agreed to apply
and extend the basic principles of the customary or common law.5 But the latter,
again, would imply no unified legal system or dominant protective agency. Any
agencies that transgressed the basic libertarian code would be open outlaws and
aggressors, and Nozick himself concedes that, lacking legitimacy, such outlaw
agencies would probably not do very well in an anarchist society (17).
Let us now assume that a dominant protective agency has come into be-
ing, as unlikely as that may be. How then do we proceed, without violation of
anyone’s rights, to Nozick’s ultraminimal state? On pages 55-56 Nozick writes
of the plight of the dominant protective agency who sees the independents,
with their unreliable procedures, rashly and unreliably retaliating against its
own clients. Shouldn’t the dominant agency have the right to defend its clients
against these rash actions? Nozick claims that the dominant agency has a right
to prohibit risky procedures against its clients, and that this prohibition thereby
establishes the ultraminimal state,” in which one agency coercively prohibits
all other agencies from enforcing the rights of individuals.
There are two problems here at the very beginning. In the first place, what
has happened to the peaceful resolution of disputes that marked scenario 3?
Why can’t the dominant agency and the independents agree to arbitrate or
adjudicate their disputes, preferably in advance? Ahh, but here we encounter
 Nozick and the Immaculate Conception of the State 237

Nozick’s curious “thus” clause, which incorporated such voluntary agree-

ments into one “unified federal judicial system”: In short, if every time that
the dominant agency and the independents work out their disputes in advance,
Nozick then calls this “one agency,” then by definition he precludes the peace-
ful settlement of disputes without a move onward to the compulsory monopoly
of the ultraminimal state.
But suppose, for the sake of continuing the argument, that we grant Nozick
his question-begging definition of “one agency.” Would the dominant agency
still be justified in outlawing competitors? Certainly not, even if it wishes to
preclude fighting. For what of the many cases in which the independents are
enforcing justice for their own clients, and have nothing to do with the clients
of the dominant agency? By what conceivable right does the dominant agency
step in to outlaw peaceful arbitration and adjudication between the independents’
own clients, with no impact on its clients? The answer is no right whatsoever, so
that the dominant agency, in outlawing competitors, is aggressing against their
rights, and against the rights of their actual or potential customers. Furthermore,
as Roy Childs emphasizes, this decision to enforce their monopoly is scarcely
the action of an invisible hand; it is a conscious, highly visible decision, and
must be treated accordingly.6
The dominant agency, Nozick claims, has the right to bar “risky” activities
engaged by independent. But what then of the independents? Do they have right
to bar the risky activities of the dominant? And must not a war of all against all
again ensue in violation of scenario 3 and also necessarily engaging in some
aggression against rights along the way? Where, then, are the moral activities
of the state of nature assumed by Nozick all along? Furthermore, as Childs
points out, what about the risk involved in having a compulsory monopoly pro-
tection agency? As Childs writes: “What is to check its power? What happens
in the event of its assuming even more powers? Since it has a monopoly, any
disputes over its functions are solved and judged exclusively by itself. Since
careful prosecution procedures are costly there is every reason to assume that it
will become less careful without competition and, again, only it can judge the
legitimacy of its own procedures, as Nozick explicitly tells us.”7
Competing agencies, whether the competition be real or potential, not only
insure high-quality protection at the lowest cost, as compared to a compulsory
monopoly, but they also provide the genuine checks and balances of the market
against any one agency yielding to the temptations of being an “outlaw,” that is,
of aggressing against the persons and properties of its clients or non-clients. If
one agency among many becomes outlaw, there are others around to do battle
against it on behalf of the rights of their clients; but who is there to protect anyone
against the State, whether ultraminimal or minimal? If we may be permitted
to return once more to the historical record, the grisly annals of the crimes and
murders of the State throughout history give one very little confidence in the
non-risky nature of its activities. I submit that the risks of State tyranny are far
238 Anarchy and the Law

greater than the risks of worrying about one or two unreliable procedures of
competing defense agencies.
But this is scarcely all. For once it is permitted to proceed beyond defense
against an overt act of actual aggression, once one can use force against some-
one because of his “risky” activities, then the sky is the limit, in short there is
then virtually no limit to aggression against the rights of others. Once permit
someone’s “fear” of the “risky” activities of others to lead to coercive action, then
any tyranny becomes justified, and Nozick’s “minimal” state quickly becomes
the “maximal” State. I maintain, in fact, that there is no Nozickian stopping
point from his ultraminimal state to the maximal, totalitarian state. There is no
stopping point to so-called preventive restraint or detention. Surely Nozick’s
rather grotesque suggestion of “compensation” in the form of “resort detention
centers” is scarcely sufficient to ward off the specter of totalitarianism (142 ff).
A few examples: Perhaps the largest criminal class in the United States today are
teenage black males. The risk of this class committing crime is far greater than
any other age, gender, or color group. Why not, then, lock up all teenage black
males until they are old enough for the risk to diminish? And then I suppose we
could compensate them by giving them healthful food, clothing, playgrounds,
and teaching them a useful trade in the “resort” detention camp. If not, why not?
Example: the most important argument for Prohibition was the undoubted fact
that people commit significantly more crimes, more acts of negligence on the
highways, when under the influence of alcohol than when cold sober. So why
not prohibit alcohol, and thereby reduce risk and fear, perhaps “compensating”
the unfortunate victims of the law by free, tax-financed supplies of healthful
grape juice? Or the infamous Dr. Arnold Hutschneker’s plan of “identifying”
allegedly future criminals in the grade schools, and then locking them away
for suitable brainwashing? If not, why not? In each case, I submit that there is
only one why not, and this should be no news to libertarians who presumably
believe in inalienable individual rights: namely that no one has the right to coerce
anyone not himself directly engaged in an overt act of aggression against rights.
Any loosening of this criterion, to include coercion against remote “risks,” is to
sanction impermissible aggression against the rights of others. Any loosening
of this criterion furthermore, is a passport to unlimited despotism. Any state
founded on these principles has been conceived, not immaculately without
interfering with anyone’s rights, but by a savage act of rape.
Thus, even if risk were measurable, even if Nozick could provide us with
a cutoff point of when activities are “too” risky, his rite of passage from
dominant agency to ultraminimal state would still be aggressive, invasive, and
illegitimate. But, furthermore, as Childs has pointed out, there is no way to
measure (the probability of) such “risk,” let alone the fear, both of which are
purely subjective.8 The only risk that can be measured is in those rare situa-
tions—such as a lottery or a roulette wheel—where the individual events are
strictly homogeneous, and repeated a very large number of times. In almost all
 Nozick and the Immaculate Conception of the State 239

cases of actual human action, this condition does not apply, and so there is no
measurable cutoff point of risk.
This brings us to Williamson Evers’ extremely useful concept of the “proper
assumption of risk.” We live in a world of ineluctable and unmeasurable variet-
ies of uncertainty and risk. In a free society, possessing full individual rights,
the proper assumption of risk is by each individual over his own person and his
justly owned property. No one, then, can have the right to coerce anyone else
into reducing his risks; such coercive assumption is aggression and invasion
to be properly stopped and punished by the legal system. Of course, in a free
society, anyone may take steps to reduce risks that do not invade someone else’s
rights and property; for example, by taking out insurance, hedging operations,
performance bonding, etc. But all of this is voluntary, and none involves either
taxation or compulsory monopoly. And, as Roy Childs states, any coercive
intervention in the market’s provision for risk shifts the societal provision for
risk away from the optimal, and hence increases risk to society.9
One example of Nozick’s sanctioning aggression against property rights
is his concern (55n) with the private landowner who is surrounded by enemy
landholders who won’t let him leave. To the libertarian reply that any rational
landowner would have first purchased access rights from surrounding owners,
Nozick brings up the problem of being surrounded by such a set of numerous
enemies that he still would not be able to go anywhere. But the point is that
this is not simply a problem of landownership. Not only in the free society, but
even now, suppose that one man is so hated by the whole world that no one will
trade with him or allow him on their property. Well, then, the only reply is that
this is his own proper assumption of risk. Any attempt to break that voluntary
boycott by physical coercion is illegitimate aggression against the boycotters’
rights. This fellow had better find some friends, or at least purchase allies, as
quickly as possible.
How then does Nozick proceed from his “ultraminimal” to his “minimal”
State? He maintains that the ultraminimal state is morally bound to “compen-
sate” the prohibited, would-be purchasers of the services of independents by
supplying them with protective services—and hence the “night watchman” or
minimal state. In the first place, this decision too is a conscious and visible one,
and scarcely the process of an invisible hand. But, more importantly, Nozick’s
principle of compensation is in even worse philosophical shape, if that is pos-
sible, than his theory of risk. For, first, compensation, in the theory of punish-
ment, is simply a method of trying to recompense the victim of crime; it must
in no sense be considered a moral sanction for crime itself. Nozick asks (57)
whether property rights mean that people are permitted to perform invasive
actions “provided that they compensate the person whose boundary has been
crossed?” In contrast to Nozick, the answer must be no, in every case. As Randy
Barnett states, in his critique of Nozick, “Contrary to the principle of compen-
sation, all violations of rights are prohibited. That’s what rights means.” And,
240 Anarchy and the Law

“while voluntarily paying a purchase price makes an exchange permissible,

compensation does not make an aggression permissible or justified.”10 Rights
must not be transgressed, period, compensation being simply one method of
restitution or punishment after the fact; I must not be permitted to cavalierly
invade someone’s home and break his furniture, simply because I am prepared
to “compensate” him afterward.11
Secondly, there is no way of knowing, in any case, what the compensation
is supposed to be. Nozick’s theory depends on people’s utility scales being
constant, measurable, and knowable to outside observers, none of which is the
case.12 Austrian subjective value theory shows us that people’s utility scales
are always subject to change, and that they can neither be measured nor known
to any outside observer. If I buy a newspaper for 15 cents, then all we can say
about my value-scale is that, at the moment of purchase the newspaper was
worth more to me than the 15 cents, and that is all. That valuation can change
tomorrow, and no other part of my utility scale is knowable to others at all. (A
minor point: Nozick’s pretentious use of the “indifference curve” concept is
not even necessary for his case, and it adds still further fallacies: namely, that
indifference is never by definition exhibited in action, in actual exchanges, and
is therefore unknowable and objectively meaningless, and because an indiffer-
ence curve postulates two commodity axes—and what are the axes to Nozick’s
alleged curve?)13 But if there is no way of knowing what will make a person
as well off as before any particular change, then there is no way for an outside
observer, such as the minimal state, to discover how much compensation is
needed. The Chicago School tries to resolve this problem by simply assuming
that a person’s utility loss is measured by the money-price of the loss; so if
someone slashes my painting, and outside appraisers determine that I could
have sold it for $2000 then that is my proper compensation. But first, no one
really knows what the market price would have been, since tomorrow’s market
may well differ from yesterday’s, and second and more important, my psychic
attachment to the painting may he worth far more to me than the money price,
and there is no way for anyone to determine what that psychic attachment might
be worth: asking is invalid since there is nothing to prevent me from lying
grossly in order to drive up the “compensation.”14
Moreover, Nozick says nothing about the dominant agency compensating
its clients for the shutting down of their opportunities in being able to shift
their purchases to competing agencies. Yet their opportunities are shut off
by compulsion, and furthermore, they may well perceive themselves as
benefiting from the competitive check on the possible tyrannical impulses
of the dominant agency. But how is the extent of such compensation to be
determined? Furthermore, if compensation to the deprived clients of the
dominant agency is forgotten by Nozick, what about the dedicated anarchistic
state of nature? What about their trauma at seeing the far from immaculate
emergence of the State? Are they to he compensated for their horror at seeing
 Nozick and the Immaculate Conception of the State 241

the State emerge? And how much are they to he paid? In fact, the existence
of only one fervent anarchist who could not be compensated for the psychic
trauma inflicted on him by the emergence of the State, is enough by itself to
scuttle Nozick’s allegedly non-invasive model for the origin of the minimal
state. For that absolutist anarchist, no amount of compensation would suffice
to assuage his grief.
This brings us to another flaw in the Nozickian scheme: the curious fact
that the compensation paid by the dominant agency is paid, not in cash, but in
the extension of its sometimes dubious services to the clients of other agen-
cies. And yet, advocates of the compensation principle have demonstrated
that cash—which leaves the recipients free to buy whatever they wish—is far
better from their point of view than any compensation in kind. Yet, Nozick,
in postulating the extension of protection as the form of compensation, never
considers the cash payment alternative. In fact, for the anarchist, this form of
“compensation”—the institution of the State itself—is a grisly and ironic one
indeed. As Childs forcefully points out: Nozick “wishes to prohibit us from
turning to any of a number of competing agencies, other than the dominant
protection agency. What is he willing to offer us as compensation for being so
prohibited? He is generous to a fault. He will give us nothing less than the State.
Let me be the first to publicly reject this admittedly generous offer. But…the
point is, we can’t reject it. It is foisted upon us whether we like it or not, whether
we are willing to accept the state as compensation or not.”15
Furthermore, there is no warrant whatever, even on Nozick’s own terms, for
the minimal state’s compensating every one uniformly, as he postulates; surely,
there is no likelihood of everyone’s value-scales being identical. But then how
are the differences to be discovered and differential compensation paid?
Even confining ourselves to Nozick’s compensated people—the former or
current would-be clients of competing agencies: who are they? How can they
be found? For, on Nozick’s own terms, only such actual or would-be competing
clients need compensation. But how does one distinguish, as proper compensa-
tion must, between those who have been deprived of their desired independent
agencies and who therefore deserve compensation, and those who wouldn’t
have patronized the independents anyway and who therefore don’t need com-
pensation? By not making such distinctions, Nozick’s minimal state doesn’t
even engage in proper compensation on Nozick’s own terms.
Childs raises another excellent point on Nozick’s own prescribed form of
compensation—the dire consequences for the minimal state of the fact that the
payment of such compensation will necessarily raise the costs, and therefore
the prices charged, by the dominant agency. As Childs states:
If the minimal state must protect everyone, even those who cannot pay, and if it must
compensate those others for prohibiting their risky actions, then this must mean
that it will charge its original customers more than it would have in the case of the
ultraminimal state. But this, would, ipso facto, increase the number of those who,
242 Anarchy and the Law

because of their demand curves would have chosen non-dominant agencies…over

dominant agency-turned ultraminimal state-turned minimal state. Must the minimal
state then protect them at no charge, or compensate them for prohibiting them from
turning to the other agencies? If so, then once again it must either increase its price
to its remaining customers, or decrease its services. In either case this again produces
those who, given the nature and shape of their demand curves, would have chosen the
non-dominant agencies over the dominant agency. Must these then be compensated?
If so, then the process leads on, to the point where no one but a few wealthy fanatics
avoiding a minimal state would be willing to pay for greatly reduced services. If this
happened there is reason to believe that very soon the minimal state would be thrown
into the invisible dustbin of history, which it would, I suggest, richly deserve.16
A tangential but important point on compensation: adopting Locke’s un-
fortunate “proviso,” on homesteading property rights in unused land, Nozick
declares that no one may appropriate unused land if the remaining population
who desire access to land are “worse off” (178 ff.). But again: how do we know
if they are worse off or not? In fact, Locke’s proviso may lead to outlawry of
all private ownership of land, since one can always say that the reduction of
available land leaves everyone else, who could have appropriated the land, worse
off. In fact, there is no way of measuring or knowing when they are worse off
or not. And even if they are, I submit that that, too, is their proper assumption
of risk. Everyone should have the right to appropriate as his property previously
unowned land or other resources. If latecomers are worse off, well then that
is their proper assumption of risk in this free and uncertain world. There is no
more vast frontier in the United States, and there is no point in crying over the
fact. In fact, we can generally achieve as much “access” as we want to these
resources by paying a market price for them, but even if the owners refused to
sell or rent, that should be their right in a free society. Even Locke could nod
once in a while.17
We come now to another crucial point: that Nozick’s presumption that he
can outlaw risky activities upon compensation rests on his contention that no
one has the right to engage in “non-productive” (including risky) activities or
exchanges, and that therefore they can legitimately be prohibited.18 For Nozick
concedes that if the risky activities of others were legitimate, then prohibition
and compensation would not be valid, and that we would then be “required
instead to negotiate or contract with them whereby they agree not to do the
risky act in question. Why wouldn’t we have to offer them an incentive, or hire
them, or bribe them, to refrain from doing the act?” (83-84). In short, if not for
Nozick’s fallacious theory of illegitimate “non-productive” activities, he would
have to concede people’s rights to engage in such activities, the prohibition of
risk and compensation principles would fall to the ground, and neither Nozick’s
ultraminimal nor his minimal state could be justified.
And here we come to what we might call Nozick’s “drop dead” principle.
For his criterion of a “productive” exchange is one where each party is better
off than if the other did not exist at all; whereas a “non-productive” exchange
 Nozick and the Immaculate Conception of the State 243

is one where one party would be better off if the other dropped dead. Thus: “If
I pay you for not harming me, I gain nothing from you that I wouldn’t posses if
either you didn’t exist at all or existed without having anything to do with me”
(84). Nozick’s “principle of compensation” maintains that a “non-productive”
activity can be prohibited provided that the person is compensated by the benefit
he was forced to forego from the imposition of the prohibition.
Let us then see how Nozick applies his “non-productive” and compensation
criteria to the problem of blackmail. Nozick tries to rehabilitate the outlawry of
blackmail by asserting that “non-productive” contracts should be illegal, and
that a blackmail contract is non-productive because a blackmailee is worse off
because of the blackmailer’s very existence (84-86). In short, if blackmailer
Smith dropped dead, Jones (the blackmailee) would be better off. Or, to put
it another way, Jones is paying not for Smith’s making him better off, but for
not making him worse off. But surely the latter is also a productive contract,
because Jones is still better off making the exchange than he would have been
if the exchange were not made.
But this theory gets Nozick into very muddy waters indeed, some, though
by no means all of which, he recognizes. He concedes, for example, that his
reason for outlawing blackmail would force him also to outlaw the following
contract: Brown comes to Green, his next-door neighbor, with the following
proposition: I intend to build such-and-such a pink building on my property
(which he knows that Green will detest). I won’t build this building, however, if
you pay me x amount of money. Nozick concedes that this, too, would have to
be illegal in his schema, because Green would be paying Brown for not being
worse off, and hence the contract would be “non- productive.” In essence, that
Green would be better off if Brown dropped dead. It is difficult, however, for a
libertarian to square such outlawry with any plausible theory of property rights.
In analogy with the blackmail example above, furthermore, Nozick concedes
that it would be legal, in his schema, for Green, on finding out about Brown’s
projected pink building, to come to Brown and offer to pay him not to go ahead.
But why would such an exchange be “productive” just because Green made
the offer?19 What difference does it make who makes the offer in this situation?
Wouldn’t Green still be better off if Brown dropped dead? And again, following
the analogy, would Nozick make it illegal for Brown to refuse Green’s offer
and then ask for more money? Why? Or, again, would Nozick make it illegal
for Brown to subtly let Green know about the projected pink building and then
let nature take its course: say, by advertising in a newspaper about the building
and sending Green the clipping? Couldn’t this be taken as an act of courtesy?
And why should merely advertising something be illegal? Clearly, Nozick’s
case becomes ever more flimsy as we consider the implications.
Furthermore, Nozick has not at all considered the manifold implications of
his “drop dead” principle. If he is saying, as he seems to, that A is illegitimately
“coercing” B if B is better off should A drop dead, then consider the following
244 Anarchy and the Law

case: Brown and Green are competing at auction for the same painting which
they desire. They are the last two customers left. Wouldn’t Green be better
off if Brown dropped dead? Isn’t Brown therefore illegally coercing Green
in some way, and therefore shouldn’t Brown’s participation in the auction be
outlawed? Or, per contra, isn’t Green coercing Brown in the same manner and
shouldn’t Green’s participation in the auction be outlawed? If not, why not?
Or, suppose that Brown and Green are competing for the hand of the same girl;
wouldn’t each be better off if the other dropped dead, and shouldn’t either or
both’s participation in the courtship therefore be outlawed? The ramifications
are virtually endless.
Nozick, furthermore, gets himself into a deeper quagmire when he adds
that a blackmail exchange is not “productive” because outlawing the exchange
makes one party (the blackmailee) no worse off. But that of course is not true: as
Professor Block has pointed out, outlawing a blackmail contract means that the
blackmailer has no further incentive not to disseminate the unwelcome, hitherto
secret information about the blackmailed party. However, after twice asserting
that the victim would be “no worse off” from the outlawing of the blackmail
exchange, Nozick immediately and inconsistently concedes that “people
value a blackmailer’s silence, and pay for it.” In that case, if the blackmailer
is prohibited from charging for his silence, he need not maintain it and hence
the blackmail—payer would indeed be worse off because of the prohibition!
Nozick adds, without supporting the assertion, that “his being silent is not a
productive activity.” Why not? Apparently because “His victims would be as
well off if the blackmailer did not exist at all…” Back again to the “drop dead”
principle. But then, reversing his field once more, Nozick adds—inconsistently
with his own assertion that the blackmailer’s silence is not productive—that
“On the view we take here, a seller of such silence could legitimately charge
only for what he forgoes by silence…includ(ing) the payments others would
make to him to reveal the information.” Nozick adds that while a blackmailer
may charge the amount of money he would have received for revealing the
information, “he may not charge the best price he could get from the purchaser
of his silence” (85-86).
Thus, Nozick, waffling inconsistently between outlawing blackmail and
permitting only a price that the blackmailer could have received from selling
the information, has mired himself into an unsupportable concept of a “just
price.” Why is it only licit to charge the payment foregone? Why not charge
whatever the blackmailee is willing to pay? In the first place, both transactions
are voluntary, and within the purview of both parties’ property rights. Secondly,
no one knows, either conceptually or in practice, what price the blackmailer
could have gotten for his secret on the market. No one can predict a market
price in advance of the actual exchange. Thirdly, the blackmailer may not
only be gaining money from the exchange; he also possibly gains psychic
satisfaction—he may dislike the blackmailee, or he may enjoy selling secrets
 Nozick and the Immaculate Conception of the State 245

and therefore he may “earn” from the sale to a third party more than just a
monetary return. Here, in fact, Nozick gives away the case by conceding that
a blackmailer “who delights in selling secrets may charge differently” (86n).
But, in that case, what outside legal enforcement agency will ever be able
to discover to what extent the blackmailer delights in revealing secrets and
therefore what price he may legally charge to the “victim”? More broadly, it
is conceptually impossible ever to discover the existence or the extent of his
subjective delight or of any other psychic factors that may enter into his value-
scale and therefore into his exchange.
And fourthly, suppose that we take Nozick’s worst case, a blackmailer who
could not find any monetary price for his secret. But, if blackmail were outlawed
either totally or in Nozick’s “just price” version, the thwarted blackmailer would
simply disseminate the secrets for free—would give away the information
(Block’s “gossip or blabbermouth”). In doing so, the blackmailer would sim-
ply be exercising his right to use his body, in this case his freedom of speech.
There can be no “just price” for restricting this right, for it has no objectively
measurable value.20 Its value is subjective to the blackmailer, and his right may
not be justly restricted. And furthermore, the “protected” victim is, in this case,
surely worse off as a result of the prohibition against blackmail.21
We must conclude, then, with modern, post-medieval economic theory, that
the only “just price” for any transaction is the price voluntarily agreed upon
by the two parties. Furthermore and more broadly, we must also join modern
economic theory in labeling all voluntary exchanges as “productive,” and as
making both parties better off from making the exchange. Any good or service
voluntarily purchased by a user or consumer benefits him and is therefore “pro-
ductive” from his point of view. Hence, all of Nozick’s attempts to justify either
the outlawing of blackmail or the setting of some sort of just blackmail price
(as well as for any other contracts that sell someone’s inaction) fall completely
to the ground. But this means, too, that his attempt to justify the prohibition of
any “non-productive” activities—including risk—fails as well, and hence fails,
on this ground alone, Nozick’s attempt to justify his ultraminimal (as well as
his minimal) state.
In applying his theory to the risky, fear inducing “non-productive” activities
of independent agencies which allegedly justify the imposition of the coercive
monopoly of the ultraminimal state, Nozick concentrates on his asserted “pro-
cedural rights” of each individual, which he states is the “right to have his guilt
determined by the least dangerous of the known procedures for ascertaining guilt,
that is, by the one having the lowest probability of finding an innocent party
guilty” (96). Here Nozick adds to the usual substantive natural rights—to the use
of one’s person and justly acquired property unimpaired by violence—alleged
“procedural rights,” or rights to certain procedures for determining innocence
or guilt. But one vital distinction between a genuine and a spurious “right” is
that the former requires no positive action by anyone except non-interference.
246 Anarchy and the Law

Hence, a right to person and property is not dependent on time, space or the
number or wealth of other people in the society; Crusoe can have such a right
against Friday as can anyone in an advanced industrial society. On the other
hand, an asserted right “to a living wage” is a spurious one, since fulfilling it
requires positive action on the part of other people; as well as the existence of
enough people with a high enough wealth or income to satisfy such a claim.
Hence such a “right” cannot be independent of time, place, or the number
or condition of other persons in society. But surely a “right” to a less risky
procedure requires positive action from enough people of specialized skills to
fulfill such a claim; hence it is not a genuine right. Furthermore, such a right
cannot be deduced from the basic right of self-ownership. On the contrary,
everyone has the absolute right to defend his person and property against
invasion. The criminal has no right, on the other hand, to defend his ill-gotten
gains. But what procedure will be adopted by any group of people to defend
their rights—whether, for example, personal self-defense, or the use of courts
or arbitration agencies—depends on the knowledge and skill of the individuals
concerned. Presumably, a free market will tend to lead to most people choosing
to defend themselves with those private institutions and protection agencies
whose procedures will attract the most agreement from people in society. People
who will be willing to abide by their decisions as the most practical way of
approximating the determination of who, in particular cases, are innocent and
who are guilty. But these are matters of utilitarian discovery on the market as
to the most efficient means of arriving at self-defense, and do not imply any
such fallacious concepts as “procedural rights.”22
Finally, in a scintillating tour de force, Roy Childs, after demonstrating that
each of Nozick’s stages to the State is accomplished by a visible decision rather
than by an “invisible hand,” stands Nozick on his head by demonstrating that
the invisible hand, on Nozick’s own terms, would lead straight back from his
minimal State to anarchism. Childs writes:
Assume the existence of the minimal state. An agency arises which copies the proce-
dures of the minimal state, allows the state to sit in on its trials, proceedings, and so
forth. Under this situation, it cannot be alleged that this agency is any more “risky”
than the state. If it is still too risky, then we are also justified in saying that the state
is too risky, and in prohibiting its activities, providing we compensate those who are
disadvantaged by such prohibition. If we follow this course, the result is anarchy.
If not, then the “dominant agency”-turned minimal state finds itself competing
against an admittedly watched-over competing agency. But wait: the competing, spied
upon, oppressed second agency finds that it can charge a lower price for its services,
since the minimal state has to compensate those who would have patronized agencies
using risky procedures. It also has to pay the costs of spying on the new agency.
Since it is only morally bound to provide such compensation, it is likely to cease
doing so under severe economic pressure. This sets two processes in motion: those
formerly compensated because they would have chosen other agencies over the state,
rush to subscribe to the maverick agency, thus reasserting their old preferences. Also,
another fateful step has been taken: the once proud minimal state, having ceased
compensation, reverts to a lowly ultraminimal state.
 Nozick and the Immaculate Conception of the State 247

But the process cannot be stopped. The maverick agency must and does establish
a good record, to win clients away from the ultraminimal state. It offers a greater
variety of services, toys with different prices, and generally becomes a more attractive
alternative, all the time letting the state spy on it, checking its processes and proce-
dures. Other noble entrepreneurs follow suit. Soon, the once lowly ultraminimal state
becomes a mere dominant agency, finding that the other agencies have established a
noteworthy record, with safe, non-risky procedures, and stops spying on them, prefer-
ring less expensive agreements instead. Its executives have, alas!, grown fat and placid
without competition; their calculations of who to protect, how, by what allocation of
resources, to what ends…are adversely affected by their having formerly removed
themselves out of a truly competitive market price system. The dominant agency
grows inefficient, when compared to the new, dynamic, improved agencies.
Soon—lo! and behold—the mere dominant protection agency becomes simply
one agency among many in a market legal network. The sinister minimal state is
reduced, by a series of morally permissible steps which violate the rights of no one,
to merely one agency among many. In short, the invisible hand strikes back.23

Some final brief but important points. Nozick, in common with all other
limited government, laissez-faire theorists, has no theory of taxation: of how
much it shall be, of who shall pay it, of what kind it should be, etc. Indeed,
taxation is scarcely mentioned in Nozick’s progression of stages toward his
minimal state. It would seem that Nozick’s minimal state could only impose
taxation on the clients it would have had before it became a state, and not on
the would-be clients of competing agencies. But clearly, the existing State
taxes everyone, with no regard whatever for who they would have patronized,
and indeed it is difficult to see how they could try to find and separate these
different hypothetical groups.
Nozick also, in common with his limited government colleagues, treats “pro-
tection”—at least when preferred by his minimal state—as one collective lump.
But how much protection shall be supplied, and at what cost of resources? And
what criteria shall decide? For after all, we can conceive of almost the entire
national product being devoted to supplying each person with a tank and an
armed guard; or, we can conceive of only one policeman and one judge in an
entire country. Who decides on the degree of protection, and on what criterion?
For, in contrast, all the goods and services on the private market are produced
on the basis of relative demands and costs to the consumers on the market. But
there is no such criterion for protection in the minimal or any other State.
Moreover, as Childs points out, the minimal State that Nozick attempts to
justify is a State owned by a private, dominant firm. There is still no explanation
or justification in Nozick for the modern form of voting, democracy, checks
and balances, etc.24
Finally, a grave flaw permeates the entire discussion of rights and govern-
ment in the Nozick volume: that, as a Kantian intuitionist, he has no theory of
rights. Rights are simply emotionally intuited, with no groundwork in natural
law—in the nature of man or of the universe. At bottom, Nozick has no real
argument for the existence of rights.
248 Anarchy and the Law

To conclude: (1) no existing State has been immaculately conceived, and

therefore Nozick, on his own grounds, should advocate anarchism and then
wait for his State to develop; (2) even if any State had been so conceived,
individual rights are inalienable and therefore no existing State could be justi-
fied; (3) every step of Nozick’s invisible hand process is invalid: the process
is all too conscious and visible, and the risk and compensation principles are
both fallacious and passports to unlimited despotism; (4) there is no warrant,
even on Nozick’s own grounds, for the dominant protective agency to outlaw
procedures by independents that do not injure its own clients, and therefore it
cannot arrive at an ultraminimal state; (5) Nozick’s theory of “non-productive”
exchanges is invalid, so that the prohibition of risky activities and hence the
ultraminimal state falls on that account alone; (6) contrary to Nozick, there are
no “procedural rights,” and therefore no way to get from his theory of risk and
non-productive exchange to the compulsory monopoly of the ultraminimal state;
(7) there is no warrant, even on Nozick’s own grounds, for the minimal state
to impose taxation; (8) there is no way, in Nozick’s theory, to justify the voting
or democratic procedures of any State; (9) Nozick’s minimal state would, on
his own grounds, justify a maximal State as well; and (10) the only “invisible
hand” process, on Nozick’s own terms, would move society from his minimal
State back to anarchism.
Thus, the most important attempt in this century to rebut anarchism and to
justify the State fails totally and in each if it’s parts.
Notes
1. The Complete Writings of Thomas Paine, ed. P. Foner (New York: Citadel Press,
L945), V.I., p. 13.
2. In Robert A. Rutland, George Mason (Williamsburg, Va.: Colonial Williamsburg,
1961), p. 111.
3. Williamson M. Evers, “Toward a Reformulation of the Law of Contracts” (unpub-
lished MS.), p. 12. The great 17th-century English Leveller leader Richard Overton
wrote, “To every individual in nature is given an individual property by nature, not
to be invaded or usurped by any: for everyone as he is himself, so he hath a self
propriety, else he could not be himself…. Mine and thine cannot be, except this
be: No man hath power over my rights and liberties and I over no man’s: I may be
but an individual, enjoy myself and myself propriety.” Quoted in Sylvester Petro,
“Feudalism, Property, and Praxeology,” in S. Blumenfeld, ed., Property in a Humane
Economy (LaSalle, Ill.: Open Court. 1974). p. 162.
4. Roy Childs, “The Invisible Hand Strikes Back,” Journal of Libertarian Studies,
pp. 23-33.
5. Cf. Bruno Leoni, Freedom and the Law (Los Angeles: Nash Publishing, 1972) and
F. A. Hayek, Law, Legislation, and Liberty, Vol. I (Chicago: University of Chicago
Press, 1973).
6. Childs, “The Invisible Hand Strikes Back,” pp. 23-33.
7. Ibid.
8. Ibid.
9. Ibid.
 Nozick and the Immaculate Conception of the State 249

10. Randy Barnett. “Whither Anarchy? Has Robert Nozick Justified the State?” The
Libertarian Forum (December 1975), p. 5.
11. Nozick, furthermore, compounds the burdens on the victim by compensating him
only for actions that respond “adaptively” to the aggression (58).
12. Nozick explicitly assumes the measurability of utility (58).
13. I am indebted for this latter point to Mr. Roger Garrison of the economics depart-
ment, University of Virginia.
14. Nozick also employs the concept of “transaction costs” and other costs in arriv-
ing at what activities may be prohibited with compensation. But this is invalid on
the same grounds, i.e. that transaction and other costs are all subjective to each
individual and not objective, and hence are unknowable by any outside observer.
15. Childs, “The Invisible Hand Strikes Back,” pp. 23-33.
16. Ibid.
17. Nozick also reiterates Hayek’s position on charging for the use of one’s solitary
waterhole (180).
18. See Barnett, “Whither Anarchy?” pp. 4-5
19. Nozick doesn’t answer this crucial question; he only asserts that this “will be a
productive exchange” (84, 340n16). Ironically, Nozick was apparently forced into
this retreat—conceding the “productivity” of the exchange if Green makes the of-
fer—by the arguments of Professor Ronald Hamowy: ironic because Hamowy has
also delivered a devastating critique of a somewhat similar definition of coercion
by Professor Hayek.
20. See Barnett, “Whither Anarchy?” pp. 4-5.
21. Nozick compounds his fallacies by going on to liken the blackmailer to a “protection
racketeer,” pointing out that, whereas protection is productive, selling someone “the
racketeers’ mere abstention from harming you” is not (86). But the “harm” threatened
by the protection racketeer is not the exercise of free speech but aggressive violence,
and the threat to commit aggressive violence is itself aggression. Here the differ-
ence is not the fallacies “productive vs. nonproductive” but between “voluntary”
and “coercive” or “invasive”—the very essence of the libertarian philosophy. As
professor Block points out, “In aggression, what is being threatened is aggressive
violence, something that the blackmailer most certainly does have a right to do! To
exercise his right of free speech, to gossip about our secrets…” Walter Block, “The
Blackmailer as Hero,” Libertarian Forum (December 1972), p. 3.
22. For an excellent and detailed critique of Nozick’s concept of “procedural rights,”
see Barnett, “Whither Anarchy?” pp. 2-4. Professor Jeffrey Paul has also shown
that any concept of “procedural rights” implies a “right” of some other procedure
to arrive at such procedures, and this in turn implies another set of “rights” for
methods of deciding on those procedures, and so on to an infinite regress. Paul,
“Comment on Barnett” (unpublished MS.).
23. Childs, “The Invisible Hand Strikes Back,” pp. 23-33.
24. Ibid.
 13
Objectivism and the State:
An Open Letter to Ayn Rand
Roy A. Childs, Jr.
Dear Miss Rand:
The purpose of this letter is to convert you to free market anarchism. As far
as I can determine, no one has ever pointed out to you in detail the errors in your
political philosophy. That is my intention here. I attempted this task once before,
in my essay “The Contradiction in Objectivism,” in the March 1968 issue of the
Rampart Journal, but I now think that my argument was ineffective and weak,
not emphasizing the essentials of the matter. I will remedy that here.
Why am I making such an attempt to convert you to a point of view which
you have, repeatedly, publicly condemned as a floating abstraction? Because
you are wrong. I suggest that your political philosophy cannot be maintained
without contradiction, that, in fact, you are advocating the maintenance of an
institution—the state—which is a moral evil. To a person of self-esteem, these
are reasons enough.
There is a battle shaping up in the world—a battle between the forces of
archy—of statism, of political rule and authority—and its only alternative—an-
archy, the absence of political rule. This battle is the necessary and logical con-
sequence of the battle between individualism and collectivism, between liberty
and the state, between freedom and slavery. As in ethics there are only two sides
to any question—the good and the evil—so too are there only two logical sides
to the political question of the state: either you are for it, or you are against it.
Any attempt at a middle ground is doomed to failure, and the adherents of any
middle course are doomed likewise to failure and frustration—or the blackness
of psychological destruction, should they blank out and refuse to identify the
causes of such failure, or the nature of reality as it is.
There are, by your framework, three alternatives in political organization:
statism, which is a governmental system wherein the government initiates force
to attain its ends; limited government, which holds a monopoly on retaliation
but does not initiate the use or threat of physical force; and anarchy, a society
wherein there is no government, government being defined by you as “an institu-
tion that holds the exclusive power to enforce certain rules of social conduct in
a given geographical area.” You support a limited government, one which does
not initiate the use or threat of physical force against others.

250
 Objectivism and the State: An Open Letter to Ayn Rand 251

It is my contention that limited government is a floating abstraction which has

never been concretized by anyone; that a limited government must either initiate
force or cease being a government; that the very concept of limited government
is an unsuccessful attempt to integrate two mutually contradictory elements:
statism and voluntarism. Hence, if this can be shown, epistemological clarity
and moral consistency demands the rejection of the institution of government
totally, resulting in free market anarchism, or a purely voluntary society.
Why is a limited government a floating abstraction? Because it must either
initiate force or stop being a government. Let me present a brief proof of this.
Although I do not agree with your definition of government and think that it
is epistemologically mistaken (i.e., you are not identifying its fundamental, and
hence essential, characteristics), I shall accept it for the purpose of this critique.
One of the major characteristics of your conception of government is that it
holds a monopoly on the use of retaliatory force in a given geographical area.
Now, there are only two possible kinds of monopolies: a coercive monopoly,
which initiates force to keep its monopoly, or a non-coercive monopoly, which
is always open to competition. In an Objectivist society, the government is not
open to competition, and hence is a coercive monopoly.
The quickest way of showing why it must either initiate force or cease being
a government is the following: Suppose that I were distraught with the service of
a government in an Objectivist society. Suppose that I judged, being as rational
as I possibly could, that I could secure the protection of my contracts and the
retrieval of stolen goods at a cheaper price and with more efficiency. Suppose I
either decide to set up an institution to attain these ends, or patronize one which
a friend or a business colleague has established. Now, if he succeeds in setting
up the agency, which provides all the services of the Objectivist government, and
restricts his more efficient activities to the use of retaliation against aggressors,
there are only two alternatives as far as the “government” is concerned: (a) It
can use force or the threat of it against the new institution, in order to keep its
monopoly status in the given territory, thus initiating the use of threat of physi-
cal force against one who has not himself initiated force. Obviously, then, if it
should choose this alternative, it would have initiated force. Q.E.D. Or: (b) It
can refrain from initiating force, and allow the new institution to carry on its
activities without interference. If it did this, then the Objectivist “government”
would become a truly marketplace institution, and not a “government” at all.
There would be competing agencies of protection, defense and retaliation—in
short, free market anarchism.
If the former should occur, the result would be statism. It is important to
remember in this context that statism exists whenever there is a government
which initiates force. The degree of statism, once the government has done so,
is all that is in question. Once the principle of the initiation of force has been
accepted, we have granted the premise of statists of all breeds, and the rest, as
you have said so eloquently, is just a matter of time.
252 Anarchy and the Law

If the latter case should occur, we would no longer have a government, prop-
erly speaking. This is, again, called free market anarchism. Note that what is
in question is not whether or not, in fact, any free market agency of protection,
defense or retaliation is more efficient than the former “government.” The point is
that whether it is more efficient or not can only be decided by individuals acting
according to their rational self-interest and on the basis of their rational judg-
ment. And if they do not initiate force in this pursuit, then they are within their
rights. If the Objectivist government, for whatever reason, moves to threaten or
physically prevent these individuals from pursuing their rational self-interest, it
is, whether you like it or not, initiating the use of physical force against another
peaceful, nonaggressive human being. To advocate such a thing is, as you have
said, “to evict oneself automatically from the realm of rights, of morality, and
of the intellect.” Surely, then, you cannot be guilty of such a thing.
Now, if the new agency should in fact initiate the use of force, then the for-
mer “government”-turned-marketplace-agency would of course have the right
to retaliate against those individuals who performed the act. But, likewise, so
would the new institution be able to use retaliation against the former “govern-
ment” if that should initiate force.
I shall cover some of your major “justifications” for government, pointing
out your logical flaws, but first let us get one thing very clear: as far as I can
determine, I have absolutely and irrefutably shown that government cannot exist
without initiating force, or at least threatening to do so, against dissenters. If this
is true, and if sanctioning any institution which initiates force is a moral evil,
then you should morally withdraw all sanction from the U.S. government, in
fact, from the very concept of government itself. One does not have an obliga-
tion to oppose all evils in the world, since life rationally consists of a pursuit
of positives, not merely a negation of negatives. But one does, I submit, have a
moral obligation to oppose a moral evil such as government, especially when
one had previously come out in favor of such an evil.
Note also that the question of how free market anarchism would work is
secondary to establishing the evil of government. If a limited government,
i.e., a non-statist government, is a contradiction in terms, then it cannot be
advocated—period. But since there is no conflict between the moral and the
practical, I am obliged to briefly sketch how your objections to free market
anarchism are in error.
I do not intend to undertake a full “model” of a free market anarchist society,
since I, like yourself, truly cannot discuss things that way. I am not a social
planner and again, like yourself, do not spend my time inventing Utopias. I am
talking about principles whose practical applications should be clear. In any
case, a much fuller discussion of the technical aspects of the operation of a fully
voluntary, nonstatist society is forthcoming, in the opening chapter of Murray
N. Rothbard’s follow-up volume to his masterly two-volume economic treatise,
Man, Economy, and State, to be entitled Power and Market, and in Morris and
 Objectivism and the State: An Open Letter to Ayn Rand 253

Linda Tannehill’s book, which will hopefully be published soon, to be entitled

The Market for Liberty. The latter takes up the problem where Murray Roth-
bard leaves off, and discusses the problems in detail. A chapter from this book,
incidentally, entitled “Warring Defense Agencies and Organized Crime,” will
appear in the Libertarian Connection #5, and a short statement of the authors’
position is presented in their pamphlet “Liberty Via the Market.”
To make consideration of your errors easier, I shall number them and pres-
ent the outline of possible replies to your major, and hence essential, points, as
presented in your essay, “The Nature of Government.”
1. “If a society provided no organized protection against force, it would
compel every citizen to go about armed, to turn his home into a fortress, to
shoot any strangers approaching his door,” etc.
This is a bad argument. One could just as easily assert that if “society”
(subsuming whom?) provided no organized way of raising food, it would
compel every citizen to go out and raise vegetables in his own backyard, or to
starve. This is illogical. The alternative is most emphatically not either we have
a single, monopolistic governmental food-growing program or we have each
man growing his own food, or starving. There is such a thing as the division
of labor, the free market—and that can provide all the food man needs. So too
with protection against aggression.
2. “The use of physical force—even its retaliatory use—cannot be left at the
discretion of individual citizens.”
This contradicts your epistemological and ethical position. Man’s mind—
which means: the mind of the individual human being—is capable of knowing
reality, and man is capable of coming to conclusions on the basis of his rational
judgment and acting on the basis of his rational self-interest. You imply, without
stating it, that if an individual decides to use retaliation, that that decision is
somehow subjective and arbitrary. Rather, supposedly the individual should
leave such a decision up to government which is—what? Collective and there-
fore objective? This is illogical. If man is not capable of making these deci-
sions, then he isn’t capable of making them, and no government made up of
men is capable of making them, either. By what epistemological criterion is an
individual’s action classified as “arbitrary,” while that of a group of individuals
is somehow “objective”?
Rather, I assert that an individual must judge, and evaluate the facts of reality
in accordance with logic and by the standard of his own rational self-interest.
Are you here claiming that man’s mind is not capable of knowing reality? That
men must not judge, or act on the basis of their rational self-interest and percep-
tion of the facts of reality? To claim this is to smash the root of the Objectivist
philosophy: the validity of reason, and the ability and right of man to think and
judge for himself.
I am not, of course, claiming that a man must always personally use retali-
ation against those who initiate such against him—he has the right, though
254 Anarchy and the Law

not the obligation, to delegate that right to any legitimate agency. I am merely
criticizing your faulty logic.
3. “The retaliatory use of force requires objective rules of evidence to estab-
lish that a crime has been committed and to prove who committed it, as well as
objective rules to define punishments and enforcement procedures.”
There is indeed a need for such objective rules. But look at the problem this
way: there is also a need for objective rules in order to produce a ton of steel,
an automobile, an acre of wheat. Must these activities, too, therefore be made
into a coercive monopoly? I think not. By what twist of logic are you suggest-
ing that a free market would not be able to provide such objective rules, while
a coercive government would? It seems obvious that man needs objective rules
in every activity of his life, not merely in relation to the use of retaliation. But,
strange as it may seem, the free market is capable of providing such rules. You
are, it seems to me, blithely assuming that free market agencies would not have
objective rules, etc., and this without proof. If you believe this to be the case,
yet have no rational grounds for believing such, what epistemological practice
have you smuggled into your consciousness?
4. “All laws must be objective (and objectively justifiable): Men must know
clearly, and in advance of taking an action, what the law forbids them to do
(and why), what constitutes a crime and what penalty they will incur if they
commit it.”
This is not, properly speaking, an objection to anarchism. The answer to this
problem of “objective laws” is quite easy: all that would be forbidden in any
voluntary society would be the initiation of physical force, or the gaining of
a value by any substitute thereof, such as fraud. If a person chooses to initiate
force in order to gain a value, then by his act of aggression, he creates a debt
which he must repay to the victim, plus damages. There is nothing particularly
difficult about this, and no reason why the free market could not evolve institu-
tions around this concept of justice.
5. We come to the main thrust of your attack on free market anarchism on
pages 112-113 of the paperback edition of The Virtue of Selfishness, and I will
not quote the relevant paragraph here.
Suffice it to say that you have not proven that anarchy is a naive floating
abstraction, that a society without government would be at the mercy of the
first criminal to appear—(which is false, since market protection agencies
could perform more efficiently the same service as is supposedly provided by
“government”), and that objective rules could not be observed by such agen-
cies. You would not argue that since there are needs for objective laws in the
production of steel, therefore the government should take over that activity.
Why do you argue it in the case of protection, defense and retaliation? And if
it is the need for objective laws which necessitates government, and that alone,
we can conclude that if a marketplace agency can observe objective laws, as
can, say, marketplace steel producers, then there is, in fact, really no need for
government at all.
 Objectivism and the State: An Open Letter to Ayn Rand 255

We “younger advocates of freedom,” incidentally, are not “befuddled” by our

anarchist theory. The theory which we advocate is not called “competing gov-
ernments,” of course, since a government is a coercive monopoly. We advocate
competing agencies of protection, defense, and retaliation; in short, we claim
that the free market can supply all of man’s needs—including the protection and
defense of his values. We most emphatically do not accept the basic premise of
modern statists, and do not confuse force and production. We merely recognize
protection, defense and retaliation for what they are: namely, scarce services
which, because they are scarce, can be offered on a market at a price. We see
it as immoral to initiate force against another to prevent him from patronizing
his own court system, etc. The remainder of your remarks in this area are un-
worthy of you. You misrepresent the arguments of Murray Rothbard and others,
without even identifying them by name so that those who are interested can
judge the arguments by going to their source. Since we understand the nature
of government, we advocate no such thing as competing governments; rather,
we advocate the destruction or abolition of the state, which, since it regularly
initiates force, is a criminal organization. And, incidentally, the case for com-
peting courts and police has been concretized—by the individualist anarchist
Benjamin R. Tucker, over 80 years ago, by Murray Rothbard, and by a host of
other less prominent theorists.
Let us take up your example of why competing courts and police suppos-
edly cannot function.
Suppose Mr. Smith, a customer of Government A, suspects that his next-door
neighbor, Mr. Jones, a customer of Government B, has robbed him; a squad
of Police A proceeds to Mr. Jones’ house and is met at the door by a squad
of Police B, who declare that they do not accept the validity of Mr. Smith’s
complaint and do not recognize the authority of Government A. What happens
then? You take it from there.
Unfortunately, though this poses as a convincing argument, it is a straw man,
and is about as accurate a picture of the institutions pictured by free market
anarchists as would be my setting up Nazi Germany as an historical example
of an Objectivist society.
The main question to ask at this point is this: do you think that it would be
in the rational self-interest of either agency to allow this to happen, this fighting
out conflicts in the streets, which is what you imply? No? Then what view of
human nature does it presuppose to assume that such would happen anyway?
One legitimate answer to your allegations is this: since you are, in effect,
asking “what happens when the agencies decide to act irrationally?” allow me
to ask the far more potent question: “What happens when your government acts
irrationally?”—which is at least possible. And which is more likely, in addition,
to occur: the violation of rights by a bureaucrat or politician who got his job by
fooling people in elections, which are nothing but community-wide opinion-
mongering contests (which are, presumably, a rational and objective manner of
selecting the best people for a job), or the violation of rights by a hard-nosed
256 Anarchy and the Law

businessman, who has had to earn his position? So your objection against compet-
ing agencies is even more effective against your own “limited government.”
Obviously, there are a number of ways in which such ferocious confrontations
can be avoided by rational businessmen: there could be contracts or “treaties”
between the competing agencies providing for the peaceful ironing out of dis-
putes, etc., just to mention one simplistic way. Do you see people as being so
blind that this would not occur to them?
Another interesting argument against your position is this: there is now
anarchy between citizens of different countries, i.e., between, say, a Canadian
citizen on one side of the Canadian-American border and an American citizen
on the other. There is, to be more precise, no single government which presides
over both of them. If there is a need for government to settle disputes among
individuals, as you state, then you should look at the logical implications of
your argument: is there not then a need for a super-government to resolve
disputes among governments? Of course the implications of this are obvious:
theoretically, the ultimate end of this process of piling government on top of
government is a government for the entire universe. And the practical end, for
the moment, is at the very least world government.
Also, you should be aware of the fact that just as conflicts could conceiv-
ably arise between such market agencies, so could they arise between govern-
ments—which is called war, and is a thousand times more terrible. Making a
defense agency a monopoly in a certain area doesn’t do anything to eliminate
such conflicts, of course. It merely makes them more awesome, more destructive,
and increases the number of innocent bystanders who are harmed immensely.
Is this desirable?
Suffice it to say that all of your arguments against free market anarchism are
invalid; and hence, you are under the moral obligation, since it has been shown
that government cannot exist without initiating force, to adopt it. Questions of
how competing courts could function are technical questions, not specifically
moral ones. Hence, I refer you to Murray Rothbard and Morris G. Tannehill,
who have both solved the problem.
In the future, if you are interested, I will take up several other issues sur-
rounding your political philosophy, such as a discussion of the epistemological
problems of definition and concept formation in issues concerning the state, a
discussion of the nature of the U.S. Constitution, both ethically and historically,
and a discussion of the nature of the Cold War. I believe that your historical
misunderstanding of these last two is responsible for many errors in judgment,
and is increasingly expressed in your commentaries on contemporary events.
Finally, I want to take up a major question: why should you adopt free
market anarchism after having endorsed the political state for so many years?
Fundamentally, for the same reason you gave for withdrawing your sanction
from Nathaniel Branden in an issue of The Objectivist: namely, you do not fake
reality and never have. If your reputation should suffer with you becoming a
 Objectivism and the State: An Open Letter to Ayn Rand 257

total voluntarist, a free market anarchist, what is that compared with the pride
of being consistent—of knowing that you have correctly identified the facts of
reality, and are acting accordingly? A path of expedience taken by a person of
self-esteem is psychologically destructive, and such a person will find himself
either losing his pride or committing that act of philosophical treason and
psychological suicide which is blanking out, the willful refusal to consider an
issue, or to integrate one’s knowledge. Objectivism is a completely consistent
philosophical system you say—and I agree that it is potentially such. But it will
be an Objectivism without the state.
And there is the major issue of the destructiveness of the state itself. No one
can evade the fact that, historically, the state is a bloodthirsty monster, which
has been responsible for more violence, bloodshed and hatred than any other
institution known to man. Your approach to the matter is not yet radical, not
yet fundamental: it is the existence of the state itself which must be challenged
by the new radicals. It must be understood that the state is an unnecessary evil,
that it regularly initiates force, and in fact attempts to gain what must rationally
be called a monopoly of crime in a given territory. Hence, government is little
more, and has never been more, than a gang of professional criminals. If, then,
government has been the most tangible cause of most of man’s inhumanity to
man, let us, as Morris Tannehill has said, “identify it for what it is instead of
attempting to clean it up, thus helping the statists to keep it by preventing the
idea that government is inherently evil from becoming known…. The ‘sacred
cow’ regard for government (which most people have) must be broken! That
instrument of sophisticated savagery has no redeeming qualities. The free market
does; let’s redeem it by identifying its greatest enemy—the idea of government
(and its ramifications).”
This is the only alternative to continuing centuries of statism, with all quib-
bling only over the degree of the evil we will tolerate. I believe that evils should
not be tolerated—period. There are only two alternatives, in reality: political
rule, or archy, which means: the condition of social existence wherein some
men use aggression to dominate or rule another, and anarchy, which is the
absence of the initiation of force, the absence of political rule, the absence of
the state. We shall replace the state with the free market, and men shall for the
first time in their history be able to walk and live without fear of destruction
being unleashed upon them at any moment—especially the obscenity of such
destruction being unleashed by a looter armed with nuclear weapons and nerve
gases. We shall replace statism with voluntarism: a society wherein all man’s
relationships with others are voluntary and uncoerced. Where men are free to
act according to their rational self-interest, even if it means the establishment
of competing agencies of defense.
Let me then halt this letter by repeating to you those glorious words with
which you had John Galt address his collapsing world: “Such is the future
you are capable of winning. It requires a struggle; so does any human value.
258 Anarchy and the Law

All life is a purposeful struggle, and your only choice is the choice of a goal.
Do you wish to continue the battle of your present, or do you wish to fight for
my world?… Such is the choice before you. Let your mind and your love of
existence decide.”
Let us walk forward into the sunlight, Miss Rand. You belong with us.
Yours in liberty,
R.A. Childs, Jr.
cc: Nathaniel Branden, Leonard Peikoff, Robert Hessen, Murray N. Roth-
bard
P.S. I would like to thank Murray Morris and Joe Hoffman for their advice
and suggestions.—R.A.C., Jr.
 14
Do We Ever Really Get Out of Anarchy?1
Alfred G. Cuzán
Introduction

A major point of dispute among libertarian theorists and thinkers today as

always revolves around the age-old question of whether man can live in total
anarchy or whether the minimal state is absolutely necessary for the maximiza-
tion of freedom. Lost in this dispute is the question of whether man is capable
of getting out of anarchy at all. Can we really abolish anarchy and set up a Gov-
ernment in its place? Most people, regardless of their ideological preferences,
simply assume that the abolition of anarchy is possible, that they live under
Government, and that anarchy would be nothing but chaos and violence.2
The purpose of this paper is to question this venerated assumption and to
argue that the escape from anarchy is impossible, that we always live in anarchy,
and that the real question is what kind of anarchy we live under, market anarchy
or non-market (political) anarchy.3 Further, it is argued that political anarchies are
of two types—hierarchical or plural. The more pluralist political anarchy is, the
more it resembles market anarchy. The performance of hierarchical and plural
anarchies is evaluated in terms of their ability to minimize the level of force in
society. It is shown that plural anarchies are much less violent than hierarchi-
cal anarchies. We conclude that the real question libertarians must solve is not
whether minimalism or anarchy, but which type of anarchy, market or political,
hierarchical or plural, is most conducive to the maximization of freedom.
I
Anarchy is a social order without Government, subject only to the economic
laws of the market.4 Government is an agent external to society, a “third party”
with the power to coerce all other parties to relations in society into accepting
its conceptions of those relations. The idea of Government as an agent external
to society is analogous to the idea of God as an intervener in human affairs. For
an atheist, a good analogy might be to assume that omnipotent Martians fill the
role we usually ascribe to Government, i.e., an external designer and enforcer
of rules of behavior by which everyone subject to those rules must abide.5
However, that the idea of Government exists is no proof of its empirical ex-
istence.6 Few of us would be convinced by an argument such as: “I believe the

259
260 Anarchy and the Law

idea of God is possible, therefore God exists.” Yet such is the structure of the
argument which underlies all assumptions about the existence of Government.
That societies may have some form of organization they call the “government”
is no reason to conclude that those “governments” are empirical manifestations
of the idea of Government.
A closer look at these earthly “governments” reveals that they do not get us
out of anarchy at all. They simply replace one form of anarchy by another and
hence do not give us real Government. Let’s see how this is so.
Wherever earthly “governments” are established or exist, anarchy is offi-
cially prohibited for all members of society, usually referred to as subjects or
citizens. They can no longer relate to each other on their own terms—whether
as merchants at a port or a vigilante unit and its prey in the open desert or the
streets of Newark, N.J. Rather, all members of society must accept an external
“third party”—a government—into their relationships, a third party with the
coercive powers to enforce its judgments and punish detractors.
For example, when a thief steals my wallet at a concert, I am legally required
to rely on the services of members of a third party to catch him (policemen),
imprison him (jailers), try him (prosecutors, judges, even “public” defenders),
judge him (trial by a group of individuals coerced into jury duty by the courts),
and acquit or punish him (prisons, hangmen). At most, I am legally authorized
to catch him, but I am prohibited from settling the account myself. Such pro-
hibitions have reached tragi-comic proportions, as when government punishes
victims of crime for having defended themselves beyond the limits authorized
by “law.” 7 In short, I or any other citizen or subject must accept the rulings of
government in our relations with others. We are required to abide by the law
of this “third party.”
However, such a “third party” arrangement for society is non-existent among
those who exercise the power of government themselves. In other words,
there is no “third party” to make and enforce judgments among the individual
members who make up the third party itself. The rulers still remain in a state
of anarchy vis-à-vis each other. They settle disputes among themselves, without
regard for a Government (an entity outside themselves). Anarchy still exists.
Only whereas without government it was market or natural anarchy, it is now
a political anarchy, an anarchy inside power.8 Take, for example, the rulers of
our own Federal government. It is a group composed of congressmen, judges,
a president and a vice-president, top level bureaucrats in civilian and military
agencies, and their armies of assistants who together oversee the work of the
millions of public employees who man the several Federal bureaucracies. These
individuals together make and enforce laws, edicts, regulations and vast arrays
of orders of all kinds by which all members of society must abide.
Yet, in their relations among each other, they remain largely “lawless.” No-
body external to the group writes and enforces rules governing the relations
among them. At most, the rulers are bound by flexible constraints imposed
by a “constitution” which they, in any case, interpret and enforce among and
 Do We Ever Really Get Out of Anarchy? 261

upon themselves. The Supreme Court, after all, is only a branch of the govern-
ment, composed of people appointed by and subjected to pressures from other
members of the government. Moreover, their decisions are enforced by some
other branch of the government, the executive, over whom the judges have no
power, only authority. Further, the Congress, through vocal pressures and the
manipulation of budgetary allocations to the judiciary, also exercises pressures
which the judges must contend with. Similarly, congressmen have no “third
party” arbiters either among themselves or in their relations with the executive.
Furthermore, even the various federal bureaucracies and all their component
parts are without a “third party” to govern their relations, internally or externally.
In short, looking inside the government reveals that the rulers remain in a state
of anarchy among themselves. They live in a political anarchy.9
The anarchic relations of government officials can be illustrated in the
following example: Suppose that a congressman manages to divert streams
of moneys from the government’s flows to his private estate. This is a crime,
theft, the stealing of money. But from whom? From you or me? Only in the
sense that we were coerced into contributing to the public treasury which the
congressman viewed as booty. It was no longer ours; it belonged to someone
else. But who? Why, the members of the government who have the power to
allocate those flows of resources.
In short, the congressman stole from other government officials, congress-
men, bureaucrats, a president, etc. But what is done about the crime? Is the
congressman publicly accused, indicted, and tried for his crime like an ordinary
citizen who steals from another citizen? Sometimes; but what usually happens
is a flurry of political maneuverings at high levels; mutual threats are delivered
behind closed doors and forces marshaled against each other; occasional battles
take place in which either reputations are destroyed, money changes hands, or
resource flows or access to them are altered.
The hue and cry is soon forgotten, the congressman receives a “clean bill
of health” by the prosecution, or the charges are dismissed or not pressed, and
the congressman wins reelection at the polls. Occasionally, if the infractor was
a weak or declining public figure, or one much hated by his colleagues, he
is brought before the courts, tried, and given a minimal or even a suspended
sentence. In most instances, small fish near the bottom of the bureaucracies are
sacrificed for the crimes higher-ups directed, profited from or sanctioned. But
make no mistake: no “third party,” no Government, ever made or enforced a
judgment. The rulers of the government themselves literally took the law into
their own hands and produced what outside the government would be considered
“vigilante justice.”10
In short, society is always in anarchy. A government only abolishes anarchy
among what are called “subjects” or “citizens,” but among those who rule,
anarchy prevails.
Figure 1 illustrates this situation. The circle on the left shows a state of true or
market or natural anarchy, in which all members of society relate to each other
262 Anarchy and the Law

in strictly bilateral transactions without third party intervention. The circle on

the right shows the situation prevalent under government. In the higher com-
partment we see individuals whose relations among each other are no longer
bilateral. All relations are legally “triangular,” in that all members of society
are forced to accept the rule of government in their transactions. However, in
the lower compartment, inside the “government” itself, relations among the
rulers remain in anarchy.11
Figure 1

b c
b
a d

a c G

d e g
f

II
Having shown that anarchy is not completely abolished by government
but reserved, so to speak, for the rulers only, among whom it is the prevail-
ing condition, it is proper to inquire whether this is beneficial for society. Its
proponents and defenders claim that without government society would be in
a state of intolerable violence. Thus it is logical to inquire whether the effect
of government is to increase, reduce, or in no way affect the level of violence
in society.
Is political anarchy less violent than natural or market anarchy? Minimalists
argue that it is, provided government is strictly confined to the role of acting
as a third party in property disputes. While government necessarily involves
the use of limited violence, minimalists say, the level of violence in a minimal
state would be lower than that in natural anarchy.
Figure 2 illustrates the minimalist idea. By providing the amount of govern-
ment of the minimal state, the level of violence in society drops below the level
in natural anarchy. Presumably, judging from the vociferous anti-intervention-
ist stand of the minimalists, if government grows beyond the size of a limited
state, either there are no further gains in reducing violence—and thus more
government is pointless and costly in other ways—and/or beyond a certain size
the level of violence in society rises to meet or perhaps surpass the amount of
natural violence. (See Figure 3.)
 Do We Ever Really Get Out of Anarchy? 263

Figure 2
violence

Va

Vmg

gov.
anarchy min. gov.
Figure 3*
violence
Va

Vmg

gov.
anarchy min. gov.

*Broken lines represent possible effects on violence from enlarging government beyond the
minimal state.

That violence under political anarchy might exceed the violence of market
anarchy is not inconceivable.12 Hitler’s concentration camps and Stalin’s Gulags
are evidence of violence in such proportions that one could hardly venture to say
that natural anarchy would be worse than that. Similarly, the political anarchy
of nation-states has produced interstate violence on such a scale that it must
give pause even to the most devoted disciple of Hobbes.13
A third view is possible and theoretically the most interesting. This view
says that the relation between government (the substitution of political for
market anarchy) and violence, is qualified by a third element, the structure
of the government, measured along a centralization dimension. The more
authoritative powers are dispersed among numerous political units, the more
pluralistic the government. The more centralized the structure, i.e., the more
authoritative powers are concentrated, the more hierarchical the government.
Note that the more hierarchical the government, the more government is run
264 Anarchy and the Law

on the assumption of an ultimate arbiter. In other words, the more centralized

the structure, the greater the effort to create a single “third party” inside the
government itself in the form of a God-like figure such as a Hitler, Stalin, Mao
or Castro. Such a “third party,” however, remains in complete anarchy from the
rest of his countrymen and the rest of the world.14
The more plural the politics of a country, the more the rulers behave without
any reference to a “third party” and thus the more society resembles natural
anarchy. The less plural or more hierarchical the politics of a country, the more
society appears to be ruled by a truly “external” element, a god-like figure sent
from the heavens of history, religion or ideology.
A cursory glance at contemporary societies and recent history shows that,
empirically, it is precisely those societies ruled by such earthly personifications
of Government where the level of violence in the form of political repression,
coercion and intimidation is highest. In contrast, violence is lowest in societies
with highly pluralistic politics, such as Switzerland. This is true even in the “com-
munist” world: the more pluralistic communist politics of Poland or Yugoslavia
are less violent than the more hierarchical politics of the Soviet Union. Similarly,
in the Western world, the more pluralistic politics of the United States are less
violent than those of Italy, where politics are much more hierarchical.15
But why would the degree of centralization determine whether political
anarchy is violent in hierarchical states such as China or Cuba, and relatively
peaceful in pluralist states such as India and Costa Rica? The answer may
simply lie in the fact that centralized states are more likely to make mistakes
than decentralized states.16 Political mistakes are in the form of wrong or false
conceptions about the nature of bilateral relations in society and in politics, such
as conceptions held about the relation between worker and capitalist in com-
munist states. If judgments are wrong, they are not voluntarily accepted by one
or both of the parties to the transactions. Under those conditions, the only way
for the rulers to enforce their “third party” conceptions is to use force, which,
under different conditions, will or will not be resisted by the opposition.
In a pluralist government, wrong conceptions about bilateral relations in
society are less likely to occur. This is because there are numerous units inde-
pendently interacting with each other and with the citizens and subjects, so that
more and better information about the effect of these judgments on bilateral
relations exist. Moreover, wrong conceptions are more easily checked as various
autonomous political units, each capable of marshaling political resources of
their own, confront each other in a successive series of political transactions.
In a hierarchical government, however, not even the members of the gov-
ernment are permitted to settle disputes among themselves. All relations are
subjected to the judgment of some supreme leader. Such a leader must maintain
a vast network of spies and enforcers to accomplish such a superhuman feat. Of
course, one man’s ability to control the behavior of others is quite limited, and
so even in Hitler’s Germany, truly Machiavellian, feudalistic deals were made
right under the Fuhrer’s nose. Naturally, such arrangements were prohibited so
 Do We Ever Really Get Out of Anarchy? 265

everyone lived in a state of fearful insecurity, not knowing when his enemies
would succeed in turning Hitler against him.17
Whether this explanation is a good one or not, we still have with us the
explanandum, i.e., the fact that hierarchical politics are more violent than plu-
ralist politics. But if society with a pluralist political anarchy experiences less
violence than societies with a hierarchical or “governed” government, isn’t it
logical to inquire whether natural anarchy is less violent than political anarchy?
Why should the relation between government and violence be curvilinear? Isn’t
it possible that it is upward sloping all the way, so that government always
produces more violence than the market?18
Summary and Conclusion
We have shown that anarchy, like matter, never disappears—it only changes
form. Anarchy is either market anarchy or political anarchy. Pluralist, decentral-
ized political anarchy is less violent than hierarchical political anarchy. Hence,
we have reason to hypothesize that market anarchy could be less violent than
political anarchy. Since market anarchy can be shown to outperform political
anarchy in efficiency and equity in all other respects,19 why should we expect
anything different now? Wouldn’t we be justified to expect that market anar-
chy produces less violence in the enforcement of property rights than political
anarchy? After all, the market is the best economizer of all—wouldn’t it also
economize on violence better than government does, too?20
Notes
1. 2006 addition: It’s been almost three decades since I wrote this essay. A couple
of years ago, when he was still editor of The Journal of Libertarian Studies, Hans-
Hermann Hoppe invited me to revisit it. His successor renewed the invitation. But
the pursuit of other interests and the fulfillment of other obligations have stood in
the way. In lieu of that task, which I hope to accomplish some day, I take this op-
portunity to insert a few reflections in the footnotes. Also, I have found passages
in Locke’s Second Treatise and Hobbes’ Leviathan that are consistent with the idea
that the escape from anarchy is illusory, and these have been inserted in footnotes,
as well.
2. Even Gordon Tullock writes, “If, as I believe is correct, people under anarchy are
every bit as selfish as they are now, we would have the Hobbesian jungle….” From
the point of view of this paper, it is interesting that in the very next sentence he
adds: “…we would be unable to distinguish a fully corrupt government from no
government.” Gordon Tullock, “Corruption and Anarchy,” in Gordon Tullock (ed.)
Further Explorations in the Theory of Anarchy (Blacksburg, Virginia: University
Publications, 1974).
3. 2006 addition: In the original essay I used “market anarchy” and “natural anarchy”
interchangeably. Today I would consistently use the latter term, which is equivalent
to what Hobbes and Locke called “the state of nature.”
4. 2006 addition: As well as market laws, anarchy would be subject to whatever other
sociological laws govern (in the naturalistic sense) interpersonal or intergroup rela-
tions. For example, the outbreak of violent conflict in the state of nature could be a
function of the distribution of capabilities for exerting force among individuals or
groups, much like the onset of interstate war may well be at least partly a function
of the dyadic or systemic distribution of military power among nations.
266 Anarchy and the Law

5. 2006 addition: Perhaps the closest approximation to the idea of Government is

found in Hobbes’ Leviathan. See below.
6. Paul Craig Roberts, in Alienation and the Soviet Economy (Albuquerque: Univer-
sity of New Mexico Press, 1971), argues similarly that to be able to conceive of
central planning is no proof of its empirical possibility. Roberts shows that formally
planned economies like the Soviet Union are not centrally planned at all, but are
plural economies guided by non-market signals. Roberts’ conclusion that central
planning does not exist is analogous to my own conclusion that Government does
not exist either. I am grateful to Murray Rothbard for pointing out the parallels in
the two arguments.
While the body of this paper was being typed, I read Michael Bakunin God and
the State (New York: Dover Publications, 1970), and was struck by the similarities
between Bakunin’s argument against God and my argument against Government.
This is not surprising, since many assumptions used to justify government refer
to man’s evil nature. It’s as if government took God’s place on earth to keep evil
humans in line. That governments are themselves made up of ordinary human be-
ings who remain in a state of anarchy among themselves seems to have escaped
those who adhere to this view.
7. 2006 addition: John Locke argues that when quitting the state of nature for what
he calls civil society, man surrenders the right to punish while reserving a qualified
right of self-defense. See Second Treatise on Government (Indianapolis: Hackett
Publishing Company, 1980), 67.
8. Of course, the rulers of any government have as their power base interest groups
in and out of government. The leaders of non-governmental interest groups often
hold the key to the political survival of even the mast powerful politicians. Hence,
the strict dichotomy between governmental and non-governmental members of
society breaks down. Around the edges of government, many private individuals
live in a state of anarchy vis-à-vis government officials. George Meany is probably
as good an example as any. I am indebted to my colleague Cal Clark for pointing
this out.
Also living in anarchy vis-à-vis government officials are all those members of
underground criminal organizations which supply consumers with a vast array of
illegal goods and services. That the CIA made deals with top gangsters to carry
out some of its missions should not come as a surprise. Most police departments
probably have similar relations with local crime chiefs.
9. 2006 addition: That there can be no government within the government was made
plain by Hobbes, who rejected the doctrine that the sovereign is subject to the laws
on the grounds that “to be subject to laws, is to be subject to the commonwealth,
that is to the sovereign representative, that is to himself; which is not subjection, but
freedom from the laws. Which error, because it setteth the laws above the sovereign,
setteth also a judge above him, and a power to punish him; which is to make a
new sovereign; and again for the same reason a third, to punish the second; and so
continually without end, to the confusion, and dissolution of the commonwealth.”
See Leviathan (London: The Crowell-Collier Publishing Company), 240.
10. 2006 addition: This and the previous two paragraphs may be overly cynical about
what happens to miscreant public officials in America and other countries where
the rule of law, a civic culture, and a vigorous public opinion exert their salutary
influence. It is an empirical question whether public officials in different political
regimes are punished more or less severely than their private counterparts convicted
of equivalent crimes.
 Do We Ever Really Get Out of Anarchy? 267

11. 2006 addition: In his discussion of executive prerogative, Locke recognized this. He
wrote: “The old question will be asked in this matter of prerogative, But who shall
be judge when this power is made a right use of? I answer: between an executive
power in being, with such a prerogative, and a legislative that depends upon his will
for their convening, there can be no judge on earth; as there can be none between
the legislative and the people, should either the executive, or the legislative, when
they have got the power in their hands, design, or go about to enslave or destroy
them” (Second Treatise, 87; italics in original). That members of the political elite
lack a third party to settle their disputes highlights the importance for avoiding
civil war of a culture of self-restraint and what used to be called “gentlemen’s
agreements.” The problem is that when elite opinion becomes polarized over a set
of issues, such restraints go out the window. The English, American, and Spanish
civil wars are cases in point.
Hobbes, for whom anarchy meant a war of “every man, against every man,” was
also aware of this, and argued therefore against dividing the powers of government:
“For what is it to divide the power of the commonwealth, but to dissolve it; for
powers divided mutually destroy each other” (Leviathan, 100, 240). The passage
previously quoted from the Leviathan on the impossibility of setting up a govern-
ment within the government is also pertinent.
12. 2006 addition: Locke argues that while a properly limited civil society is preferable
to the state of nature, tyranny would be worse (Second Treatise, 113).
13. This is an argument which Murray Rothbard makes and which implies that true
archists should logically favor a single world government in order to abolish anarchy
among nation-states. Yet few of them do. (Murray Rothbard, in letter to the author,
September 21, 1978; and Walter Block, in letter to the author, October 26, 1978.)
14. 2006 addition: As Locke puts it, “such a man [i.e., the tyrant]…is as much in the
state of nature, with all under his dominion, as he is with the rest of mankind….”
(Second Treatise, 48-49; italics in the original).
15. 2006 addition: I am not sure why I contrasted Italy with the United States. I may
have been thinking of the violence associated with the Mafia and the Red Brigades,
which were wreaking mayhem at the time. According to an entry in the Wikipe-
dia, consulted on April 25, 2006, “Throughout the 1970’s the Red Brigades were
credited with 14,000 acts of violence.” Interestingly, in the 1980s Italy underwent
a decentralization of government whose effects are traced by Robert Putnam in
Making Democracy Work (Princeton University Press, 1993).
16. See Gordon Tullock, The Politics of Bureaucracy (Washington, D.C.: The Public
Affairs Press, 1965), for a full theoretical development of this idea.
17. See Albert Speer, Inside the Third Reich (New York: Avon Books, 1970), Part II.
18. 2006 addition: That is, the state of nature.
19. Murray Rothbard, Power and Market (Kansas City: Sheed Andrews and McMeel,
Inc., 1970). 2006 addition: I am less sure of the truth of this claim than I used to
be. Be that as it may, this has no bearing on the central proposition of the essay.
20. 2006 addition: The logic of the argument leads to the raising of these questions.
The answers, however, are elusive and may never be found. There must be a reason
why there is no society without government. Locke no less than Hobbes concluded
that a properly constituted government is at least convenient. There may very well
be a social law that drives men into civil society, that is, into substituting political
anarchy for the natural kind. That it turns into an ill bargain for many subjects of
tyrannical regimes is a terrible tragedy. But that does not mean that the remedy
lies in natural anarchy. A decentralized political anarchy bounded by a culture of
sober self-restraint on the part of the members of the political elite is probably a
safer bet.
 15
Law as a Public Good:
The Economics of Anarchy
Tyler Cowen
1. Introduction
Various writers in the Western liberal and libertarian tradition have chal-
lenged the argument that enforcement of law and protection of property rights
are public goods that must be provided by governments. Many of these writers
argue explicitly for the provision of law enforcement services through private
market relations.1
When protection services are purchased through markets, I refer to this situ-
ation as anarchy, or libertarian anarchy. Libertarian anarchy is to be contrasted
with the “crude anarchy” of Hobbes’s state of nature. Unlike crude anarchy,
libertarian anarchy has organized institutions responsible for the provision of
public order and prevention of crime. By examining institutions that attempt
to provide governmental services without actually being governments, we may
learn what, if anything, makes government necessary, special, or important.2
I do not offer a single, all-purpose definition of government. However, I
treat finance through taxation, claim of sovereignty, ultimate decision-making
authority, and prohibitions on competitive entry as features that characterize
government. In contrast, libertarian private protection agencies allow the right
of secession, finance themselves through sale of product, and compete with
other agencies within a given geographical area.
I argue that libertarian anarchy is not a stable equilibrium. For the purposes
of this paper, I accept the premise that the absence of government will not lead
to crude anarchy. The same factors that create the potential for orderly anarchy,
however, also imply that anarchy will reevolve into government.
The claims of libertarian anarchists have received critical scrutiny from
several quarters. Robert Nozick focuses upon whether a state could arise from
a state of nature (“anarchy”) without violating individual rights. He examines
how private protection agencies could behave to give rise to a state in a just
The author wishes to thank Jerry Ellig, Fred Foldvary, Jeffrey Rogers Hummel,
Gregory Kavka, Daniel Klein, David Levy, Jeremy Shearmur, Sterios Skaper-
das, Dan Sutter, Alex Tabarrok, and Carole Uhlaner for useful comments and
discussions.

268
 Law as a Public Good: The Economics of Anarchy 269

manner. In contrast, my focus is upon incentives and how private protection

agencies actually would behave. Nonetheless, both Nozick and I focus upon
the possibility that anarchy would evolve into government because individuals
prefer to participate in a common legal system.3
The “Virginia School” political economy considers the incentive to engage
in predation when governmental rule of law is not present. These writers, how-
ever, do not examine systematically the provision of law enforcement through
markets. Instead, they focus upon whether markets will come into existence in
the first place. The focus of the Virginia School literature is logically prior to
my analysis; it considers whether a feasible transition is possible from a state of
nature to markets without government protection of property rights. In contrast
I focus upon the stability of an anarchist equilibrium.4
The literature on libertarianism considers several kinds or varieties of anar-
chism. First, private defense agencies may offer competing law codes (Friedman,
1989). Slander and libel, for instance, could be legal under some codes but illegal
under others. Secondly, private defense agencies may offer the same law code
and punishment standards, but compete across other quality dimensions, such
as means of protection (Rothbard, 1978). Some agencies would place a patrol-
man on every block, whereas others would supply their clients with locks and
burglar alarms. Different agencies need not offer exactly the same law codes,
but could agree upon a common adjudication mechanism, or network, in case
of interagency conflict.5 A third scenario, following Nozick (1974), posits a
dominant protection agency. Protection services are a natural monopoly, and
market competition gives rise to one large agency. Conflicts among different
law codes or agencies do not arise.
2. Assumptions
I treat individuals as rational, utility-maximizing agents. I do not defend this
assumption on the grounds of realism, but rather as a simplifying maneuver,
which highlights the role that incentives would play in anarchy. Behavior in
accordance with rational self-interest and marketplace incentives is presumably
an assumption that ought to favor the libertarian anarchist case.6
I combine the rationality assumption with three substantive restrictions upon
individual preferences. First, individuals aggress against others only when they
benefit directly by doing so. Persons do not enjoy aggression for its own sake.
Second, once a well-functioning social order is in place, persons expect that others
obey the law to some basic degree. When breaking the law, a person sees the re-
mainder of society as siding with the established legal system, and not with himself.
Without this assumption, it is difficult to explain why government edicts are obeyed
in today’s world, or why any set of political institutions has a stable core.
Third, libertarian ideology does not provide a safeguard against the emer-
gence of government, if incentives based on self-interest dictate that govern-
ment emerge. Reliance upon libertarian ideology alone to defend the continued
270 Anarchy and the Law

survival of anarchy involves a deus ex machina. It is inconsistent to rely upon

self-interest to motivate the basic workings of markets and then have a model
in which supporting the underlying institutional structure behind markets is
contrary to self-interest.7
More practically, if the stability of an anarchist society requires libertarian
values of its citizens, it is likely to be short-lived. Anarchy might arise through
evolutionary means or through the purposive behavior of individuals with non-
libertarian motives. Ideologies also change over time. Anarchy might come about
through libertarian ideology, but later be accompanied by other ideologies.8
The analysis of this paper focuses upon incentives, but in doing so, I ignore
many issues in political philosophy necessary for a complete evaluation of
anarchism. For instance, I treat power relations in society as transitive. If A has
jurisdiction over B and B has jurisdiction over C, then A has jurisdiction over
C. An alternative approach to political philosophy treats nontransitivity as the
distinguishing feature of law and compares different systems of nontransitivity.
I abstract from these complications.9
My arguments proceed as follows. I first consider the conditions under
which the private provision of law enforcement services can overcome public
goods and “free-rider” problems. In some cases, consumers can be induced to
contribute funds toward the provision of property protection and law enforce-
ment, once a stable system of private protection agencies is in place. I next
examine whether a system of private protection agencies would evolve into
government. The same conditions that allow private agencies potentially to
overcome public goods problems also imply that these agencies will collude
successfully.
I consider the different scenarios for anarchism discussed above. The first
anarchist scenario, competing legal systems, is not stable unless private defense
agencies develop a common means of mediating disputes, which will evolve
into a single legal system. Stable versions of competing agencies thus resemble
the second arbitration scenario with a single legal system. Once a single legal
system is in place, the difference is small between cooperating agencies en-
forcing uniform laws and a single dominant protection agency. In each case, a
single arbitration network possesses monopoly power, whether this network is
composed of “separate” cooperating firms or a single firm.
I then analyze the behavior of private protection agencies when a single firm
or dominant adjudication network is present. An anarchist dominant protection
agency or network can produce public goods but will also have the incentive and
ability to start behaving like a government. The same factors that allow anarchy
to be stable may also allow the protection agencies to exercise monopoly power
and collude. I present some reasons why a cartel of private protection agencies
is likely to prove more stable than most private cartels, which have historically
demonstrated instability.10
 Law as a Public Good: The Economics of Anarchy 271

3. Anarchist Scenarios
The different possibilities for libertarian anarchy examined below share the
common feature of offering protection services through private markets. In
these scenarios, individuals find it in their self-interest to purchase protection
services. Although protection has a public good component (the security of
my property may enhance the security of property in general), the purchase of
protection services also yields significant private benefits. Victims of criminal
aggression incur psychic and pecuniary losses, and individuals are presumably
willing to purchase protection to decrease or avoid these costs.11
The private-good component of protection services is demonstrated by
expenditures in today’s world. Private security, police, and protection services
are commonplace. There are now twice as many private-sector police as public-
sector police in the United States, despite the fact that public police are supplied
free of charge to users (Benson, 1990, pp. 3-4). Not all protection services need
be purchased by individuals on a subscription basis. Owners of condominiums,
housing developments, and proprietary communities hire private security forces to
protect their property and preserve property values. Shopping malls, museums,
businesses, and universities all provide their own protection services.12
In anarchy, protection services can also be supplied by insurance agencies.
Persons purchase home, property, and automobile insurance to protect their
belongings against damage. Insurance companies might then find it profitable
to form a consortium of security forces to protect the property they have in-
sured (Tandy, 1896, p. 66). Similarly, private road owners are another possible
source of protection services. Just as shopping mall owners provide protection
and security for the “streets” and parking lots they offer, so could the owners
of outdoor roads and streets.13
Funding the protection of property is not the most difficult problem in
anarchy. The most difficult problems arise when disputes must be adjudicated
between two or more institutions that claim to be protecting property. Adjudica-
tion and resolution of disputes involve at least two parties, and create a potential
externalities problem. How individuals would resolve disputes over property
rights is the issue to which I now turn.14
3.1 Competing Legal Systems
Under the anarchist scenario envisioned by David Friedman, consumers of
protection services subscribe to the law code that best suits their preferences.
Competing agencies offer different punishments, definitions of crime, and legal
procedures. Friedman’s scenario does not present particular problems when
both plaintiff and defendant belong to the same agency. The agency enforces
laws to which both parties have agreed. Difficulties arise when disputing parties
subscribe to different agencies with conflicting law codes. What happens if the
plaintiff’s agency promises capital punishment for murder but the defendant’s
agency promises protection against capital punishment?
272 Anarchy and the Law

Agencies may go to war each time a dispute arises. This is the least favorable
case for anarchy, as private protection agencies generate a war of all against all.
Competing law codes do not prove feasible, as libertarian anarchy collapses
into Hobbesian anarchy.15
Warfare, however, is not a certain outcome of competing law codes. Private
protection agencies may find interagency warfare unprofitable and danger-
ous, and subscribe to a common arbitration mechanism for settling disputes.
Economic forces may also encourage the consolidation of competing agencies
either through conquest or simply because citizens of a territorial area join the
strongest agency in that area. Each geographical area would possess a dominant
protection agency. (Agencies, however, might skirmish at their borders, much
like many governments.)
I am not suggesting that such mechanisms of consolidation and adjudication
would triumph necessarily over Hobbesian anarchy. Instead, the argument is
that Friedman’s scenario is not an independent alternative. Competing law codes
are stable only if they evolve into a dominant agency or arbitration network,
possibilities to which I now turn.
3.2 Interagency Cooperation and Arbitration
Agencies might eschew warfare in favor of arbitration and interagency
cooperation. Agencies would agree in advance how interagency conflicts will
be settled. Common standards would be applied for criminality, punishment,
and criminal procedures when disputes occur. Even when no specific resolution
to a case has been agreed upon in advance, agencies could take disputes to an
impartial, third-party arbitrator. Agencies could also apply the law of the party
on whose territory the crime was committed. Today’s governments use a similar
procedure when citizens of one country aggress against citizens of another.16
A systematic arbitration network would arise to encourage the orderly ap-
plication of law. Although intra-agency conflicts might be settled differently
from interagency conflicts, society would possess effectively a single legal code.
For any action committed by one person against another, agencies agree upon
the principles to be applied. At the very least, agencies abide by higher-order
arbitration. The arbitration literature stresses the importance of preexisting
contractual relationships between disputing parties; such relationships would
be instituted through subscription to agency policies.17
The arbitration network internalizes adjudication externalities by providing
for systematic contractual relationships among disputing parties. Like govern-
ments, however, anarchist private protection agencies need not enforce a lib-
ertarian legal code. If a sufficient number of persons demand illiberal policies
and are willing to pay for them, the legal code implemented by the network
may be quite interventionist.
The arbitration network would punish defectors, or “outlaw” agencies.
Member agencies who did not respect the decisions of the arbitration network
 Law as a Public Good: The Economics of Anarchy 273

would be ostracized, and their rulings, requests for extradition, and so on, would
not be heeded. In extreme cases, the network could use force to rein in outlaws.
Outlaws could also be excluded from interagency cooperative ventures, such
as the use of databases to track down criminals or the negotiation of treaties
with foreign countries. The ability of agency consumers to discontinue their
subscriptions serves as a further check on outlaws. Organizing a revolt against
an arbitration network is not necessarily easier than organizing a revolt against
a government.
Outlaws would meet with success only if they could command a high degree
of support from their fellow agencies. Perhaps half of the agencies would band
together and attempt to conquer the other half. Such outcomes, however, are also
possible under government. A large enough group of individuals and institutions,
acting in concert, can impose their will upon any political system.
Revolutions do not continually occur, because they are prevented by such
factors as free-rider problems, coordination difficulties, and fear of failure and
retaliation. These forces would continue to operate under anarchy, just as they
do in today’s world of governments. The arbitration equilibrium is not neces-
sarily less stable than a government or less stable than international relations
between different governments. If the existing order is well-functioning and
perceived as legitimate, I assumed (above) that individuals take the basic loyalty
of others to the system as parametrically given.
Agency attempts to lead a revolution would be further discouraged by in-
teragency collusion (discussed later). The presence of monopoly profits gives
agencies a stake in the existing order and discourages radical actions that might
endanger these profits. In contrast, a perfectly competitive protection industry
with zero economic profit would imply that agencies have little to lose by risk-
ing their position in the industry.18
The motivating forces behind cooperative relations among agencies are well
summarized by Tandy (1896, p. 69):
Many people seem to fear that with the existence of several different protective
associations in the same city, there will be incessant conflict between them. But as
each will be endeavoring to get the largest possible number of patrons, each will
endeavor to follow the policy that is most universally approved. The ordinary busi-
nessman does not lie awake in the small hours of the morning pining for civil war.
So the probabilities are that protective associations will not attempt to place such an
expensive commodity upon the market when there is no demand for it.

3.3. Dominant Protection Agency

Nozick (1974) develops a model for an “ultraminimal” state, which supplies
only protection services and law enforcement. Property rights are enforced by
a dominant protection agency, which Nozick considers a state because it does
not admit competitors. Competing agencies are forbidden to operate by the
dominant agency because their procedures are considered too risky. Nozick’s
ultraminimal state does not resort to taxation. Individuals have the option of
274 Anarchy and the Law

not paying “fees” and taking their chances with criminals. These individuals,
however, are subject to the dominant legal code if they commit a crime against
agency members.19
Nozick’s ultraminimal state differs from the network by degree only. Unlike
Nozick’s ultraminimal state, the network consists of more than one firm. These
firms have separate shareholders and seek to maximize their own profit, rather
than the profit of the entire network (nonprofits and mutuals are considered
later). The importance of separate shareholders, however, is limited by the
presence of network relations. The presence of a network gives rise to con-
tractual relations that induce firms to behave cooperatively, as if they were
one large firm. Whether the common arbitration network is “one big firm,”
or “many cooperating smaller firms” is primarily a matter of semantics. The
network can just as well be considered a single firm with separate divisions
that compete to some degree. Each division has its own set of residual claim-
ants, but the behavior of divisions is constrained to favor the interests of the
entire network.20
Nor can we use restrictions on competitors to differentiate Nozick’s minimal
state and the network. Nozick’s ultraminimal state does not allow competitors
to exist, but law enforcement entrants who subordinate their will to the state are
allowed. Nozick’s ultraminimal state does not rule out taking in new citizens
through immigration or birth, government subcontracting to private agencies for
certain tasks, or the absorption of new territories through annexation, discovery,
or liberation, for instance.
The common arbitration network deals with potential competitors in similar
fashion. Entrants who are willing to subordinate their will to the network are
allowed to enter the market and “compete” with other network members for
customers, just as states in a federal republic may compete for citizens. Chal-
lenges to the network itself, however, are not allowed. Entrant agencies who do
not recognize the network as the ultimate decision-making authority are treated
as outlaws and driven out of business.
4. Collusive Arbitration Networks with Monopoly Power
The presence of a common arbitration network is responsible for the orderly
relations among private protection agencies. Rather than using force to settle
disputes, agencies settle claims through mutual agreement and cooperation. This
same arbitration network, however, allows agencies to exert private monopoly
power collectively or perhaps even to become a government.
The existence of a common arbitration network creates a vehicle for pro-
tection agency collusion. Members of the network find it profitable to write a
contract agreeing not to compete with each other. The agencies restrict output
and raise prices, thus reaping monopoly profits. Network membership requires
contractual acceptance of jointly determined prices and outputs, as well as legal
procedures. The collusive contract can also include other monopolizing devices,
 Law as a Public Good: The Economics of Anarchy 275

such as exclusive territories. Finally, network shareholders can agree to impose

taxation upon the populace.
The ability to collude successfully is inherent in the nature of the network.
The network can internalize the externalities problem behind peaceful adjudi-
cation only by suspending quality competition—that is, by offering a uniform
set of laws or higher-order adjudication procedures. The ability to engage suc-
cessfully in quality collusion, however, implies that other kinds of collusion
are possible also.21
Collusion is enforced when network members agree not to cooperate
with potential entrants. We saw above that anarchy is orderly only under the
condition that the network, can act collectively to prevent outlaw firms from
gaining sizeable market share. If the network can implement successful sanc-
tions against outlaws, however, the network can also implement successful
sanctions against potential competitors. The network decides which agencies
are outlaws, and profit maximization dictates labeling potential competitors as
outlaws, even if these competitors do not threaten societal order. If punishing
potential competitors is too costly, punishing outlaws is also too costly, and
anarchy will collapse into the scenario where different agencies have conflict-
ing law codes. Competing legal systems are either unstable or collapse into a
monopoly agency or network.
Neither free entry nor defection from the cartel provides the usual protection
against collusion that we find in most other markets. First, network members
will retaliate against defectors, through sanctions, the use of force, or simply
ignoring judgments rendered by defectors. This retaliation need not be costly
for the network; the network can simply render systematically biased judgments
against nonmembers. Such biased judgments will favor network interests.
Second, membership in the common arbitration network is one of the most
important services an agency can offer its members. Network membership
implies that interagency disputes are settled without risk of force or radical
uncertainty about the final outcome. Agency members will be loathe to defect
and sacrifice both these privileges and their monopoly profits.
Although private cartels usually collapse of their own accord, most historical
examples of cartel instability do not involve the benefits of joining a common
network. The food that I buy from one supermarket is just as valuable to me
regardless of whether this supermarket has friendly relations with its competi-
tors; this independence does not hold with private protection agencies.
In response to the collusion argument, Friedman (1989, pp. 169-70) argues that
the profitability of collusion requires small numbers of protection agencies:
In addition to the temperament and incentives of potential conspirators, there is
another relevant factor: the number of protection agencies. If there are only two
or three agencies in the entire area now covered by the United States, a conspiracy
among them may be practical. If there are 10,000, then when any group of them
starts acting like a government, their customers will hire someone else to protect
them against their protectors.
276 Anarchy and the Law

How many agencies there are depends on what size agency does the most efficient
job protecting its clients. My own guess is that there will be nearer 10,000 agencies
than 3. If the performance of present-day police forces is any indication, a protection
agency protecting as many as one million people is far above optimum size.
Several replies can be made to Friedman’s argument. First, it illustrates
the danger of making inferences about industry structure under anarchy from
observed industry structures today. The number of private protection and de-
tective agencies today is very large, but this does not imply that the number
of independent firms would be very large in anarchy. Current private agencies
and arbiters are not required to serve as ultimate arbitrators and enforcers in
disputes. Government is available to settle disputes that might arise between
different firms. In anarchy, the incentives that generate a monopoly firm or
network arise from absence of this external final arbiter.
Second, Friedman’s argument does not consider that even large numbers
of protection agencies can collude through the network. The network itself
overcomes the coordination problem of implementing and enforcing collusion.
There are no legal obstacles to enforcing the collusive contract, and the network
has a strong profit incentive to prevent shirking on the collusive agreement.
Some forms of shirking on collusion, such as price shading, may survive, but
the network will take great pains to ensure that the cartel does not break down
altogether. A large number of potential competitors increases the benefits of
successful collusion. We can even imagine the network implementing a perverse
form of “antirust” law, which would enforce collusion rather than prevent it.
Private-sector experience demonstrates the feasibility of enforcing coopera-
tive relationships across many firms that might otherwise be tempted to compete.
Different franchises of McDonalds, for instance, enter into common relations
through the parent company and agree not to compete with each other. The
franchises abide by common quality standards and marketing practices and
receive territorial rights to a market area. Franchises that deviate from their
contract with the parent company are reprimanded and ultimately cut off, if
disobedience persists. While different McDonald’s franchises undoubtedly do
compete across some margins in violation of their instructions, parent company
attempts to discipline franchises are frequently successful in this regard.
It may still be possible that detecting and punishing competitive behavior is
too costly for the network. If the network cannot monitor and control the be-
havior of member agencies, however, anarchy will not remain orderly. Agencies
will favor the interests of their own customers, enforce their own preferred law
codes, and treat the customers of other agencies poorly. We are effectively back
to the case of competing outlaw agencies, even though these agencies belong
nominally to the network. Orderly anarchy again implies collusive anarchy.
If collusion is successful, the protection network now holds the power to
initiate coercion against customers. Like a government, the network’s revenue is
raised through taxation and becomes independent of consumer demand through
 Law as a Public Good: The Economics of Anarchy 277

markets. Taxpayers can exit only through death or emigration. Furthermore, con-
sumers lose the influence over product mix that they have under normal market
arrangements. The network is well on its way to becoming a full-fledged state.
The state that evolved through anarchy would still be privately held through
shareholders, unlike today’s governments. In this respect, a residual difference
would remain between modern states and the states that might evolve through
anarchy. The decision-making apparatus in a shareholder-held state, for instance,
differs from that of a constitutional democracy.22 If the network does become
a state, however, public trading of the network’s shares may eventually cease.
Trading the right to enforce and define contracts involves problems if network
shares are traded in large, controlling blocks. After a person or consortium has
purchased a controlling interest in the network, for instance, how do sellers
require them to settle, or prevent them from seizing the funds received from
sale of the network?
4.1. Extending Monopoly Power
Once the network obtains monopoly power over society’s apparatus of adju-
dication and punishment, it can use this power to achieve monopolistic positions
elsewhere in the economy. The network, for instance, could threaten to with-
hold protection from private entrepreneurs unless they sell out to the network.
Even more baldly, the network might simply seize the desired resources and
proclaim itself the rightful owner. The network can thus take control of com-
munications and transportation systems or other industries in order to support
its bid to maintain power. More generally, the network could implement policies
at variance with free-market and libertarian principles.23
Nonetheless, a profit-maximizing network would not seize all of society’s
productive economic resources. A network that owned the entire economy
would find itself in a position similar to that of a central planner. In the com-
plete absence of competition, efficient resource allocation would be difficult,
national product would fall, and the network’s profits would decline. A rational
network will preserve a significant amount of competition in the private sector
of industries other than the adjudication industry.24
4.2. Anarchy and International Anarchy
The possibility of interagency collusion points to a disanalogy between
competing defense agencies and the international “anarchy” that exists between
different governments in today’s world. Collusion among private protection
agencies is more likely than collusion between governments for several reasons.
First, protection agencies are owned by shareholders who wish to maximize prof-
its; these shareholders favor successful collusion. The incentives and motives of
governments are less clear. It is not obvious, for instance, that intergovernmental
collusion significantly increases incumbents’ chances of reelection.
Second, immigration and trade restrictions limit competition between nation-
states for citizens and economic resources. Because competition is limited to begin
278 Anarchy and the Law

with, the motivation to collude is weaker. Private protection agencies, in contrast,

cannot prevent their clients from switching allegiance to other firms in the absence
of collusion; the cost of changing one’s subscription may be quite low. Since agen-
cies do not have a natural lock on their market, the value of collusion is high.25
Third, international criminal and legal relations are a very small part of the
activities of, say, the American and Canadian governments. The benefits of form-
ing a world government to more profitably or efficiently deal with Americans
who murder Canadians are relatively small. In the case of private protection
agencies, interagency relations on issues of criminal law likely form large
part of their business. The benefits of forming a single, overarching, collusive
arbitration network are correspondingly larger.
5. How Might Anarchy Avoid Government?
In the above scenarios, the network becomes a government because network
shareholders are able to exploit successfully conflicts between network profit
maximization and the interests of the network consumers. If consumers are
sufficiently far-sighted, they may prefer dealing with agencies that precommit
to never becoming collusive or coercive. Consumers may attempt to control the
network by owning the member firms; under this scenario, the protection agen-
cies would become mutuals or cooperatives. Protection agencies could then be
bound by democratic procedures, according to customer vote. Collusion could
not occur unless approved by agency customers (shareholders).26
Notes
1. Arguments for provision of law enforcement through private markets originate with
Tucker (1893/1972), de Molinari (1849/1977), and the Anglo-American “Voluntary-
ist” Movement (e.g. Francis Tandy [l896]). Today, anarchism is most commonly
associated with segments of the libertarian movement. Libertarian economists such
as Rothbard (1978), Friedman (1989), and Benson (1990), and libertarian legal
theorist Barnett (1986) have endorsed the private provision of law enforcement
services. Other writers sympathetic to the market provision of protection and law
enforcement services include Morris and Linda Tannehill (1972), Wollstein (1972),
Tador (1982), Osterfeld (1983), de Jasay (1989), Hummel (1990).,Christiansen
(1990), and Sutter (1991). The Journal of Libertarian Studies contains many articles
arguing in favor of anarchy, some of which are cited throughout the text. Landes
and Posner (1979) provide a law and economics perspective on private courts.
The profit-maximizing punishment strategies of private protection agencies are
considered in Becker and Stigler (1974) and Friedman (1984).
I do not consider many varieties of anarchism. “Left-wing” anarchists such
as Proudhon, Kropotkin, and Bakunin consider anarchist societies in which law
enforcement institutions are not necessary, usually because of changes in human
nature. These writers devote little attention to whether their proposed reforms lead
to incentive compatible outcomes.
2. Posner (l979, p. 323) explains a similar motivation: “What we ask in Part I is what
would the world look like, in terms of judicial services, if there were no state? We
don’t ask this question because we are interested in privatizing judicial services.
Our piece is not normative in its thrust. But it is frequently a useful approach
to positive analysis to ask: What would be the problems if a service which has
 Law as a Public Good: The Economics of Anarchy 279

traditionally been regarded as governmental were to be provided exclusively on a

private basis?
3. See Nozick (1974). In addition to the authors mentioned in the text, critics of anar-
chy include French (1973), Hospers (1973), Kelley (1974), Rand (1961), Sampson
(1984, chap. 8), Newman (1984), and Kavka (1986).
4. Some representative Virginia School writings on anarchy are Tullock (1972, 1974),
Buchanan (1975), and Bush (1976). Gregory Kavka and I consider the prior issue
of how markets could arise in Cowen and Kavka (1991). Kavka and I argue that
monopoly power in law enforcement increases the likelihood that the public good
of markets will evolve, just as this paper argues that monopoly power is associated
with the sustenance of a stable law-and-order equilibrium.
5. I read the proposals of Rothbard (1978) as consistent with this approach. Hospers
(1973) calls for a system where government enforces a single law code but private
agencies compete to enforce this code. If enforcement power is in the hands of
private agencies, this system is difficult to distinguish from anarchy.
6. Historical experience illustrates that stable anarchy is at the very least possible.
Medieval Iceland and medieval Ireland are two examples of relatively stable anar-
chist societies. On Iceland, see Friedman (1979) and Solvason (1991). On Ireland,
see Peden (1977).
7. The roll that I allow ideology to play can be expressed in the language of game
theory. Ideology may be a factor in selecting among multiple equilibria. For in-
stance, if each individual believes that others will cooperate with the established
legal order, crude anarchy will be less likely; ideology may be responsible for such
expectations. Given an equilibrium and set of mutual expectations, however, I do
not invoke ideology to produce cooperation when aggression would serve self-
interest.
8. Rothbard (1973) and Hummel (1990) assign a central roll to ideology in preventing
the reemergence of government.
9. Neither anarchy nor government is likely to have fully transitive power relations.
Various social institutions, such as churches, terrorist groups, and families, have
their own spheres of jurisdiction that are not directly subject to political rule. The
government or anarchist adjudication mechanism does not have a strict monopoly
on the use of retaliatory violence or the initiation of violence. Even within a govern-
ment, transitivity of power relations does not generally hold. Under a system with
federalism and the separation of powers, different parts of government exist in a
state of anarchy with respect to each other. There is no clearly defined transitive
ordering of who has jurisdiction over whom. Similarly, the adjudication mecha-
nisms in anarchy may not develop a clearly defined power ordering to cover all
possible relationships and conflicts. Just as in the American system of government,
the adjudication may consist of a coalition of forces, none of which has ultimate
authority. The importance of nontransitivity for political philosophy is stressed by
Cuzan (1979).
10. Of the critics of anarchy, only Kelley (1974, pp. 247-48) raises the issue of collu-
sion. Some writers, such as Kavka (1986, p. 172), raise the distinct issue of natural
monopoly. While natural monopoly will give rise to a dominant agency or network,
collusion will produce a dominant network without requiring the cost structure
traditionally associated with natural monopoly. Friedman (1989, pp. 169-70) argues
that the protection industry is not characterized by natural monopoly. I discuss this
issue in further detail later.
11. General arguments that markets can produce public goods, or that many supposed
public goods are actually private goods, can be found in Cowen (1988); de Jasay
(1989) and Schmidtz (1991) examine the market provision of law enforcement
services.
280 Anarchy and the Law

12. McCallum (1970) emphasizes proprietary communities as a means of public goods

provision through private markets.
13. I assume a closed economy by considering only protection services in general, and
not protection against foreign aggressors. Protection against foreign aggressors
presents a problem different in scope, but not different in kind from protection
against domestic aggressors. Relatively small territories, whether governmental
or anarchistic, may not be able to protect themselves against their more powerful
neighbors. Anarchy may increase the significance of this problem at the margin, but
government does not ensure its elimination. In any case, consideration or foreign
conquest would only strengthen my argument that government is to be expected.
14. On adjudication, see Landes and Posner (1979). The purchase of private adjudication
services through markets is widespread in the United States and other countries.
On the punishment incentives of private law enforcement agencies, see Becker and
Stigler (1974) and Friedman (1984).
15. We cannot rely upon the Coase theorem to prevent violent outcomes. First, individu-
als have an incentive to engage in threats and strategic behavior in small-numbers
problems. Second, the Coase theorem takes the distribution or property rights as
given and examines a small change in rights at the margin, such as the assignment
of rights to a water stream, piece of land, or natural resource. The Coase theorem
does not apply when the entire distribution of property is potentially up for grabs.
We cannot argue that those who value rights the most will bid the highest for them;
the distribution of property and thus bidding power itself is precisely what is be-
ing determined. Enforceable contracts are no longer present. Kuwait, for instance,
could not bribe Iraq not to invade; Iraq could simply pocket the bribe and invade
anyway. Cowen (1990) discusses these problems in further detail.
16. Agencies may agree not to punish too harshly convicted criminals who belong to
other agencies. Furthermore, agencies might also agree to restrictions upon conflict
resolution procedures among their own clients. Selling a law code that offers very
harsh punishments for minor crimes, for instance, might offend members or other
agencies with more lenient values. Or imposing lenient punishments for serious
crimes, even within a single agency’s members, may decrease the strength of other
agencies’ attempts at deterrence (criminals do not always know to which agency
their potential victims belong). For these reasons agencies may collectively abide
by common standards, even for intra-agency disputes.
17. On the prerequisites or arbitration, see Landes and Posner (1979, p. 246). The
problem of individuals who do not join any agency is dealt with further below.
18. The effect of monopoly profits in firm behavior is considered in Klein and Leffler
(1981).
19. Much of Nozick’s argument is geared toward establishing that this monopoliza-
tion of the market does not violate individual rights. I am discussing Nozick’s
“ultraminimal” state. Nozick’s slightly larger “minimal” state provides protection
services to noncontributors for free. These services are compensation for forbidding
noncontributors from taking the law into their own hands.
20. Competing divisions are common in entities that are traditionally considered “single
firms.” The corporate structure of General Motors is one well-known example. Most
economists agree that the difference between “firm” and “market” is one of degree
rather than of kind. See Richardson (1972), Fama (1980), and Cheung (1983).
21. In the context of other markets, economists have argued that the presence of common
relations between firms allows for incentive-compatible collusion even without an
explicit collusive contract. See Bernheim and Whinston (1985).
22. This difference should not be overdrawn. Some monarchies, for instance, can be
interpreted as privately held slates. Furthermore, a new state arising from anarchy
 Law as a Public Good: The Economics of Anarchy 281

need not remain shareholder-owned. It is possible that managers could turn against
shareholders and seize control of the network. Or some shareholders could stage a coup
d’état and control the network exclusively. Under another scenario, the new state could
offer democratic constraints upon its leaders. Fear of immigration, lower tax revenues,
and popular revolt might encourage the new government to be democratic.
23. The dominant agency or collusive network can attempt to extend its monopoly
power through several means. A dominant protection agency or agency network
would find it profitable to offer tied sales of public goods, for instance. A protection
agency with monopoly power can spread its monopoly successfully across goods
that are produced at declining average cost (e.g., excludable public goods). For a
demonstration of this proposition, see Mumy (1987). Whinston (1990) reaches
similar conclusions.
24. On the consequences of centralized private ownership of all the means of produc-
tion, see Cowen and Glazer (1991).
25. As resource mobility increases, we should expect to see increased regulatory col-
lusion through international agencies. This is precisely the case in the European
Community. Similarly, the U.S.-Canada free-trade agreement can be expected to
increase collusion between these two governments. We should also expect states
in a federal system to favor a larger role for the federal government as resource
mobility increases.
26. In mutuals, the corporation’s customers are also its owners. A mutual life insurance
company, for instance, is owned by its policyholders, who serve as residual claim-
ants. If the company makes money. the profits are refunded in the form of lower
premiums; conversely, losses imply higher premiums. (Not all of the mutual’s profits
are rebated to customers, however, as managers retain perks for themselves.) In so
far as mutual shareholders succeed in controlling their company, their dual roles
as owners and customers diminish conflicts of interest. Policies that deliberately
defraud customers, for instance, would not be approved by mutual shareholders.
Shareholders of traditional corporations, in contrast, will maximize profits as the
expense of consumer interests, when possible. Cooperatives and nonprofit organi-
zations are other possible organizational forms for protection agencies. Although
these forms differ from mutuals with respect to many details, they also eschew direct
profit-maximization and allow managers to maximize the no. of perks, although
subject to different institutional constraints. See Rose-Ackerman (1986) on these
alternative forms of organization.
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 16
Law as a Private Good: A Response to
Tyler Cowen on the Economics of Anarchy
David Friedman
In “Law as a Public Good” Tyler Cowen argues that an anarcho-capitalist
system of private protection agencies of the sort proposed by myself and others is
unworkable. I believe he is mistaken. In explaining why, I will start with a brief
explanation of how I believe that such a system would work, then summarize
Professor Cowen’s arguments and attempt to show why they are wrong.
Imagine a society with no government. Individuals purchase protection
of themselves and their property from private firms. Each such firm faces the
problem of possible conflicts with other firms. Private policemen working for
the protection agency that I employ may track down the burglar who stole my
property only to discover, when they try to arrest him, that he too employs a
protection agency.
There are three ways in which this problem might be dealt with. The most
obvious and least likely is direct violence—a mini-war between my agency,
attempting to arrest the burglar, and his agency attempting to defend him from
arrest. A somewhat more plausible scenario is negotiation. Since warfare is
expensive, agencies might include in the contracts they offer their customers
a provision under which they are not obliged to defend customers against le-
gitimate punishments for their actual crimes. When a conflict occurs, it would
then be up to the two agencies to determine whether the accused customer of
one will or will not be deemed guilty and turned over to the other.
A still more attractive and more likely solution is advance contracting be-
tween the agencies. Under this scenario, any two agencies that faced a signifi-
cant probability of such clashes would agree on an arbitration agency to settle
them—a private court. Implicit or explicit in their agreement would be the legal
rules under which such disputes were to be settled.
Under these circumstances, both law enforcement and law are private goods
produced on a private market. Law enforcement is produced by enforcement
agencies and sold directly to their customers. Law is produced by arbitration
agencies and sold to the protection agencies, who resell it to their customers
as one characteristic of the bundle of services they provide.

284
 Law as a Private Good: A Response to Tyler Cowen 285

One attractive feature of such a system is that the usual economic arguments
for the efficiency of market outcomes apply to the legal system and the rules
it generates. To see why, imagine that there is some change in the legal rules
currently prevailing between two enforcement agencies which would yield net
benefits to their customers. If it benefits both sets of customers, then it is in the
interest of the protection agencies either to persuade their arbitration agency
to make the change or to shift to one that follows the superior set of rules. If
it benefits the customers of one agency but imposes costs on the customers of
the other, with net costs smaller than net benefits, then it is in the interest of the
two agencies to agree to make the change, with the loser compensated either
directly or by some other change elsewhere in the legal rules. In practice, since
it is the arbitration agencies that specialize in legal rules, we would expect them
to try to develop superior legal codes in the process of competing for custom-
ers. The result should be a set of legal codes that are economically efficient in
the conventional sense.1
While this argument implies an efficient set of legal codes, it does not tell
us which efficient set. Legal rules have distributional as well as allocational
consequences. Imagine, for example, that agency X and agency Y represent
customers with different tastes in legal rules. Perhaps the customers of X sup-
port the death penalty and the customers of Y oppose it. The argument of the
previous paragraph implies that whichever group most values its preferred legal
rule will get it. But it does not tell us which agency will have to pay the other
in order to get its way in disputes between their customers. Will X have to pay
Y to get its agreement to a pro-death penalty court for disputes between their
customers, or will Y have to pay X if it wants an anti-death penalty court? I have
described the logic of the bargaining, but not the starting point—the default
rules from which mutually beneficial changes will be made.2
The answer is that the distributional starting point is the solution to a bilateral
monopoly bargaining game between the agencies. Each agency can threaten
to refuse to agree to any arbitrator, subjecting both to the costs of occasional
violence, or at least ad hoc negotiation to avoid violence. Each knows that the
other would prefer even a rather unfavorable set of legal rules to no agreement
at all. The situation is analogous to a union management negotiation or the ne-
gotiations determining borders, trade policies, and the like between neighboring
countries. While there is no good theoretical account of exactly what determines
the outcome of bilateral monopoly bargaining, experience suggests that some
reasonably efficient equilibrium usually exists. Most unionized firms manage
to settle their differences without lengthy strikes, and most nations are at peace
with most of their neighbors most of the time.3
So we may imagine the market for law as starting out with a set of default
rules between each pair of protection agencies, representing the result of bar-
gaining backed by threats of refusal to agree on an arbitrator. From there, the
agencies bargain to an efficient set of rules. Where the change benefits both, it
286 Anarchy and the Law

may occur without side payments. Where the change is preferred by only one
agency, it must pay the other enough to obtain its agreement. The distributional
outcome is the result of an implicit threat game between the agencies; the al-
locational outcome is the result of a (logically subsequent) bargaining game to
move from the starting point to the Pareto frontier.
Experience suggests that there is enormous inertia in mutual threat games of
this sort. National boundaries do not move half a mile one way or the other each
time one nation becomes a little richer or a little more powerful. In practice,
an anarcho-capitalist society will probably be built not so much on an ongoing
mutual threat game as on a mutual threat game played out in the distant past.
That suggests that, once the initial equilibrium has been established, the success
of a protection agency will be based mainly on its ability to produce protection
for its customers, not its ability to defeat rivals in open warfare.
While it is always possible for one firm to threaten to withdraw from its
arbitration agreement with another unless the terms are renegotiated de novo,
such threats are unlikely to be either common or successful. Other agencies have
a strong incentive to insist on basing their bargaining on the existing rules, in
order to prevent the costs of continual renegotiation and the costs of violence
when negotiations break down.
I have now described anarcho-capitalism as I believe it would function in a
modern society.4 What are Cowen’s reasons for believing that such institutions
would be unstable?
Cowen (1992) writes:
…the argument is that Friedman’s scenario is not an independent alternative. Com-
peting law codes are stable only if they evolve into a dominant agency or arbitration
network….
Agencies might eschew warfare in favor of arbitration and interagency coop-
eration. Agencies would agree in advance how interagency conflicts will be settled.
Common standards would be applied for criminality, punishment, and criminal
procedures when disputes occur….
A systematic arbitration network would arise to encourage the orderly application
of law. Although intra-agency conflicts might be settled differently from interagency
conflicts, society would possess effectively a single legal code…. At the very least,
agencies abide by higher-order arbitration….
So far I agree with Cowen,5 provided that the accent is put on the final sen-
tence and that it is recognized that what is described is an equilibrium, not a
constraint. Firms almost always abide by arbitration because it is almost always
in their interest to do so. Describing this as a single legal code is, however,
somewhat misleading, since there may be as many legal codes as there are
pairs of agencies.6
The distinction between a market equilibrium and a constraint is not merely
a verbal one. Consider the analogous case of an ordinary competitive market.
Economic theory tells us that firms selling identical goods will all charge the
same price. That does not mean that firms are not free to change their price if
 Law as a Private Good: A Response to Tyler Cowen 287

they wish, nor that a change by one firm will somehow force every other firm
to make an identical change. On the contrary, the analysis of what the price
will be depends on the assumption that each firm is free to set whatever price
it wishes, and deduces both the existence and level of the common price from
that assumption. Similarly, protection firms under anarcho-capitalism will agree
on arbitrators to settle disputes between them, but that is a consequence of their
profit maximizing behavior, not a constraint upon it. The fact that they are free
to refuse to agree to arbitration is one of the elements that determine what the
actual terms of arbitration will be.
Cowen then writes:
Unlike Nozick’s ultraminimal state, the network consists of more than one firm….
The presence of a network gives rise to contractual relations that induce firms to
behave cooperatively, as if they were one large firm. Whether the common arbitra-
tion network is “one big firm,” or “many cooperating smaller firms” is primarily a
matter of semantics. The network can just as well be considered a single firm with
separate divisions that compete to some degree. Each division has its own set of
residual claimants, but the behavior of divisions is constrained to favor the interests
of the entire network.
So far as I can tell, this final assertion is nowhere justified, and I believe it
to be false. What Cowen describes as a “network” is simply a set of private
firms—protection and arbitration agencies—linked by a large number of con-
tracts. Each pair of protection agencies has a contract specifying an arbitrator
for disputes between their customers, and each protection agency has contracts
with one or more arbitration agencies specifying the terms on which they will
arbitrate its disputes with specified other protection agencies.
Nothing in this situation requires or implies a single firm controlling the
whole, nor anything analogous to one. The network as I have described it has
no decision-making body. Its “decisions,” the set of legal codes it enforces, are
the outcome of independent profit-making decisions by the individual firms
and bargaining between pairs of firms. Nothing in the logic of the market for
protection and arbitration implies that the outcome will maximize the summed
profits of the firms, as Cowen seems to assert. Indeed, ordinary economic theory
suggests that in equilibrium this market, like any competitive market, will yield
zero profit to the firms that make it up.
Consider Cowen’s argument applied to a less exotic industry—groceries.
As a practical matter, any grocery that wishes to stay in business must have
contracts with a number of large suppliers, such as Kraft and General Mills,
either directly or through distributors that function as intermediaries. Thus all
grocery stores are linked together by contracts with common intermediaries.
The whole collection of firms—grocery stores, producers, wholesalers—could
be described as a network in the same sense in which Cowen describes the
protection agency as a network.7 Does it follow that, in the grocery industry,
“contractual relations…induce firms to behave cooperatively, as if they were
288 Anarchy and the Law

one large firm?” Is there any reason to believe that the behavior of the separate
firms “is constrained to favor the interests of the entire network?”
Grocery stores and protection agencies are indeed constrained, but it is
not their own interest that they are constrained to follow. Grocery stores are
constrained to follow policies that maximize the welfare of their customers,
and protection agencies are constrained to enforce legal codes that maximize
the welfare of their customers, for essentially analogous reasons. In both
cases the constraint is only approximate, due to the familiar problems of
imperfect competition, imperfect knowledge, externalities, and the like. But
nothing in the logic of either market leads to maximization of the interests
of the industry.
Having asserted that the protection industry is in effect a single firm, the
next step in Cowen’s argument is straightforward.
The existence of a common arbitration network creates a vehicle for protection agency
collusion. Members of the network find it profitable to write a contract agreeing not
to compete with each other. The agencies restrict output and raise prices, thus reaping
monopoly profits. Network membership requires contractual acceptance of jointly
determined prices and outputs, as well as legal procedures….
Let us see how this works—remembering that the “network” is not a firm
but a set of contracts among a large number of firms. Firm A announces that it
will only agree to arbitration agreements with other firms that agree to restrict
output and raise price. Firm B treats this offer like any other move in its nego-
tiations with firm A—it accepts it if the agreement, along with any compensa-
tion offered by firm A for agreeing, makes it better off, otherwise it insists on
sticking to the old terms.
But firm B could have raised prices and restricted output without any demand
from firm A. The reason it did not was that doing so would have lowered its
profits. It will accept A’s demand only if A is willing to pay enough to make up
for the resulting losses. The situation is no different than in any industry (without
antitrust laws) where one firm attempts to create a cartel. As in any industry, it is
possible to have a profitable cartel if all of the firms can somehow agree to and
abide by a cartel agreement, while keeping out new entrants. One reason that
is difficult, here as elsewhere, is that if some subgroup of the industry forms a
cartel it is in the interest of all the non-members to undercut the members.
Cowen seems to imagine the collusion occurring not at the level of the firm
but at the level of the network. He writes:
The ability to collude successfully is inherent in the nature of the network. The
network can internalize the externalities problem behind peaceful adjudication only
by suspending quality competition—that is, by offering a uniform set of laws or
higher-order adjudication procedures. The ability to engage successfully in quality
collusion, however, implies that other kinds of collusion are possible also.
But, as we have already seen, nothing in the logic of the system requires either
uniform laws or any single body determining such laws. It is, of course, possible
 Law as a Private Good: A Response to Tyler Cowen 289

that there will be one or more bodies offering model legal codes, and that many
firms may adopt such codes in order to reduce the costs of legal diversity. To the
extent that reasonably uniform standards prevail, collusion will be somewhat
easier since there will be fewer dimensions on which the collusive agreement
must be defined and adherence to it monitored. But a standard setting body
does not, as Cowen seems to assume, provide an enforcement mechanism for
a cartel. Non-member firms can abide by non-price standards while chiseling
on the cartel’s price.
Cowen also argues that “anarchy is orderly only under the condition that
the network can act collectively to prevent outlaw firms from gaining sizable
market share. If the network can implement successful sanctions against out-
laws, however, the network can also implement successful sanctions against
potential competitors.”
Here again, he is misinterpreting the anarcho-capitalist system, or at least
the version of it that I proposed and he earlier cites. In a system of a hundred
agencies of equal size, one of which is an outlaw, each of the ninety-nine others
settles ninety-nine percent of its conflicts by arbitration and one percent by vio-
lence. The outlaw agency settles a hundred percent of its conflicts by violence.
Since violence is much more expensive than arbitration, the outlaw’s costs are
much higher than the costs of its competitors. Agencies that are unwilling to
sign arbitration agreements acceptable to most other agencies with which they
are likely to come in conflict are prevented from gaining market share not by
some collective action by “the network” but by the difficulty of selling a product
when your production cost is much higher than your competitors’.
There is, it is true, one special feature of this market which might make
cartelization easier. If all the existing firms do agree on a common anti-com-
petitive policy, they may well have the physical force necessary to enforce it
by keeping new firms from forming. I discussed this possibility at some length
in Friedman (1989), where I wrote:
The protection agencies will have a large fraction of the armed might of the society.
What can prevent them from getting together and using that might to set themselves
up as a government?
…our present police departments, national guard, and armed forces already pos-
sess most of the armed might. Why have they not combined to run the country for
their own benefit? Neither soldiers nor policemen are especially well paid; surely
they could impose a better settlement at gunpoint.
… A brief answer is that people act according to what they perceive as right,
proper, and practical. The restraints which prevent a military coup are essentially
restrains interior to the men with guns.
We must ask, not whether an anarcho-capitalist society would be safe from a
power grab by the men with the guns (safety is not an available option), but whether
it would be safer than our society is from a comparable seizure of power by the
men with the guns. I think the answer is yes. In our society, the men who must
engineer such a coup are politicians, military officers, and policemen, men selected
precisely for the characteristic of desiring power and being good at using it. They
290 Anarchy and the Law

are men who already believe that they have a right to push other men around—that
is their job. They are particularly well qualified for the job of seizing power. Under
anarcho-capitalism the men in control of protection agencies are selected for their
ability to run an efficient business and please their customers. It is always possible
that some will turn out to be secret power freaks as well, but it is surely less likely
than under our system where the corresponding jobs are labeled “non-power freaks
need not apply.”
In addition to the temperament of potential conspirators, there is another relevant
factor: the number of protection agencies. If there are only two or three agencies
in the entire area now covered by the United States, a conspiracy among them may
be practical. If there are 10,000, then when any group of them starts acting like a
government, their customers will hire someone else to protect them against their
protectors.
How many agencies there are depends on what size agency does the most efficient
job of protecting its clients. My own guess is that the number will be nearer 10,000
than 3. If the performance of present-day police forces is any indication, a protection
agency protecting as many as one million people is far above optimum size.
My conclusion is one of guarded optimism. (pp. 123-124).

Notes
1. This conclusion is qualified, for this market as for other markets, by the possibility of
the usual sorts of market failure. In particular, since the legal rule applying between
A and B is negotiated on their behalf by their protection agencies, the decision will
not take account of effects on C. Consider the case of intellectual property. When
B agrees to respect A’s intellectual property, the result is an increased incentive for
A to produce such property, which may benefit others who use it. Such benefits
will not be taken into account in the negotiations that determine whether or not B
makes such an agreement. Similar problems will arise with pollution law, where
A’s right to sue B for polluting his air results in a reduction of B’s emissions and
thus an external benefit for A’s neighbor C.
This problem is not part of the argument Cowen offers for why anarcho-capital-
ism is unworkable, and I have therefore not discussed it in the body of this article.
Its implication is that the legal rules generated by anarcho-capitalism will not be
perfectly efficient. That is not, however, a reason to prefer the rules generated by
other institutions, unless we have some reason to expect them to generate efficient
rules. Arguments for the efficiency of the legal rules generated by ordinary politi-
cal processes are, however, weak or nonexistent. For an attempt to argue that the
common law tends to generate efficient law, but not, in my view, a convincing one,
see Posner (1992, pp. 254-255, 535-536).
2. This omission was pointed out in a perceptive review of The Machinery of Freedom
by James Buchanan (1974).
3. For one approach to understanding how the solution to such conflicts is determined
and maintained, see Friedman (1994).
4. For a description of a historical society with some, although not perfect, similarity
to what I have described, see Friedman (1979).
5. It is unclear to me whether Cowen, in this part of his discussion, intends to describe
the institutions proposed in Friedman (1989) or a different set of institutions that
he believes they would evolve into.
6. There will be some market pressure towards legal uniformity, since there are costs
to a system where the legal rules applying to a transaction vary widely according to
who you happen to be transacting with. There will also be some pressure towards
 Law as a Private Good: A Response to Tyler Cowen 291

diversity, designed to satisfy the different legal needs of different segments of the
population. It seems likely that the result, as in the U.S. states, will be a small number
of basic legal systems, but variations in detail among the legal rules followed by
different arbitrators. See Friedman (1989, p. 120).
7. Of course, the structure of the two networks is not the same. Protection agencies
will typically have contracts with both other protection agencies and arbitrators.
Grocery stores may have contracts with other grocery stores providing for joint
purchasing, or lobbying efforts, or whatever, but the essential contracts are with
suppliers. Perhaps Cowen can show that the particular structure of contracts in the
former case somehow leads to an industry that acts like a single firm—but so far
as I can tell, he has not done so anywhere in this article.

References
Buchanan, James M. 1974. Review of The Machinery of Freedom: Guide to a Radical
Capitalism by David D. Friedman, Journal of Economic Literature XII, 3 (Septem-
ber): 914-915.
Cowen, Tyler. 1992. “Law as a Public Good: The Economics of Anarchy,” Economics
and Philosophy 8: 249-267.
Friedman, David. 1994. “A Positive Account of Property Rights,” Social Philosophy
and Policy 11, 2 (Summer).
Friedman, David. 1979. “Private Creation and Enforcement of Law—A Historical Case.”
Journal of Legal Studies 8 (March): 399-415.
Friedman, David. 1989. The Machinery of Freedom, Guide to a Radical Capitalism,
2nd ed. (La Salle, IL: Open Court).
Posner, Richard. 1992. Economic Analysis of Law, 4th ed. (Boston: Little Brown).
 17

Rejoinder to David Friedman on the

Economics of Anarchy
Tyler Cowen
The received wisdom once stated that anarcho-capitalism would collapse
into Hobbes’s state of nature, with life nasty, short, and brutish. The problem
of competing governments is the problem of externality par excellence. But
David Friedman, among others, has argued persuasively that privately financed
arbitration agencies can overcome the basic externalities problems behind
social order.
Unfortunately the matter is not so simple, because the state—a coercive
monopoly on the use of force—may reemerge. Like most advocates of libertar-
ian anarchy, Friedman wishes to have it both ways. Private protection agencies
are supposed to be able to produce public goods by cooperating. But somehow
collusion, which is a public good for the firms in question (if not for all of
society), is supposed to be impossible or unstable.
My initial piece argued that the same mechanisms that encourage interagency
cooperation also would allow agency collusion. Friedman’s comment has not
changed my mind about the soundness of this conclusion.1
The industry for protection services is particularly vulnerable to collusion
because it is what I call a network industry. Specifically, the industry is char-
acterized by the following features:
1. Firms that do not have friendly, cooperative relations with the other firms in
the same industry cannot capture market share. Private protection agencies
under anarchy differ from Friedman’s example of the grocery industry. I do
not mind patronizing a Safeway that is having a price war with another rival
supermarket, but I do mind patronizing a protection agency whose deci-
sions are ignored by other agencies. This means that if there is a dominant
protection cartel, customers will patronize the cartel, not the lower-price
upstarts.
2. Protection firms with differing law codes must offer a form of quality col-
lusion that provides a common product (a final decision) to their respective
customers when interests clash. The firms must have contractual agreements
to cooperate when potential conflict of interest is present.

292
 Rejoinder to David Friedman on the Economics of Anarchy 293

3. A cooperating network of protection service agencies could use aggressive

force to enforce its market domination (Friedman does concede this point,
although he doubts its likelihood).
4. The adjudication network is stable only if it can use force to put down out-
law agencies that do not accept its higher-order arbitration decisions. Such
a network also could use force to put down firms that do not adhere to the
collusive agreement.
The adjudication network could divide the market into exclusive territories
and institute taxation. Each firm belonging to the network would agree not to
deal with upstart firms, or with firms that violated against the common agree-
ment to monopolize. Under this agreement the forces that usually break down
cartels—new entrants and renegade colluders—cannot obtain market share.
What Happens to Noncooperating Firms Under Anarchy?
Friedman assumes that the adjudication network need not implement vio-
lence or the threat of violence against noncooperators. They can simply let
these firms, which supposedly must settle their conflicts with violence, go out
of business.
Friedman and I agree that outlaw firms will not prosper but we have differ-
ent reasons for holding this belief; these reasons lead to different conclusions
about the likelihood of collusion. Friedman thinks that outlaw firms will lose
customers because of competitive market forces. But competitive forces could
conceivably favor such firms. How would competitive market forces alone
prevent an outlaw firm from increasing its business by promising never to turn
over its guilty customers for imprisonment or trial?2
I think this kind of outlaw firm will fail, but not because customers will
automatically stop patronizing it. The threat of violence from the network can
enforce compliance, or the network could brand such firms renegades and cut
off all relations with them. Nonconforming firms will lose market share and
go out of business because they cannot promise peaceful adjudication. But we
should not be so quick to jump on the anarchist bandwagon. The disciplinary
actions of the network that put down these outlaws are precisely the actions
that could enforce collusion as well.
Friedman also thinks that an anarcho-capitalist society would be safer from
a power grab than a government. He cites ideology as the relevant constraint
in both cases—“The restraints which prevent a military coup are essentially
restraints interior to the men with guns.” Friedman portrays government officials
as more power-hungry than businessmen and thus more dangerous. I did not
deal with this issue in my original piece, but I am nonetheless skeptical about
Friedman’s argument.
Businessmen and government officials differ little with respect to tempera-
ment. Electing businessmen to political office, even average ones (opposed to
those who deliberately seek election), would not change the tyranny of gov-
294 Anarchy and the Law

ernment much. In addition, businessmen, if in a position to engineer a coup

through the network, might prove more efficient and cost-effective than their
public-sector counterparts. A privately owned network holds out the possibil-
ity of residual claimancy and profits, which makes the likelihood of a coup
through the network might prove more efficient and cost-effective than their
public-sector counterparts. A privately owned network holds out the possibility
of residual claimancy and profits, which makes the likelihood of a coup through
the network greater.
Finally, Friedman thinks that there will be a very large number of protection
agencies, thus making collusion more difficult. But today there are a very large
number of police forces and local governments, yet they still collude. In the
network the number of truly independent sources of power is likely to be small.
It is not the number of police forces that matters; it is the number of sources
for final-order arbitration.
Perhaps Friedman has in mind a world where the number of independent
protection agencies is initially so large that a collusive network cannot get
off the ground. But if collusion, one public good among agencies, cannot be
provided, neither can the punishment of renegades be provided, another public
good among agencies. We cannot have it both ways.
Furthermore, a large number of small agencies implies only that the resulting
pools of collusion will be geographically limited. Rather than a united Europe,
we will have the Swiss confederacy. A smaller government may or may not be
a better government, but it is a government nonetheless. And over time, we can
expect some amount of consolidation among these groups of small governments,
just as we have seen throughout world history.
Governments often do terrible things, but the reason we observe them so
frequently is because they are the predominant form that a stable equilibrium
takes. If getting rid of a geographic monopoly of coercive power is our goal,
my conclusion, unfortunately, is one of guarded pessimism.
Notes
1. See Cowen (1992). I refer interested readers also to Caplan (1993), another (unpub-
lished) critical comment on my original piece. Caplan argues that anarcho-capital-
ist protection firms need only bilateral relations, not a network, and that bilateral
relations would not imply collusion.
2. Friedman seems to assume that an outlaw firm can only take the form of a firm that
settles all disputes by brute force.
References
Caplan, Bryan. 1993. “Comment on Tyler Cowen’s ‘The Economics of Anarchy.’”
Unpublished manuscript. Princeton University, Department of Economics.
Cowen, Tyler. 1992. “Law as a Public Good: The Economics of Anarchy.” Economics
and Philosophy 8: 249-67.
 18
Networks, Law, and the
Paradox of Cooperation
Bryan Caplan and Edward P. Stringham
Abstract
There is a tension between libertarians’ optimism about private supply of
public goods and skepticism of the viability of voluntary collusion (Cowen
1992, Cowen and Sutter 1999). Playing off this asymmetry, Cowen (1992)
advances the novel argument that the “free market in defense services” favored
by anarcho-capitalists is a network industry where collusion is especially fea-
sible. The current article dissolves Cowen’s asymmetry, showing that he fails
to distinguish between self-enforcing and non-self-enforcing interaction. Case
study evidence on network behavior before and after antitrust supports our
analysis. Furthermore, libertarians’ joint beliefs on public goods and collusion
are, contrary to Cowen and Sutter (1999), theoretically defensible.
1. Introduction
Cowen and Sutter (1999) argue that libertarian doubts about the viability
of collusion are inconsistent. How, they ask, can free-market economists be
simultaneously optimistic about the private production of public goods, but
skeptical about collusion? Collusion is, after all, a public good vis-à-vis com-
peting firms. Cowen and Sutter’s challenge may be dubbed the Paradox of
Cooperation: Laissez-faire can cope with either the monopoly or the public
good problem, but not both.1 Libertarians who dismiss concerns about collusion
are at best over-confident.
Cowen (1992) goes further by claiming that in so-called network indus-
tries, libertarians are not just over-confident, but wrong: Laissez-faire leads
to monopoly, not competition. Although his network industry argument poses
a challenge for more moderate libertarians too, Cowen primarily employs it
to expose the fundamental weakness of the radical anarcho-capitalist position
(Rothbard 1978, Friedman 1989): An excellent example of a network industry
is the very free market in defense services that anarcho-capitalists favor. In
consequence, anarcho-capitalists are sorely mistaken about the consequences
of their ideas if tried.

295
296 Anarchy and the Law

We maintain that these critiques are thought-provoking but wrong. The

dilemmas that Cowen (1992) and Cowen and Sutter (1999) put forward are
artificial. Cowen’s (1992) network industry argument neglects the deep contrast
between prisoners’ dilemmas and coordination games; voluntary solutions
are self-enforcing for the latter but not the former. Cowen and Sutter’s (1999)
Paradox of Cooperation likewise glosses over major dissimilarities between
collusion and traditional public goods. Empirically, moreover, there is little
evidence that modern network industries have the collusive powers Cowen
ascribes to them. Even before antitrust laws could have deterred collusive be-
havior, voluntary efforts to restrict competition in network industries were not
noticeably more successful than in other areas of the economy. The paper has
the following structure: Section 2 explains Cowen’s (1992) network industry
argument in depth and discusses responses that take his challenge at face value.
Section 3 critiques Cowen’s position: There are deep strategic reasons why
socially beneficial standardization is easier to orchestrate than socially harmful
collusion. Section 4 provides supporting empirical evidence from industry case
studies, both before and after the rise of modern antitrust enforcement. Section
5 deconstructs Cowen and Sutter’s (1999) Paradox of Cooperation, arguing
that libertarians’ beliefs about monopoly and public goods can be grounded in
sound economic analysis. Section 6 concludes.
2. Network Industries and Collusion
2.1. Cowen’s Argument
The underpinning of Cowen’s (1992) critique of anarcho-capitalism is the
notion of network industries. In such industries, the value of the good increases
as the number of users increases (Katz and Shapiro 1985, 1994, Liebowitz and
Margolis 1994). ATM cards, telephones, and software are standard examples.
ATM cards grow more useful when the number of ATM machines rises; ATM
machines become more profitable to set up as the number of ATM cards in
circulation expands. The whole point of owning a phone, similarly, is to call
other phone-owners and talk to them. Software file formats are less attractive
if no one else can open them.
In a network industry, decentralized provision runs two risks. The best-known
is product convergence that locks in a sub-optimal standard (Liebowitz and
Margolis 1994). A potentially more destructive problem, though, is proliferation
of incompatible products. It would be a serious drawback if a phone produced
by one firm could not interface with a competitor’s phone, to take a mundane
example. Similarly, in an anarcho-capitalist defense services market, it would
be disastrous if firms’ products were “incompatible”; that is, if competing
suppliers shared no procedures for resolving disputes between their respective
clients. As Cowen puts it, “The food that I buy from one supermarket is just
as valuable to me regardless of whether this supermarket has friendly relations
with its competitors; this independence does not hold with private protection
agencies” (1992:260).
 Networks, Law, and the Paradox of Cooperation 297

Monopoly is one way around lock-in and compatibility dilemmas. But there
is an attractive alternative remedy: Set up an industry “club” or network. Com-
peting firms could then work together, not only to make their products mutually
compatible, but to overcome lock-in problems as they arose. Phone companies
would agree to interconnect, competing defense firms to peacefully arbitrate
disputes using mutually acceptable rules. Proponents of anarcho-capitalism
have forcefully maintained that any sensible businessman would do precisely
that (Rothbard 1978, Friedman 1989, Benson, 1990). An “outlaw” firm that
refused to arbitrate—or recognize unwelcome verdicts—would be reduced to
unending warfare with its competitors.
While Cowen recognizes the benefits of networks, he emphasizes their seri-
ous downside. The networks that prod their members towards product compat-
ibility are, as a corollary, well-structured to promote price collusion (Bernheim
and Whinston 1985). Voluntary cartels may be notoriously ineffective due to
cheating and entry, but networks have a special ability to short-circuit the usual
market checks.
Why? A network can punish non-colluders by expelling them from the club,
and exclude new entrants by refusing to admit them. Outsiders cannot undercut
the network by selling the same product for less, because services provided
outside the network cease to be the same. A phone company with which other
companies refuse to connect, or a defense service with which competing sup-
pliers refuse to arbitrate, cannot offer the product consumers want. As Cowen
elaborates: “[M]embership in the common arbitration network is one of the
most important services an agency can offer its members. Network member-
ship implies that interagency disputes are settled without risk of force or radical
uncertainty about the final outcome” (1992:259-260). Firms may remain de
jure “independently owned and operated,” but for practical purposes there is
but one: “In the network the number of truly independent sources of power is
likely to be small” (Cowen 1994:331; emphasis added). The transaction costs
of enforcing collusion might be prohibitively high. But if so, it hardly means
that laissez-faire works well. When transaction costs preclude collusion, they
also rule out simple standardization. After all, why should transactions costs
be greater for the former than the latter? The alternative to the orderly cartel is
therefore cacophonous competition.
Thus, Cowen (1992) amounts to a virtual impossibility theorem for the
efficiency of network industries under laissez-faire. When applied to an an-
archo-capitalist defense industry, moreover, his impossibility theorem looks
particularly menacing. Low transaction costs in this market lead to far worse
than garden-variety monopoly. Since the defense industry, taken as a whole,
has a near-monopoly on force, the entire society would be in danger if collusion
worked. “Pay the monopoly price or live unprotected” would be a softball threat;
a defense cartel could up the ante to “Pay the monopoly price or be reduced
to slavery.” Anarchy could easily morph into a state of the worst sort. High
transaction costs, conversely, would engender not just consumer frustration, but
298 Anarchy and the Law

interminable violent conflict between competing suppliers. Cowen’s impossibil-

ity theorem, as applied to the defense industry, implies that anarcho-capitalism
decays into either Hobbes’ despotic Leviathan or Hobbes’ brutish anarchy.
2.2. Competition for the Network and Competition between Networks
Before turning to the deeper flaws in Cowen’s analysis, it is worth considering
two less fundamental replies. The first is to appeal to the notion of contestabil-
ity. Just because a network is the only visible seller does not mean it will act
monopolistically. It may be fully constrained by fear of potential competition
from a new network. For defense, though, this claim is unpersuasive. However
over-rated the link between competition and number of competitors usually is,
the link in an anarcho-capitalist defense industry is very real. Once a group of
defense firms earned a large enough market share, they could credibly threaten
would-be replacement networks with violence.2 Entrants would not swarm
into the industry as soon as price rose above average cost. They would wait
until expected monopoly profits exceeded expected costs of an initial period
of warfare. In other words, contestability assumes a legally protected right of
entry. A dominant network in the defense industry is in a strong position to
suppress this right. Entry remains a lingering threat, but leaves ample leeway
for an incumbent network to impose a Hobbesian despotism. A second reply is
that a network industry can often support a number of competing networks. Just
because consumers put some value on mutual compatibility does not mean the
market will deliver full compatibility. Consumers may value diversity as well as
uniformity. Moreover, as Liebowitz and Margolis (1998) point out, diseconomies
of scale can outweigh the pressure for a single network. The Windows and Ma-
cintosh operating systems coexist. So do multiple languages. Why not multiple
anarcho-capitalist defense networks? Cowen specifically mentions the case of
McDonald’s restaurants, observing that “Different franchises of McDonald’s,
for instance, enter into common relations through the parent company and agree
not to compete with each other” (1992:261). But McDonald’s is only one fast-
food franchise out of hundreds! Even if chain restaurants controlled 100% of
the market, the chains would still compete with each other.
Unfortunately, competing defense networks, if viable, appear to run once
again into Cowen’s impossibility theorem. Disputes between networks’ respec-
tive clients will inevitably arise. If transactions costs are low, the rival networks
will reach mutually acceptable procedures for resolution. But once again, why
stop there? Why not go further and strike deals to suppress price competition
and scare off prospective entrants? In contrast, if transaction costs are high, this
means chaos, not ordered anarchy. Finding negotiation too costly, the competing
networks resort to violence.
2.3. Friedman’s Reply
David Friedman (1994) raises a simple but critical doubt about the link
between network goods and collusion. Suppose there are N firms in a network
 Networks, Law, and the Paradox of Cooperation 299

industry. Then even a complete set of N(N-1)/2 bilateral contracts between

competitors is not equivalent to one N-firm multilateral contract. Each bilateral
contract maximizes the joint profits of the two signatories, ignoring the interests
of the other (N-2) firms. The signatories have a mutual interest in avoiding con-
flict with each other, so we should expect their contracts to handle dispute reso-
lution. But they have almost no incentive to write collusive contracts, because
virtually all of its benefits spill over onto the other (N-2) firms. As Friedman
explains: Nothing in this situation requires or implies a single firm controlling
the whole, nor anything analogous to one. The network as I have described it
has no decision-making body. Its “decisions,” the set of legal codes it enforces,
are the outcome of independent profit making decisions by the individual firms
and bargaining between pairs of firms.
Nothing in the logic of the market for protection and arbitration implies that
the outcome will maximize the summed profits of the firms, as Cowen seems
to assert (1994:323). Friedman undercuts any claim Cowen might have to an
impossibility theorem. But one could retreat to the more moderate position that
a single N-firm multilateral contract would probably have lower transactions
costs than N(N-1)/2 bilateral contracts. One centralized clearinghouse may
cost less than N(N-1)/2 bilateral bank clearing contracts, and one centralized
arbitration network may cost less than N(N-1)/2 arbitration contracts. If so, an
unregulated market delivers one N-firm contract and, as per Cowen’s argument,
endogenously moves to the collusive outcome. The next section tries to meet this
claim head-on by arguing that even if the market delivers one N-firm contract,
the resulting network would focus on standardization, not collusion.
3. The Limits of Networks: Self-Enforcing Agreements and Beyond
Two jointly exhaustive inferences form the backbone of Cowen’s thesis. First,
“If the network can implement successful sanctions against outlaws, however,
the network can also implement successful sanctions against potential com-
petitors”; second, “If punishing potential competitors is too costly, punishing
outlaws is also too costly” (1992:259). The underlying premise is that outlaws
and potential competitors are equally costly to punish. Initially, this looks highly
plausible. How could it be wrong? Consider one of the most frequently in-
voked sanctions: the boycott (Rothbard 1978, Benson 1990). Can the nature
of a boycott’s target affect the costliness of making it work? Absolutely. Let
us distinguish two kinds of boycotts: self-enforcing and non-self-enforcing
(Telser 1980). A good example of the former is a boycott against a crooked
businessman. To maintain it, publicity alone is likely to suffice; no one wants
to continue dealing with a known cheat3 (Veitch 1986, Greif 1993, Benson
1993, Greif, Milgrom and Weingast 1994, Stringham 2003). Note further that
the business community does not need to carefully monitor its members to
enforce such a boycott. The cheater’s former victims think, in effect, “Fool
me once, shame on you; fool me twice; shame on me”; but those with no
prior dealings with the cheater similarly reason, “Fool him once, shame on
300 Anarchy and the Law

you; fool me once, shame on me.” If defense firm A reneges on an arbitra-

tion bargain with defense firm B, it alienates not just B, but its full array of
actual and potential trading partners. By breaking the rules, cheaters ipso
facto reduce the profitability of trading with them. Other businesses punish
them not out of sympathy with the victim, but from their proverbial regard
to their own self-interest.
On the other hand, a good example of a non-self-enforcing boycott would
be a refusal to deal with redheads. As long as “being a redhead” is uncorrelated
with “being a bad business risk,” it is more profitable for an individual merchant
to break the boycott than keep it. Hatred of redheads is likely to be heteroge-
neously distributed; but more fundamentally, even if anti-redhead preferences
were equally intense, boycotting them would be a public good. Simple public-
ity about the existence of redheads consequently falls on deaf ears. It would
take more drastic measures to sustain the boycott: mutual monitoring to detect
profit-driven violations of the boycott, “courts” to weigh evidence, and second-
ary boycotts to punish those “found guilty.”
So the nature of a boycott’s target matters. It is cheap to orchestrate self-en-
forcing boycotts of the dishonest, but expensive to orchestrate non-self-enforc-
ing boycotts of redheads. In fact, incentives parallel those for statistical versus
taste-based discrimination (Coate and Loury 1993). Cowen’s line of reasoning
could easily lead us to think that: “If the market can sustain discrimination
against contract-breakers, however, the market can also sustain discrimination
against redheads. If discriminating against redheads is too costly, discriminating
against contract-breakers is too costly.” This overlooks the interaction between
the nature of the target and the costliness of discrimination. Competitive pres-
sure reinforces statistical discrimination based on real group differences: People
who broke contracts in the past are more likely to break them in the future. But
competitive pressure dissolves purely taste-based discrimination (Sowell 1994):
Redheads’ dollars are as good as anyone’s. Unregulated markets are neither
generically “discriminatory” nor “non-discriminatory.” One form thrives, the
other withers.
The same point holds for networks; it is easy to reach some types of co-
operation, even as the cost of others remains prohibitive. Consider the classic
contrast between prisoners’ dilemmas and coordination games. Every industry
faces a prisoners’ dilemma: Firms within an industry can earn more profits if
they all collude, yet individual firms earn more if they continue to compete.
Coordination problems are less ubiquitous. They surface when consumers want
compatibility: DVDs that play in their DVD players, ATM cards that work in
unfamiliar ATM machines, or a defense firm that subscribes to a common body
of procedures for dispute resolution.
The difficulty of solving the two classes of problems hinges on self-enforce-
ment. In coordination games, maintaining a cooperative outcome is fairly simple.
If other banks issue ATM cards of standard dimensions, an oddball bank that
refuses to conform hurts only itself. The reverse holds in prisoners’ dilemmas.
 Networks, Law, and the Paradox of Cooperation 301

The temptation to defect actually rises with the expected extent of cooperative
play.4 If all of the other banks collude to charge exorbitant fees, profits of the
deviant bank that undercuts them go up. True, the banking network might offset
incentives to defect with extensive monitoring and punishment; but solving
coordination problems is far easier.
It is worth pursuing this point at length because Cowen maintains that
networks’ ability to standardize products is ipso facto evidence of their ability
to collude: The ability to collude is inherent in the nature of the network. The
network can internalize the externalities problem behind peaceful adjudication
only by suspending quality competition—that is, by offering a uniform set of
laws or higher-order adjudication procedures. The ability to engage success-
fully in quality collusion, however, implies that other kinds of collusion are
possible also (1992:259). Cowen here conflates two radically different sorts of
business cooperation under the generic heading of “collusion.” Standardizing
products is essentially a coordination game, fixing prices a prisoners’ dilemma.
As long as consumers want a uniform product, adhering to industry standards
is self-enforcing. As long as consumers prefer to pay less rather than more,
price-fixing is not. Ability to reach the cooperative outcome in the former in
no way “implies” ability to reach it in the latter.5
Cowen makes the strong claim that it is inconsistent to believe in only one:
“But if collusion, one public good among agencies, cannot be provided, neither
can the punishment of renegades be provided, another public good among
agencies. We cannot have it both ways” (1994:331). This inconsistency is il-
lusory: When firms peacefully resolve disputes and ostracize renegades, it is
selfishly optimal behavior in a coordination game, not civic-minded production
of a public good.
Cowen conflates standardization and collusion in a second way. By label-
ing product uniformity “quality collusion” he makes it sound as if the goal is
to hold product quality down. But isn’t uniformity better seen as an aspect of
quality? Consumers’ preference for standardized products is the motive to have
a network in the first place (Liebowitz and Margolis 1995).
On reflection, Cowen would probably acknowledge this, but retreat to the
position that network formation remains a “Faustian bargain”: Centralization
raises product quality by sacrificing the familiar benefits of competition. But
this Faustian tradeoff may not even exist, because coordination problems are,
compared to prisoners’ dilemmas, readily solved. Any network strong enough
to enforce collusion will be at least strong enough to realize the benefits of
uniformity. The reverse is not true: Ability to standardize—to overcome mere
coordination problems—hardly indicates ability to suppress ordinary compe-
tition. Stepping back, imagine graphing—in the spirit of Cowen and Sutter
(1999)—the feasible extent of cooperation as a function of its cost. Cowen
effectively partitions this graph into two regions (Figure 1). If the costs of
cooperation are low, as in Region 1, bargains of all sorts flourish—including
some with large negative externalities. If the costs of cooperation are high, as
302 Anarchy and the Law

in Region 2, mutually beneficial interaction is impossible. There is a collapse

into chaos.
The distinction between coordination games and prisoners’ dilemmas—more
generally, self-enforcing versus non-self-enforcing interaction—highlights a bet-
ter way to conceive the relationship between cooperation and its cost. Imagine
splitting the graph into three regions rather than two (Figure 2). In Region 1, the
costs of cooperation are extremely low. It is cheap to reach and enforce agree-
ments—even collusive agreements that require numerous actors to fix prices or
attack new entrants. In Region 3, the costs of cooperation are extremely high.
Elementary forms of coordination, like language and measurement, fail to arise.
But Cowen (1992) and Cowen and Sutter (1999) neglect Region 2, where the
costs of cooperation are intermediate: High enough to prevent collusion, low
enough to permit coordination. The remainder of the paper argues that this
intermediate case is not only logically possible but empirically dominant.

Figure 1
The Cost and Extent of Feasible Cooperation

Region 1 Region 2
Cooperation Can Cooperation Can
Overcome Both Overcome Neither
Coordination Coordination
Problems and Problems nor
Prisoners’ Dilemmas Prisoners’ Dilemmas
0
cost of cooperation

Figure 2
The Cost and Extent of Feasible Cooperation

Region 1 Region 2 Region 3

Cooperation Can Cooperation Can Cooperation Can
Overcome Both Overcome Overcome Neither
Coordination Coordination Coordination
Problems and Problems but not Problems norr
Prisoners’ Dilemmas Prisoners’ Dilemmas Prisoners’ Dilemmas

0
cost of cooperation
 Networks, Law, and the Paradox of Cooperation 303

4. Evidence from Network Industries

Cowen’s case is almost wholly theoretical. The usual historical evidence
on collusion under laissez-faire, he maintains, cannot be credibly extended to
network industries: “Although private cartels usually collapse of their own ac-
cord, most historical examples of cartel instability do not involve the benefits of
joining a common network” (1992:260). But Cowen provides little in the way
of empirical counter-examples to support his belief that networks industries
are different.6
This section takes a preliminary look at modern and historical network
industries. While they definitely standardize products in beneficial ways, there
is little evidence that network industries are more prone to collusion than non-
network industries. Instances of attempted and temporarily successful collusion
do surface. But collusive efforts in network industries appear neither more com-
mon nor more successful than in other sectors of the economy (Dewing 1914).
A full-blown comparative history of collusion in network and non-network
industries is beyond the scope of this paper. On Cowen’s account, however, the
contrast should be too large to miss.
The exercise remains probative, we maintain, in spite of the special potential
for anticompetitive violence in the defense industry. Once a single network
reaches the collusive outcome, it might be able to enforce collusion and deter
entry with the threat of violence. The critical question, though, is whether
decentralized firms can bootstrap themselves into this dominant position. This
is Tullock’s (1974) “paradox of revolution” in another guise. After a violent
movement gets off the ground, it can use violence to reinforce its position by
extorting help from fence-straddlers. The hard part is getting a violent move-
ment off the ground in the first place. In other words, saying that violence solves
the free-rider problem begs the question: Violent threats are only credible after
the free-rider problem has been non-violently solved to a moderate degree.
While the potential for violence under anarcho-capitalism raises special issues,
these will probably not materialize unless it is abnormally easy for networks
to peacefully collude first.
4.1. Modern Networks: The Credit Card Industry
The market for credit cards has all the defining characteristics of a network
industry (Carlton and Frankel 1995a, 1995b, Economides 1995, Evans and
Schmalensee 1995, 1999). The value of a credit card increases with the number
of participating consumers, merchants, and banks. As Evans and Schmalensee
(1999:138) observe, “[P]ayment cards are provided through a network industry
in which participants are linked economically in unusual ways. Payment cards
are useless to consumers unless merchants accept them, but merchants have
no reason to accept cards unless consumers carry them and want to use them.”
Consumers value widely accepted payment cards more, so issuers typically
belong to large networks. But competition persists (Stringham 1999, Zywicki
2000). The market sustains inter-network competition between networks
304 Anarchy and the Law

owned by member banks, such as Visa and MasterCard, proprietary networks

like Discover and American Express, and store-specific cards. What is more
striking is the scope of intra-network competition. Visa and MasterCard, the
two leading networks, are non-profit membership corporations with thousands
of member firms. They provide infrastructure and a large network of users,
and finance their services with membership fees (Hausman et al. 1999, Carl-
ton and Frankel 1995:646). Despite strong network features, there is vigorous
intra-network competition (Rochet and Tirole 2000). Evans and Schmalensee
(1995:889) note that:
Given the inherent interdependency of transactions, how—if at all—should the
costs, risk, and income from the “two sides” of the business be shared? In theory,
the problem could be addressed by having the organization (e.g., Visa) establish
the terms (i.e., interest, annual fee, special features) for all Visa cards issued by any
member as well as the discount rate to be paid by the merchants… Such an approach,
however, would be far more restrictive on competition at the intrasystem level than is
desirable (or, perhaps, even legal). Therefore, neither Visa nor MasterCard regulates
the amount charged to cardholders by its various issuers or the amount of discounts
paid by merchants.
Though one might expect the network to impose monolithic restrictions,
member firms have a lot of autonomy. Members cooperate to make the prod-
uct more convenient, not to stop them from stealing each other’s customers.
Visa founder Dee Hock (1999) explains that Visa was deliberately designed
to allow intra-network competition. According to Evans and Schmalensee
(1995:865–866):
Competition for consumers takes place between issuers of Visa and MasterCard…
Nationally, there are approximately 7,300 Visa issuers, each of which sets its own
interest rates, fees, features, and marketing strategy for its cards. Although many
payment cards are marketed locally, there are also nearly 100 national issuers, includ-
ing all the largest Visa and MasterCard issuing members… Competition to enroll
merchants to take a Visa or MasterCard brand and to service these merchants took
place among approximately 250 acquirer organizations.
The benefits of network membership are great. But this hardly induces the
networks to “squeeze” aspiring members, or subject them to draconian restric-
tions. Broad membership is what makes it valuable to join in the first place. The
natural way for networks to build and maintain such a membership base is a
“big tent” approach, where affiliating is cheap and low-hassle. If one network’s
rules create a lot of outsiders, a more inclusive network comes along to take
advantage of the situation. In the fifties, Diners Club created the first charge
card network among Manhattan restaurants (Evans and Schmalensee 1999:62).
Visa originated in 1966 when the Bank of America licensed its card nationally
and shortly spun off its franchise system to create a nonstock membership cor-
poration (Evans and Schmalensee 1999:66). MasterCard has similar origins.
It was a cooperative effort to induce many banks, merchants, and consumers
to jointly adopt the new card. Decades later, alongside a handful of existing
networks, Sears leveraged its store card to create Discover. Following the “big
 Networks, Law, and the Paradox of Cooperation 305

tent” approach, Discover offered such attractive rates that it became as widely
accepted as American Express shortly after its creation, turning profitable three
years later after a $300 million investment (Evans and Schmalensee 1999:232).
The credit card industry thus provides little support for Cowen’s fears. But
while evidence from modern examples can hardly be dismissed, antitrust is a
troubling confounding variable. The checkered history of antitrust makes us
doubt that the Department of Justice deserves credit for the accomplishments
of the credit card industry7 (McChesney and Shughart 1995). Still, perhaps
Visa and MasterCard permit intra-network competition because they must. It
is therefore in many respects more probative to examine networks during the
era prior to modern antitrust enforcement.
4.2. Networks Before Antitrust: Clearinghouses
Banking is a good example of a nineteenth-century network industry.
Competing banks formed clearinghouses to enhance the value of their prod-
uct. As Timberlake (1984:2-3) explains, “Instead of each bank establishing
a transactional relationship with all other banks, every bank sends a repre-
sentative to one place—the clearinghouse—where its debit items are cleared
against its credit items.” Gorton (1985), Gorton and Mullineaux (1987), and
Calomiris (1990) emphasize another function: Since the leading reasons for
bank failure were fraud and conflict of interest (Calomiris and Kahn 1991),
banks needed a way to signal honesty. One good signal was joining a banking
network liable for member obligations, conditional on adherence to its rules.
As Calomiris puts it, banks used “self-regulation, made credible by mutual
liability” (1990:283).
In the pre-antitrust U.S. banking industry, then, networks known as clear-
inghouses arose to reduce transactions costs and bolster reputations. “An
essential feature of the banking industry was the endogenous development of
the clearinghouse, a governing association of banks to which individual banks
voluntarily abrogated certain rights and powers normally held by firms” (Gorton
1985:277). Membership requirements and monitoring enhanced the public’s
trust in the redeemability of members’ bank notes and the overall soundness of
their business practices. As Gorton and Mullineaux (1987:461) explain:
The clearinghouse required, for example, that member institutions satisfy an admis-
sions test (based on certification of adequate capital), pay an admissions fee, and
submit to periodic exams (audits) by the clearinghouse. Members who failed to satisfy
[commercial-bank clearinghouse] regulations were subject to disciplinary actions
(fines) and, for extreme violations, could be expelled. Expulsion from the clearing-
house was a clear negative signal concerning the quality of the bank’s liabilities.
Did the threat of expulsion from the clearinghouse lead to a blatant pattern
of industry-wide collusion? No; as Dowd (1994:298) puts it, “Nor is there any
strong evidence, populist views about banking power notwithstanding, that
banks were able to cartelize the market successfully.” Banks that tried to set
rates found it difficult to punish cheating and provoked fierce competition.
306 Anarchy and the Law

Consider the case of the New York Clearinghouse, which decreed, in 1873, that
“No bank shall pay, or procure to be paid, interest upon deposits” (Sprague 1910:102).
Things did not play out as expected. As Sprague (1910:104) recounts:
The report of the clearinghouse committee seems to have been received with general
approval, both by bankers and by the public, but it led to no immediate change in
banking methods. It was considered at a meeting of the banks…and the adoption of
its principal recommendation, that interest on its deposits be prohibited, was favored
by about three-fourths of the banks. It was felt, however, that a unanimous agreement
was necessary to secure its effective adoption.
In 1884, American Exchange National Bank president George Coe com-
plained, “This subject has upon several occasions in years past been under
consideration, and its total abolition has been almost unanimously agreed to
among banks by written contract. Yet by the refusal of one or more members
it has failed to become a binding obligation” (Sprague 1910:375). Rate-fixing
banks would lose out to those offering competitive rates. Expelling rate-cutters
would have been legal, but apparently members saw it as imprudent. Exclud-
ing financially impeccable members would dilute the network’s reputation for
financial probity. Far better to keep transactions costs low by sticking to an
inclusive, “big tent” approach.
In another scheme a clearinghouse tried to fix rates of exchange. This too
was unsuccessful:
But the formation of new banks finally played havoc with the uniform-rate system.
While it lasted, it was obligatory upon every [member] bank, but in 1891 the newly
organized banks began to cut on rates. The clearing-house members endeavored
to induce the new banks to join the association, but did not at first succeed. It was
regarded as unjust to the member banks to hold them to the existing agreement when
their competitors were free, and accordingly, in June, 1891, the schedule of rates was
made no longer obligatory (Cannon 1910:15).
An additional check against collusion was banks’ credible threat to withdraw
from the network or refuse to join. As Dowd recounts:
A good example of banks “voting with their feet” even when the market could only
support one clearinghouse is provided by the demise of the Suffolk system. The Suf-
folk system was a club managed by the Suffolk Bank of Boston, but some members
found the club rules too constraining and there were complaints about the Suffolk’s
highhanded attitude toward members. Discontent led to the founding of a rival, the
Bank of Mutual Redemption (BMR), and when the latter opened in 1858 many of
the Suffolk’s clients defected to it (Dowd 1994:295).
Despite the benefits of participation, then, a dominant clearinghouse hardly
had a stranglehold on uppity members. Since one of a clearinghouse’s main
selling points is breadth of membership, they mostly stuck to issues where mem-
ber banks could broadly agree.8 Expelling financially unstable firms makes the
network more attractive for consumers; expelling up-and-coming firms makes it
less attractive. Conditioning membership on factors other than financial honesty
dilutes the value of the name brand of the network.
 Networks, Law, and the Paradox of Cooperation 307

So clearinghouses took a soft-line on some issues, like cutting rates. But

they took a hard-line on others. They had no qualms about ousting insolvent
banks. Calomiris (1990:288) explains that, “The Indiana insurance system re-
lied on bankers themselves to make and enforce laws and regulations through
a Board of Directors and, importantly, gave the board authority when to close
a bank. Unlimited mutual liability provided bankers the incentive to regulate
and enforce properly.” Because consumers knew that unreliable banks would
be penalized, it raised “the public’s perception of the quality of the ‘average’
bank” (Gorton and Mullineaux 1987:463). Thus, clearinghouses were bad at
orchestrating some forms of cooperation, but good at others.
During banking panics, the power of clearinghouses expanded. But this was
temporary by design:
Suppose that once the more hierarchical form of organization had been adopted
during the panic, the [clearinghouse] did not revert back to its more limited form.
Then individual banks, knowing that the loan certificates were available, would
have an incentive to make riskier loans since each would believe that the risk could
be spread over the other members through the loan certificate process. Clearly, this
would not be viable… Only by reverting back to the more limited organizational
form did individual banks have the incentives to monitor each other (Gorton and
Mullineaux 1987:466).
For Gorton (1985:283), “the existence of the clearinghouse suggests that
private agents can creatively respond to market failure.” At the same time, the
historical evidence disconfirms Cowen’s belief that a new—and perhaps worse—
market failure accompanies each of the market’s “creative responses.”
4.3. The Sports League Anomaly
There are numerous other examples of competitive network industries: ATM
machines, computer software, computer hardware, fax machines, financial
exchanges,9 the Internet, television, telecommunications, and more. Geddes
(2000) surveys utilities and network industries such as airlines, cable television,
railroads, telecommunications, and trucking, and concludes that laissez-faire
outperforms state control.10 There is however one cluster of network industries
where collusion has been fairly effective: professional and college sports11 (Boal
and Ransom 1997, Salop and White 1991).
The rules of sports leagues are often expansive. They address salaries,
player mobility, television contracts, revenue sharing, location, and more.
The underlying threat is expulsion of disobedient teams (NCAA Division I
Manual 2000–2001: Article 19). High-profile defiance does surface: In NCAA
v. Board of Regents, for instance, a group of large schools negotiated their own
television contracts in spite of NCAA rules. Nevertheless, Cowen’s pessimistic
scenario for network industries is often consistent with economic histories of
sport (Noll 1974). Leagues impose collusive rules and teams take sanctions for
noncompliance seriously.
308 Anarchy and the Law

There is however an alternative explanation for their successful collusion:

Professional sports are superstar markets (Rosen 1981). A vital characteristic of
their product, for many fans, is that the contending teams are “the best.” While
there is obviously a market for minor league games, college sports, and so on,
consumer interest declines rapidly with the quality of play.
Given these consumer preferences, collusion gets a lot easier. The supply of
good players is elastic, but the supply of “the best” players is extremely inelastic
almost by definition. A league where a moderate number of teams employ almost
all of the “best” players is like a natural resource cartel. This does not make
it any less laborious to initially reach a collusive agreement. But it multiplies
the present value of success, because the monopoly profits of natural resource
cartels are so persistent. There is little need to worry about entry. As long as
demand to watch the sport’s best players endures, a cartel can earn monopoly
profits indefinitely.
If this hypothesis is correct, the effectiveness of collusion in professional
sports is no cause for concern about network industries in general.12 Network
industries might function poorly when they also happen to be superstar mar-
kets. But this is a rare combination. Few consumers care much if their bank or
credit card company is “the best.” Networks in these industries are accordingly
unlikely to successfully jump from coordination to collusion.
Would anarcho-capitalist defense services turn out to be a superstar market?
Conceivably so: Free-market defense, like legal representation in the current
world, would be a positional good to some degree. Consumers might feel safer
with the best firm standing behind them. This pushes the market in a superstar
direction. But the effect is probably slight: Few people today see the need to hire
“the best” law firm, in spite of the positional nature of legal representation.13
Similarly, many consumers opt for low-quality, low-cost security in today’s
marketplace, despite the positional aspects of protection (Benson 1998).
5. The Paradox of Cooperation Resolved
Let us now return to Cowen and Sutter’s paradox:
Free market economists typically express confidence in the ability of markets to
produce public goods… At the same time, free market economists tend to be pessi-
mistic about the stability of cartels in an unregulated market. If markets successfully
produce local public goods, however, why are stable cartels not more prevalent?
(1999:168)
So far, our implicit response has been: Yes, it is hard for markets to produce
public goods, but private provision of defense services functions well as long
as free markets possess the humbler ability to solve coordination problems. In
other words, the externalities of social order are infra-marginal. If farmers grew
no food, or if defense providers failed to develop procedures for dispute resolu-
tion, society would collapse into chaos. Yet these dire situations are unlikely at
the laissez-faire level of output.
 Networks, Law, and the Paradox of Cooperation 309

On reflection, though, this response is too pessimistic. Common sense tells

us, and experimental studies verify, that voluntary production of public goods
is a reality (Schmidtz 1991, Smith 1980). What makes this possible? There
are two critical variables we would advance: (a) the effectiveness of partial
participation, and (b) ideological appeal. Furthermore, along both dimensions,
voluntary provision of traditional public goods like clean air usually has a
decisive advantage over voluntary collusion.
First consider the effectiveness of partial participation. Voluntary collabora-
tion never yields unanimity. But how injurious is the shortfall? This hinges on
the elasticity of outsiders’ behavior. Suppose that 50% of all firms in an industry
join a cartel to restrict production. They will be unable to raise prices much
because outsiders’ supply curves will typically be elastic. Firms that refuse to
join the cartel increase their output to exploit the situation. Indeed, if outsiders’
supply is perfectly elastic, strict unanimity is crucial; any departure from 100%
participation renders the cartel impotent. In contrast, if 50% of all people who
benefit from clean air decide to “do their part” by buying low-pollution cars,
they can make a significant dent in the problem. As long as the outsiders already
pollute to the selfishly optimal point, an improvement in the level of air quality
has no effect on their marginal incentive to pollute. Half of the drivers pollute
less; half pollute the same; air quality improves. Of course, neither the cartel
nor the clean air movement fully solves its public good problem. The point is
that voluntary pollution abatement is a partial success, whereas the voluntary
cartel is a full failure.
Admittedly, outsiders’ supply of a product is occasionally less elastic: A
natural resource cartel may be moderately effective in spite of partial participa-
tion, at least in the short-term. Similarly, outsiders’ response to altruism might
be more elastic: Donations to relieve world hunger could elicit a Malthusian
population response, leaving the level of starvation insensitive to charitable
giving. We can also imagine a crowding out of altruism, so that if some people
give more, others offset it by giving less; or, even more perversely, charities
might have conflicting goals (e.g. socialist and libertarian think tanks). But for
most purposes, we should expect outsider elasticity to be high for products but
low for causes. After all, the more successful a cartel is, the more profitable it
becomes to break it; but increases in charity rarely make it more profitable to
exacerbate the very ills the donations were intended to alleviate.
The effectiveness of partial participation warrants optimism only if partici-
pation rises above the selfishly optimal level—none—in the first place. This
is where ideological appeal makes its entrance. Empirically, people typically
are—to a minor extent—willing to make tradeoffs between their narrow self-
interest and their ideological beliefs (Tullock 1981). In spite of their diversity,
moreover, ideological commitments are not random. This gives rise to the second
asymmetry between cartels and more familiar public goods: While many people
willingly sacrifice to help the environment, combat world hunger, expel foreign
310 Anarchy and the Law

oppressors, or promote human liberty, few want to crusade for the maximiza-
tion of their industry’s total profits. Investors have occasionally heeded calls to
forego profit for a public-spirited cause, from turnpike construction in the 19th
century (Klein 1990) to “social investing” in the 21st.14 Exhortations to forego
profit for the benefit of fellow investors do not have the same moral resonance.
A general account of why some causes—but not others—elicit charity is beyond
the scope of this paper. But there can be little doubt that this contrast is real.
Cowen and Sutter (1999) wonder how free market economists can be opti-
mistic about voluntary public good provision, but skeptical about the prospects
of voluntary cartels. A natural explanation is wishful thinking. We argue, in
contrast, that both beliefs are reasonable. Cartels are unlikely to work with par-
tial participation, and in any case enjoy little ideological loyalty. More familiar
public goods, in contrast, cope better with partial participation, and are, due to
ideological appeal, more able to win voluntary support.
6. Conclusion: Public Opinion as a Public Good
Cowen and Sutter put forward a final, more challenging, paradox:
“[L]ibertarians believe that voluntary institutions do not necessarily produce
the public good of mobilizing public opinion against excess government inter-
vention” (1999:169). This point must be granted. But it impinges only on the
difficulty of establishing a libertarian society. It does not show that it would
be unstable once established. It does not even show that the costs of transition
outweigh the benefits. By itself, the paradox practically amounts to, “It is a good
idea, but it will never be.” Maybe so, but it is worth pointing out the endogeneity:
If widely accepted, this paradox would seem to be self-defeating. Once enough
people see something as a good idea, it generally happens.
Acknowledgment
We would like to thank Peter Boettke, Tyler Cowen, Robin Hanson, John
Hasnas, Dan Sutter, and two anonymous referees for numerous helpful com-
ments and suggestions. Scott Beaulier provided excellent research assistance.
The standard disclaimer applies.
Notes
1. It is worth mentioning that Cowen and Sutter (1999) critique a wide spectrum of
political positions, and find comparable inconsistencies in a variety of non-libertar-
ian viewpoints.
2. Sutter (1995) makes a stronger version of this claim. In his model of the “Protec-
tion Racket Game,” firms can credibly threaten violence even when there are no
network externalities and the market for defense services is highly decentralized.
While we doubt that the bad equilibria in Sutter’s model would be focal, developing
this argument must be left for future research.
3. The boycott victim could naturally offer, instead, to compensate prospective busi-
ness partners for the extra risk of trading with a known cheat. But the incentive
structure is essentially the same: Publicity alone leads the business community to
make cheaters worse off.
 Networks, Law, and the Paradox of Cooperation 311

4. Entry amplifies the contrast between coordination games and prisoners’ dilemmas.
The existence of common standards does not spur entry, and new entrants have
every reason to adhere to prevailing standards. The opposite holds for price collu-
sion. Artificially high prices raise the incentive to enter, and new entrants’ standard
strategy is to upset preexisting industry practices by under-pricing incumbent
firms.
5. There is a standard list of factors that make collusion easier to achieve. Some of
these are likely to make coordination easier as well: most obviously, a small number
of firms and ease of communication. Others probably make little difference: legal
restriction of entry makes collusion easier, but probably has little effect on coordina-
tion. Unless incumbents have “locked-in” an inferior standard, a new entrant has a
clear incentive to make its products compatible with those already on the market.
6. Cowen (1994:331) observes that “[T]he reason we observe [governments] so
frequently is because they are the predominant form that a stable equilibrium
takes.” But this hardly counts as empirical evidence for Cowen’s network industry
hypothesis. The ubiquity of government is equally consistent with virtually every
account of its origin. For example, one might argue that government universally
exists because the public supports it existence, and policy tends to match public
opinion.
7. There have been several major antitrust challenges in the credit card industry,
though their connection to “competition” is questionable. In 1975, the US DOJ
forced Visa and MasterCard to permit dual membership, or “duality.” But in 1998
the DOJ initiated a suit to forbid duality (Hausman et al. 1999). A recent lawsuit
by Discover against Visa and MasterCard focuses on interchange fees (Carlton
and Frankel 1995a, 1995b). Visa and MasterCard maintain that their fee structure
is necessary to cover the costs of running the networks and discourage free riding
(Evans and Schmalensee 1995, Allen 2000, Hanft, 2000).
8. With identical firms, of course, strict collusive rules can enjoy unanimous support.
But in the real world, the benefits of collusion are far from uniform; up-and-coming
firms, for example, tend to lose out (Libecap and Wiggins 1984).
9. The evidence on financial exchanges’ ability to effectively fix commission rates
is more ambiguous than the other cases and demands further research. From their
beginnings, exchanges in London and New York faced competition from other
exchanges and brokers who were not members of any exchange (Stringham 2002,
Banner 1998). In 1792, a handful of New York brokers agreed to fix commission
rates with the Buttonwood Tree Agreement. The attempt failed, but common rates
became the norm in 1817, and continued through the 1934 inception of the SEC.
In London fixed commission rates eventually fell apart on their own. Perhaps
fixed rates lasted so long in New York (Mahoney 1997) because they differentiated
members from less reputable bucket-shops.
10. See also Lal (1997). Gabel (1994) points to government regulation as a major reason
that competing telephone networks ended in monopoly. Mahoney (1997) likewise
argues that the SEC propped up brokerage commissions above market rates.
11. Cowen has raised this point in several informal exchanges.
12. Indeed, the effectiveness of collusion in professional sports may actually be ef-
ficiency enhancing. Most obviously, league rules increase the entertainment value
of sporting events by creating more evenly-matched teams (Neale 1964, Fort and
Quirk 1995).
13. Perhaps the relevant positional variable, though, is not absolute quality, but size.
Consumers might feel safer with the largest firm protecting them, instead of the
tenth largest. Empirically, again, this does not seem like a big factor. Larger auto
insurers, for instance, have more legal resources to defend their clients than small
312 Anarchy and the Law

insurers, but purchasers of insurance rarely care about firms’ relative size. The
reason, presumably, is that large firms also have proportionally more demands on
their resources. The threat of bringing the totality of their resources to bear on a
single case is not credible.
14. We would like to thank an anonymous referee for bringing the first example to our
attention.

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 19
Conflict, Cooperation and Competition
in Anarchy
Tyler Cowen and Daniel Sutter
Abstract
Caplan and Stringham (2002) attempt to rebut the “paradox of cooperation
(Cowen and Sutter 1999) as it applies to libertarian anarchy. The paradox in
the context of anarchy implies that if private defense agencies can cooperate to
avoid conflict they can also collude to reestablish coercion. Caplan and String-
ham argue that arbitration is self-enforcing while collusion requires solution
of a prisoner’s dilemma. We agree that collusion requires more cooperative
efficacy than arbitration, but maintain that arbitration requires considerably
more organization than a simple coordination game. If a network of protection
agencies can organize sufficiently to arbitrate disputes, they can also create a
barrier to entry by refusing to arbitrate with entrants.
***
Cowen and Sutter (1999) outlined a “paradox of cooperation.” If civil so-
ciety can use norms to enforce cooperative solutions, that same society will
be prone to certain kinds of cartels. In other words, cooperation-enhancing
social features will bring bad outcomes as well as good outcomes. To provide
a simple example, the Nazis relied on cooperation in addition to their obvious
coercive elements in perpetrating their crimes. The ability to organize therefore
is a mixed blessing. In the context of libertarian anarchy, this argument implies
that private defense agencies are likely to collude and reestablish coercion. We
refer the reader to our original paper for the details of the argument (see also
Cowen 1992, 1994).
Caplan and Stringham (2002) attempt to rebut the argument as it applies to
libertarian anarchy. They maintain that inter-agency collusion requires solution
of a prisoner’s dilemma problem, while private defense agencies face only a
coordination problem in resolving disputes peacefully through arbitration.
They view membership in an arbitration network of agencies as self-enforcing
and believe that such a network will not evolve into a cartel. Self-interested
individuals will defect from a cartel in the absence of a sufficiently vigorous
punishment mechanism. Private defense agencies supposedly have enough
cooperative efficacy to overcome the coordination problem but cannot collude.
Thus the arbitration network will not devolve into government.

315
316 Anarchy and the Law

Caplan and Stringham have advanced the debate on cooperation and anarchy.
We accept their contention that collusion requires greater organization among
network members than establishing a system of arbitration. We remain skeptical
though about the likelihood of benevolent noncollusive anarchy. Establishing
an arbitration mechanism we contend brings us closer to collusion than their
arguments suggest. An arbitration scheme requires far more organization than
a simple convention, like driving on the right hand side of the road, which sig-
nificantly narrows the space between cooperation and collusion. An arbitration
network should have sufficient organization to create a barrier to entry by refus-
ing to arbitrate disputes with an entrant agency. Even if the network initially
lacks the organization necessary to collude, entry barriers create conditions
likely to lead to the evolution of government.
1. Confrontation Games, Equilibrium Selection and Arbitration.
Conflict is costly, and the desire of utility maximizing in individuals to
control the cost of conflict creates the potential for ordered anarchy. Figure
l presents the normal form of a confrontation game between two private pro-
tection agencies. Two protection agencies, Able and Baker, face a potential
confrontation due to a dispute between clients of the two agencies. A customer
of Able accuses a customer of Baker of violating her rights as entailed in her
contract with Able. The customer seeks redress against the alleged perpetrator
through Able. Each agency has two actions in the game, which we label for
convenience Challenge and Backdown. Challenge for Able refers to aggressively
pursuing their customer’s claim, and using force if necessary to prosecute the
offender. Challenge for Baker refers to aggressively defending their customer.
The payoff matrix in Figure 1 presents utility payoffs for each agency, but we
will only use the ordering of the outcomes from 4 (best) to 1 (worst). Conflict
occurs if both agencies choose their Challenge action, and is costly. The most
preferred outcome for each agency is to Challenge and have the other agency
Backdown. The costs of conflict exceed the financial stake each agency has in
this one interaction so each agency prefers to Backdown to Challenge when
the other agency Challenges.1
The game in Figure 1 is a coordination game with two Nash equilibria
in pure strategies, one where Able backs down to Baker’s challenge and the
second where Baker backs down to Able’s challenge. The costs of conflict
provide an incentive for a peaceful resolution of the confrontation (Rothbard
1978, Friedman 1989, Benson 1990), but do not determine which equilibrium
will prevail. Nonetheless we can already see the potential for the evolution of
government in the interests of some parties to the adjudication prevail over the
interests of others.
We also can see that only one of these equilibria is libertarian (Sutter 1995).
Both equilibria may be peaceful, but at least one equilibrium does not respect
individual rights. For instance, Able (the victim) backing down is an equilib-
rium of the confrontation game. Caplan and Stringham (and other proponents
 Conflict, Cooperation and Competition in Anarchy 317

Figure 1
A Confrontation Game between Protection Agencies

Baker
Challenge Backdown
Challenge 1,1 4,2
Able
Backdown 2,4 3,3

Payoffs are ordinal with 4 indicating agency’s most preferred outcome and 1 its least
preferred outcome.

of anarcho-capitalism) have not to our minds offered an argument why the

competitive, libertarian equilibrium is likely to prevail.
The confrontation between the agencies is more than a pure coordination
game. The agencies care about which equilibrium prevails; in other words, the
game also involves division of a surplus. Repeated play of the confrontation
game in Figure 1 increases the incentive of each agency to fight and attempt to
establish the equilibrium in which they capture the gains of cooperatives. An-
archy might be peaceful after an initial conflict, but equilibrium selection then
would depend on the relative strength of the agencies. If might makes right, as
Umbeck (1981) argues, only by luck would the libertarian equilibrium prevail.
And over time, an agency that consistently backs down would lose customers.
Customers will patronize agencies that can win battles, and the protection market
will become increasingly concentrated.
Arbitration could alter the game as portrayed above. We can imagine, for
instance, that the agencies take turns backing down, as suggested by an arbitra-
tor. If the arbitrator decides based on evidence of rights violation, libertarian
rights would be respected and each agency could stay in business. Technically
speaking, arbitration offers the hope of a libertarian outcome through a correlated
equilibrium of the confrontation game, with the arbitrator’s decision serving as
the correlating signal. Establishing a correlated equilibrium, however, is more
complicated than implementing a Nash equilibrium in a pure coordination
game. For one thing the agencies’ ignoring the signal and playing one of the
Nash equilibria of the game in Figure 1 remains an equilibrium with arbitration.
So the non-libertarian outcomes do not go away. Furthermore establishing a
credible arbitrator and inducing the parties to follow the arbitrator’s decision
requires organization. The organization required for an arbitration network
creates the potential for anti-competitive actions by the network; we now turn
to this topic in more detail.
2. Arbitration, Barriers to Entry, and Collusion
Consider the decisions a group of defense agencies must make to arbitrate
disputes arising between the agencies’ clients. The network must have some
means of determining which agencies are members, who will serve as arbitra-
318 Anarchy and the Law

tors in disputes among the members, and the rules that will apply in resolving
disputes. These decisions cannot be made once and for all; rather the network
will need a procedure to determine membership. In a competitive protection
market, new agencies might always arise, or clients of the network agencies
might travel farther and encounter agencies not currently in the network. Agen-
cies might fail to abide by an arbitrator’s decision, so the network will also
need a rule to expel or punish members. And since arbitrators retire, or may
fail to apply the agreed on rules properly, the network will need a procedure
for deciding acceptable arbitrators and rules for arbitration.
A network with this degree of organization could create a barrier to entry
into the local protection market by refusing to arbitrate disputes with an entrant.
Suppose Young Guns is a new agency trying to enter the market. The members
of the network have a common interest in preventing new competition so the
network votes to not admit Young Guns. The network then has a ruling requir-
ing members not to arbitrate disputes with nonmember agencies.2 Members are
supposed to stand firm and demand that Young Guns back down in any dispute.
Young Guns will then either have higher costs from constant conflict or be unable
to effectively defend its customers’ interests. This serves as a barrier to entry.
In this framework, consider the (implicit) argument of Caplan and String-
ham. If Able has a dispute with Young Guns, it faces the Confrontation game
in Figure 1 and has an incentive to defect from the network’s decision to fight
Young Guns to avoid the cost of conflict. In essence the network is relying on
Able (and other members with disputes with Young Guns’ customers) to bear
the costs of conflict to drive the entrant out of the market. Able may be reluctant
to provide this public good for the network without side compensation but may
nonetheless stand firm against Young Guns.
Let us consider in more detail Able’s decision to abide by the network’s rule
not to arbitrate disputes with nonmember agencies, as opposed to defecting from
the network and cutting a separate and “reasonable” deal with Young Guns. The
network could threaten expulsion against members who accommodate entrants.
Membership in the network is valuable, so a credible threat of expulsion could
make Able willing to stand firm. Furthermore, the network could extend the
entry barrier contract to arbitrators, threatening to stop employing arbitrators
who arbitrate disputes with non-network agencies. Normally cheating on a cartel
is difficult for members to detect, but monitoring arbitrators might provide an
easy way to detect cheating. Without arbitration Able faces the confrontation
game from Figure 1 and the choice between the two pure strategy equilibria.
The “division of the surplus” element of the confrontation game provides Able
an additional incentive to stand firm; Able wants to induce selection of the
equilibrium in which Young Guns backs down. Indeed, backing down against
Young Guns could be particularly costly for Able, which could lose many of
its customers to other agencies in the network willing to stand firm. Unlike the
case of a price cartel, a member may not gain from defecting from an agreement
to challenge entrants. Finally, the network may back up Able should its firm
 Conflict, Cooperation and Competition in Anarchy 319

stand with Young Guns lead to a violent conflict; assistance from the network
in a fight would share the cost of this collective good.
The network also might decide on the less extreme strategy of unfair ar-
bitration with entrants—entrants might have to accept arbitration by one of
the network’s arbitrators with the arbitrator instructed to decide in favor of
the network. The arbitrator might give Young Guns enough in his decision to
prevent a violent conflict, but not enough to be fair. Although the reader might
object that Young Guns would never agree to such biased arbitration, their only
alternative is conflict in each dispute with the network. By construction of the
example, the incumbent, not the entrant, has the first-mover advantage. Young
Guns could avoid constant conflict only by backing down on a regular basis,
which would render it an ineffective entrant.
The network could go one step further and force member agencies to change
their laws. The network will have procedures for expelling member agencies.
If say a two-thirds vote of members is necessary to expel a member, a super
majority of agencies could demand changes of the laws of minority agencies.
Suppose that one agency in the network allows its customers to grow, buy and
use drugs, while all other agencies enforce drug prohibition. Customers of the
prohibitionist agencies might object to nearby availability of drugs. The other
network members could threaten the libertarian agency with expulsion if it does
not prohibit drugs. Once expelled, the agency faces a situation parallel to that
of the entrant discussed above. If the entry deterrent is credible, the expulsion
threat may be credible as well.
The arbitration network may not be able to fix prices or establish a full
cartel, at least not immediately. Although all current members of a network
have a common interest in deterring entry by new rivals, all have the incen-
tive to chisel on a price fixing agreement. And expelling members is costly
for a network. Network members might be reluctant to expel cheaters, and
the potential exists for defection of several agencies at once. Also, price-
cutting may be difficult to observe. Thus we accept Caplan and Stringham’s
contention that collusion will require greater cooperation than establishing
a network.
That being said, price competition still may disappear over time. If a core
group of agencies manage to institute coercive taxation, the incentive for price
shading will disappear. Governments may compete against each other with lower
taxes, as we find in today’s world as well, but the previous customers now have
become tax payers, who must pay the price whether they like it or not. This part
of the story is more speculative, but it shows how easily inter-agency cooperation
can evolve into widespread coercion and indeed centralized government.
No doubt we can imagine other, non-coercive equilibria for the game. “Folk
theorems” suggest most beneficial outcomes can be sustained as an equilibrium
in a repeated games, provided agents hold the right conjectures and have long
enough time horizons. Nonetheless we believe that our postulated process is
at the very least plausible.
320 Anarchy and the Law

3. Empirics
We must take seriously the fact that governments exist all around the world,
for better or worse. Even without further analysis, government appears to be the
most likely equilibrium of a large number of political games. History shows that
“cooperating to coerce” is relatively easy to establish, regardless of the exact
path to that final state of affairs.3
Looking to more specific examples, the arbitration network of protection
agencies is similar to the merchant guilds described in Grief, Milgrom and
Weingast (1994). Merchant guilds arose to protect traveling merchants from
expropriation by the princes of different cities. Caplan and Stringham cite
the guilds in support of their claim that arbitrating interagency disputes is
self-enforcing. Yet refusing to trade with princes who expropriate merchants’
property was not self-enforcing. A boycott of a city that recently expropriated
a merchant was vulnerable to defection and difficult to enforce. The volume
of trading falls when a boycott is declared, so the marginal value to a city of
a merchant rises and at a sufficiently low volume a prince’s promise not to
expropriate merchants becomes credible. Trading by only a few merchants
could allow the city to defeat the boycott. Merchants needed the organization
of the guild to generate a boycott effective enough to deter expropriation by
princes; the guild threatened boycott-violating merchants with expulsion and
membership in the guild had to offer benefits (Grief, Milgrom and Weingast
1994). Once organized to protect merchants, guilds often managed to restrict
entry to benefit current members.
The National Collegiate Athletic Association (NCAA) provides another
example of a network formed to help overcome a coordination problem but
which has succeeded in cartel behavior. The NCAA was formed in the early
1900s to enforce rules to limit the violence in college football (Byers 1995).
An organization was needed to write rules, schedule games and identify
schools not complying with the rules. But the organization moved beyond the
simple coordination tasks to perform as a cartel. The major cartel function of
the NCAA has been of course to limit the compensation of student-athletes to
tuition and room and board, despite the millions of dollars of revenues gener-
ated by major athletic programs each year (Fleisher, Goff and Tollison 1992).
The organization created to enforce the rules also had the ability to adopt new
rules, and in 1952 the NCAA approved measures to punish members who paid
players; adoption of the punishment mechanism reduced the competitive bal-
ance of major college football (Eckard 1998). Caplan and Stringham suggest
that competing networks might reduce the potential of a coordinating network
to enforce a cartel, but the existence of a rival organization in college sports,
the National Association of Intercollegiate Athletics (NAIA), has failed to limit
the NCAA’s cartel function.
 Conflict, Cooperation and Competition in Anarchy 321

4. Conclusion
We do not contend that an arbitration network will immediately begin collud-
ing and become a government. The ability to deter entrants, however, begins the
devolution toward government. Collusion by the member agencies is superior
from their point of view. We thus continue to believe that a paradox of coopera-
tion holds for the adjudication of legal disputes. Even the ordered, libertarian
equilibrium in anarchy is likely to result in the reemergence of government. It
makes us doubt the value of experimenting with anarchy, given the risk of chaos
and the potential for a decidedly unlibertarian equilibrium.
Acknowledgment
We would like to thank Bryan Caplan, Eric Crampton and a referee for
comments on an earlier draft.
Notes
1. If an agency backs down from a challenge in this instance, they might well lose
their customer. The present value of profit from an individual customer over her
expected term of patronage is plausibly small compared to the cost of even a mod-
erately violent confrontation. If the costs of conflict are always relatively small,
anarcho-capitalism is likely to be quite violent.
2. At least disputes arising among residents of the local area.
3. Caplan and Stringham do not take this global evidence seriously enough. Their
comment considers numerous other supposed “network industries” (of their own
choosing), but does not consider the universality of government in modern industrial
society.
References
Benson, B. (1990) The Enterprise of Law. San Francisco: Pacific Research Institute.
Byers, W. and Hammer, C. (1995) Unsportsmanlike Conduct: Exploiting College Athletes.
Ann Arbor: University of Michigan Press.
Caplan, B. and Stringham, E. (2002) “Networks, Law, and the Paradox of Cooperation.”
Review of Austrian Economics, 16: 309-326.
Cowen, T. (1992) “Law as a Public Good: The Economics of Anarchy.” Economics and
Philosophy, 8: 249-267.
Cowen, T. (1994) “Rejoinder to David Friedman on the Economics of Anarchy.”
Economics and Philosophy, 10: 329-332.
Cowen, T. and Sutter, D. (1999) “The Costs of Cooperation.” Review of Austrian
Economics, 12: 161-173.
Eckard, W. W. (1998) “The NCAA Cartel and Competitive Balance in College Football.”
Review of Industrial Organization, 13: 347-369.
Fleisher, A. A. III, Goff. B. L., and Tollison, R. D. (1992) The National Collegiate Athletic
Association Chicago: University of Chicago Press.
Friedman, D. (1989) The Machinery of Freedom, 2nd ed. La Salle IL: Open Court.
Greif A., Milgrom, P., and Weingast, B. R. (1994) “Coordination, Commitment, and
Enforcement: The Case of the Merchant Guild.” Journal of Political Economy, 102:
745-776.
Rothbard, M. N. (1978) For a New Liberty, revised edition. Francisco: Fox, Wilkes.
Sutter, D. (1995) “Asymmetric Power Relations and Cooperation in Anarchy.” Southern
Economic Journal, 61: 602-613.
 20
Conventions: Some Thoughts on the
Economics of Ordered Anarchy
Anthony de Jasay
1
Theft, robbery, and default have robust attractions. Property and contract look
fragile by comparison. On the whole and most of the time, they nevertheless
prevail. This result borders on the counterintuitive, since it goes against palpable
interests. Why is it that these interests nevertheless usually fail? It is far from
self-evident that they should. An explanation is needed. The standard one is that
property and contract prevail because the state enforces the laws that secure
them. But unless cooperative behavior is for some reason first established, how
can the state itself prevail?—since it is not obvious why it should. For it must
stand up against the same robust, palpable interests as the very institutions it is
supposed to protect, and must somewhere find the strength that property and
contract need, but apparently cannot find in their own defense. Simply assum-
ing that the state does uphold them, because after all this is what the facts are
saying, is to my mind shallow, as well as potentially circular. Exploring the
possibility of an endogenous theory may well permit a deeper insight into these
institutions—even if the theory is no more than a coherent but counterfactual
account of how they might have arisen, rather than a factual one of how they
did arise.
It has become a commonplace that the application of such concepts as
rational choice, maximization, efficiency, and equilibrium presupposes some
institutional framework, within which the rules of property and contract have
pride of place. On the specific content of this institutional framework depends
the form that social cooperation takes in the division of labor and the allocation
of other resources. Doesn’t, however, the dependence go the other way, too, so
that what we are really facing is interdependence?
Marx, as we may remember, maintained that it was the economic “infrastruc-
ture,” the “forces of production” (by which he basically meant technology) that
engendered the institutional “superstructure,” the “relations of production” (by
which he basically meant property relations). The standard view in contemporary
thought is the exact opposite. It stands Marx on his head: legal and political
institutions are the “infrastructure” that supports the economic “superstructure,”

322
 Conventions: Some Thoughts on the Economics of Ordered Anarchy 323

without which some of the principal forms of social cooperation, notably the
beneficial interaction of free agents in markets, would not even be possible.
Here, the dependence goes from the legal and political to the economic: law
and its enforcement are prior to market exchange.
However, even if no causal priority is imputed to institutions, it is standard
practice to take them as exogenous data, rather than as part and parcel of a ra-
tional-choice explanation of social interaction. For example, in noncooperative
game theory (or, as Schelling would have it, the theory of interdependent ac-
tion), it is assumed that credible commitments do not exist; in cooperative game
theory, it is assumed that they do. It is of course perfectly legitimate to make
assumptions of this sort. But it does not help us to understand where contracts
come from, and why they are credible. If they are “given,” who gave them?
Lastly, what if was “given” is suddenly “taken away”? The recent collapse
of the set of bizarrely contrived institutions that used to pass for the socialist
system, and that looked as if it had been deliberately designed to breed the most
monstrous and perverse principal-agent problems, drives home the recognition
that such a far-fetched question can confront us in real life. Even if it were just
idle speculation, it would behoove scholarship to explore it. The recent (late
1980s, 1990s) historical accident that “took away” a set of socialist institutions
painfully erected on a gigantic scale over seventy years argues that conducting
such thought experiments is not a wholly idle pursuit.
2
Lest my purpose be misunderstood, before going on I should like to come to
terms with a class of theories that I believe are misdirected, seeking as they do
to explain institutions endogenously by demonstrating their efficiency. Harold
Demsetz, in his justly admired papers on the emergence of property rights
(esp. Demsetz, 1964 and 1967), contrary to most economists who tend to take
property rights as an initial datum, puts forward a theory of why and how they
came into being. For him, they evolved to fulfill a function, namely to let prop-
erty users internalize externalities when the gains from doing so exceeded the
costs. With hunting grounds in seventeenth-century Quebec used by the Indian
inhabitants as a common pool, over-hunting was the predictable result. This
imposed a negative externality on hunters as a whole. The rise in the value of
furs with the advent of the organized fur trade has increased the potential benefit
from “privatizing” the hunting grounds, with access to a given area reserved to
a given family. As the sole owner of this piece of hunting ground, the family
could fully internalize the net benefit from stopping the over-hunting. The same
cause produced the same effect in the late nineteenth-century American West
(Anderson and Hill, 1975). Open range ranching led to overgrazing. When the
value of cattle increased as transport to Eastern markets became cheaper, the
gain from preventing overgrazing came to exceed the cost of fencing in portions
of the range and reserving its use to a single rancher. In either case, internalizing
324 Anarchy and the Law

all the positive and negative effects from hunting or grazing removed the previ-
ous difference between maximizing the total net benefit from a given area of
land, and maximizing the net benefit accruing to a particular user of that land.
Only when there is a single (personal or corporate) user, entitled to all residual
benefits after bearing all costs, can he maximize his returns by maximizing
the “social” return, that is by adopting the most efficient hunting or grazing
practice. Multiple users have overriding, “dominant” free-rider incentives to
abuse resources at each other’s expense.
It also follows that if resource use has become more efficient in private
ownership, the people who used to have free access while the resource was in
common pool must now be better off as a group. But it does not follow that
some of them are not worse off, absolutely or at least relatively. The distribu-
tion of the benefit remains problematical. This is where functional theories of
institutions, destined to evolve toward ever more efficient solutions, must watch
their step. For, contrary to central command-obedience systems, an individual
incentive-based system is not teleological. It has no identifiable purpose and
is not seeking out efficient solutions (Streit, 1992). If it evolves and grows
particular institutions, it is not because social benefit is maximized thereby, but
because free agents adopt courses of individual action that seem best to them,
and never mind whether their action promotes or on the contrary frustrates social
efficiency. If it promotes it, it will do so as pure happenstance.
For take Rancher Smith whose cattle are now excluded by Rancher Jones’s
fence from part of the range. He has lost something. It is true that he will also
gain something, and probably more than he has lost, if he follows Jones’s ex-
ample and fences in another part of the range, stopping all strange cattle from
grazing there. But it is surely even better for him both to get this gain, and also
to stop Jones from inflicting any loss on him. Fairness and reasonableness need
have nothing to do with what he thinks is the best outcome for him if he can
get it. He may well try to tear down the fence Jones has put up, and the cost to
Jones of internalizing the grazing externality of the open range is not the cost
of putting up a fence, but also that of permanently guarding it from Smith, or
of buying off Smith’s intrusions. “Normally,” Jones and Smith ought to reach
a mutually profitable bargain over the division and enclosure of the range they
formerly shared. But this might fail to come about or fail to work for a number
of reasons. One of them is the possibility that Smith will no sooner shake hands
on a bargain with Jones than he will break it, cutting Jones’s fence while protect-
ing his own. Jones will have little choice but to adopt symmetrical tactics. Only
if there is literally boundless open range left for the cattle of both, will Smith
and Jones have no rational reason to contest each other’s attempt to “privatize”
any part of it. If there is only a finite area of open range left, however vast,
any diminution of it by enclosure increases the probability that some future
act of additional enclosure will cause an opportunity loss (a forgone gain) to
Smith, Jones, or both. This is just another way of saying that Locke’s proviso
 Conventions: Some Thoughts on the Economics of Ordered Anarchy 325

for legitimate first occupation, i.e., that “enough and as good is left to others,”
is inconsistent with finite resources.1
However, since strictly speaking even the most unreasonable and wild fence-
cutting, agreement-refusing, or agreement-breaking tactics to oppose enclosure
and exclusive occupation by others can be rational, satisfaction of the Lockean
proviso (assuming it could be satisfied) might still not suffice to assure the pas-
sage from common to private property. Showing that the passage is beneficial
to a group as a whole is not the same as showing that the institution of private
property will in fact emerge, and will not be effectively opposed by a strong
enough subgroup within the group. The more stringent condition of Pareto-
superiority, i.e., that the group as a whole would gain from it and no individual
within it would lose, looks more promising; but even this condition fails to rule
out successful opposition by the envious or the egalitarian who will not stand for
some members of the group gaining more than he does. Unless we are prepared
to call ends irrational, we cannot simply sweep acts of envy aside as irrational,
and it would not help if we did. The fact that it would be collectively beneficial
to privatize certain resources does not permit us to predict that they will in fact
be privatized. What it does is to alert us to a latent distribution problem: will
the collective benefit be shared among the members or will it fail to be realized
due to a failure to settle the question of how it is to be distributed? Clearly,
the share (if any) each can successfully claim will bear some relation to his
bargaining power, which in turn is a matter of his capacity to stop everybody
else from getting anything, by spoiling the privatization attempt altogether. It
is difficult to say more than this in a first approximation.2
For these reasons, social or collective benefit and functional superiority do
not prove much. To say, as Demsetz does of private property (1964/1988, p.
136) that “its existence is probably due in part to [its capacity to reveal] social
values upon which to base solutions to scarcity problems” appears to take a
teleological view, assigning high purposes to institutions and explaining their
emergence by their capacity to fulfill them. Yet nobody in his story of the com-
mon hunting grounds, or in the story of the open range, is concerned one way
or the other about the high purpose and valuable signaling function of private
property. To listen to Mandeville, this is perhaps just as well.
3
Consider next the problem of stability once some solution has been reached
for the distribution of a common pool resource among the “hunters” or “ranch-
ers.” For argument’s sake, let us take it that a tacit convention to respect private
property has been widely adopted. If everybody continues to adhere to it, prop-
erty is secure. There is no need to incur “enclosure costs” to exclude from it all
others whose access is not authorized by the owner. There need be no fences, no
locks; houses can be left open with valuables lying about. Armed guards, fin-
gerprint data banks, and criminal courts are superfluous. There is, then, a strong
326 Anarchy and the Law

incentive, created by the very confidence in established convention, to deviate

from it and steal with both hands. Even if many continue to adhere to it and do
not become opportunistic thieves, there is a sense in which the convention has
broken down if a large enough fraction of individuals concerned deviates from
it and steals when the risk-reward relation tempts it. The convention, in other
words, is not self-enforcing, and is liable to break down. A certain expenditure
of resources is needed to keep noncompliance (theft, trespass, etc.) down to a
level at which the convention is still usefully functioning. The optimum level
of expenditure (current cost or investment) is one where the marginal cost of
enforcement is equal to the marginal benefit from the increased security of
property. Somebody, however, must bear this enforcement cost. Paying it gener-
ates externalities: it is possible to benefit from the greater safety of property in
general without contributing to its general costs. It is perhaps best if my neighbor
contributes to the cost and I do not. My neighbor, of course, is symmetrically
placed and may take the same view, in which case neither of us will contribute,
and the convention will not be enforced.
Beneficial conventions that are not self-enforcing are logically equivalent
to noncooperative games whose equilibrium solutions are Pareto inferior;
technically, they work as prisoners’ dilemmas. The players are condemned to a
suboptimal outcome, failing to maximize the available game sum—unless they
transform the game, or it is transformed for them, into one where their recipro-
cal commitments not to adopt the “dominant” noncooperative strategy can be
made credible to each other. Under most standard rationality assumptions, the
commitment will be credible if it is “common knowledge” (all players know, and
each knows that the other knows that he knows that the other knows, and so on)
that the dominant strategy will bring down adverse extra-game consequences on
the player’s head that outweigh its intra-game advantage. This is typically the
case if the dominant noncooperative strategy is likely to be severely punished
after the game, i.e., if the nonself-enforcing convention is enforced.
There may be a secondary convention, as it were, a satellite of the primary
one, whose sole function is to enforce the latter. The classic example of such
a combination is the convention of queuing: the primary convention is to wait
one’s turn in the queue, and the secondary or satellite convention among the
more civic-minded queuers is to shout at, menace, and push and pull back into
line, any queue jumpers, always provided there are not too many of those.
Enforcement and the level of noncompliance are in an equilibrium which may
be unstable over some ranges, stable over others.
In the queuing example, nothing enforces the enforcing convention; no
tertiary norm stands behind the secondary one. Hence, if it functions, it must
be self-enforcing. However, there is no prima facie reason to believe that all
or most other nonself-enforcing conventions will be backed up by a satellite
convention among civic-minded adherents that will be self-enforcing. In fact,
there is a prima facie reason for holding the contrary.
 Conventions: Some Thoughts on the Economics of Ordered Anarchy 327

Punishment of noncompliance is in general costly, as are other measures

of enforcement. Punishment and some, perhaps most, measures of enforce-
ment create strong externalities: anybody can benefit from the enforcement
of a useful convention whether or not he bears any part of the cost. If and to
the extent that this is so enforcement is not selfenforcing, but is itself enforce-
ment dependent. For all we know, we may be facing a series of successively
higher-degree enforcing conventions, each depending on the next-higher one.
No matter how high one goes, there is never a highest convention that is no
longer enforcement dependent. The normal way of dealing with this kind of
logical mischief is to lose patience and postulate an arbitrary stopping point,
beyond which we simply refuse to carry on the argument. In the present case,
the stopping point is the state.
Conceived as an entity of an altogether different kind from the individuals
and organizations that are subordinated to it, the state does not maximize its own
utility, profit, or wealth; it does not respond to incentives, but seeks to carry out
society’s mandate, or rather its own reading of the variety of signs and noises
emitted by society that must be interpreted by politicians, judges, and high
officials in order to know what society’s mandate really is. The state, then, is
society’s agent. Some even view it as an agent that is in some metaphysical way
exempt from the principal-agent problem that in every other case we regard as
intrinsic, logically inseparable from the agency relation. On reflexion, this is a
strange view to take, but it is necessary to support the assignment to the state
of the role of stopping point, of ultimate enforcer. For only then can we say
that its contract with society, under which it acts as its enforcing agency, is not
itself in need of enforcement, lest it should breed parasitism, extortion, sloth,
bureaucracy, partiality, and other familiar vices.
This stopping point, then, acts as a deus ex machina postulate: for if it is
impossible to deduce, by way of individual rational choice theory, a cooperative
solution to the ordinary first-degree enforcement problem, then how is it pos-
sible, with the aid of the same premises, to deduce the state as the cooperative
solution to any nth degree enforcement problem? It can, of course, always be in-
troduced as an exogenous datum. But that, so to speak, is where we came in.
4
James Buchanan (1979, p. 282), in implicitly making the very existence of
crucial institutions depend on the state as last-resort enforcer, claims support
by both Hobbes and history: “Institutions matter. The libertarian anarchists
who dream of markets without states are romantic fools who have read neither
Hobbes nor history.” Reading history, however conducive to wisdom and un-
derstanding, is a notoriously inconclusive way of reaching specific conclusions
about such vast, amorphous and diffuse features of the past as markets, states,
and their interdependence. Buchanan reads one lesson from history; I for one
would read a rather different one, and the chances are that neither of our read-
ings is very near the mark.3
328 Anarchy and the Law

Let us, however, read Hobbes by all means. In Leviathan, he marks off two
alternative “models” of the conflict over property, one producing stalemate at
the status quo, the other permanent trespass and the continuous overturning
of any status quo. The first model applies when, or perhaps because, force is
just matched by equal force; the second and contrary model when, or because,
attack gathers more force than defense.
To establish the first alternative, Hobbes lays down that “the difference be-
tween man, and man, is not considerable…the weakest has strength enough to
kill the strongest, either by secret machination, or by confederacy with others”
(Hobbes 1651/1968, p. 113) and “the fear of coercive power…where all men
are equal…cannot possibly be supposed” (ibid., p. 196). In such a configuration
of equal opposing forces, unless technology is biased in favor of attack, a given
distribution of property can, and among rational men will, always be successfully
defended by the incumbent. If one individual seeks to change the property status
quo by excluding from it another, the other has just enough force to resist (kill)
him; in case of unequal forces, the weaker can have recourse to a “confederacy”
strong enough to resist. The important point is that in this model, coalition form-
ing has the object of equalizing the opposing forces. Consequently, whether the
property status quo is efficient or inefficient, it cannot be altered by way of a
stronger coalition forming on the side of the efficient change (or indeed of any
change, whether efficient or not), and imposing it on the weaker one.
The second alternative, by contrast, stipulates that the role of “confederacy”
is to create force inequality in favor of the attacker: “…if one plant, sow, build,
or possess a convenient Seat, others may probably be expected to come with
forces united to dispossess, and deprive him. (ibid., p. 184, my italics). Since
the attacker, being “probably” a coalition of united forces “hath no more to
fear, than another man’s single power” (ibid., my italics), the attack is generally
successful. A new status quo is created, and by the logic of the model becomes
the new target of attack by a new coalition. It is this second model that Hobbes
and all his intellectual descendants implicitly invoke when they argue the im-
possibility of contract and order in anarchy, and the imperative necessity of “a
common power set over them both, with right and force sufficient” (Hobbes,
ibid., p. 196).
Nobody has, to my knowledge, bothered to ask the obvious question: why
in a Hobbesian world should coalitions form only for attack and never for
defense? What happens if, in any conflict over property, both the attacker and
the defender are free to attract allies? Why can’t we make the commonsense
assumption that the force of the coalition gathered to back a given side in the
conflict will be proportional to the “payoff” (gain or avoided loss) the side
would get if it won the conflict? To meet the objection that this would amount
to a doubtfully rational “maximax” strategy guided only by the best possible
outcome and taking no account of intermediate or worst-possible alternatives,
the assumption could be recast in terms of the mathematical expectation of
 Conventions: Some Thoughts on the Economics of Ordered Anarchy 329

utility payoffs. However, the essential point would, as far as I can see, remain
intact: incentives work both ways, they may attract coalitions on both sides of a
conflict, and the tacit supposition of an asymmetry, giving a natural advantage
to the attacking coalition, must be justified. Failing that, it must be rejected.
5
How to justify the supposed asymmetry? If a given population is free to
form coalitions, prior to the emergence of institutions (such as a convention to
respect property, contract, or both, since the two will almost certainly come or
go together), the resulting interaction will in effect be an n-person “distribution
game,” whose game sum is the aggregate property of the n players. Let there
be, for simplicity, only three players, each equally “strong.” Their “strength”
(muscle, arms, economic power, political influence) can be employed with
equal effectiveness to defend the property status quo, or to change it to one’s
advantage; technology is neutral between attack and defense, and there are
constant returns to scale. Defense, then, wins against attack of equal or lesser
strength. Attack, to win, must have greater strength. (A special case of this
distribution game is democracy, where “strength,” instead of having a quite
general significance, is reduced to “number of votes,” and a simple or quali-
fied majority wins.) Whatever the status quo before the game, the solution of
the game is a distribution of property decided by the winner, and the stronger
coalition necessarily wins.
Evidently, since players are equally strong, in a three-person game, if any
two players can agree on how to divide all property between them, that division
will be the solution of the game and the third player will be left propertyless.4
If he tried to obstruct this outcome, he would incur some cost, only to be de-
feated; therefore if he is rational, he will not try. The winning coalition knows
this; therefore it will not negotiate with the loser. (However, if they believed
the loser was irrational, or precommitted to a costly defense unless bought off,
the winners might be prepared to buy him off.)
Of the two members of the winning coalition, one, the “poorer,” now has
less property than the other, the “richer” (in the limiting case, they will have
equal property; but the reasoning below holds in the limiting case as well). The
“poorer” and the propertyless “poorest” can now improve their joint payoff
by forming a new coalition that, being stronger than the solitary “richer,” can
dispossess him. One of the new winners will now be the “richer,” the other the
“poorer.” The latter can again improve his payoff at the new “richer’s” expense
by forming a coalition with the new “poorest” and dispossessing the “richer.”
The solution, in other words, will always remain unstable. It will rotate round
and round, always superseded by another of the same form and the same
instability. Only the members of the winning and losing coalitions will be
changing places cyclically. The mechanism by which strength (including, in a
democracy, voting strength) is attracted by prospective payoffs and produces a
certain distribution of the game sum (i.e., in the present example, of property)
330 Anarchy and the Law

is analogous to other well-known social-choice cycles (Arrow, Sen). There is

no distribution of property to which at least one other is not “preferred” by a
stronger coalition, leading to a perpetual cycle of redistribution.
This, I think, goes some way to justify the strange asymmetry in what I called
(in section 4) Hobbes’s second “model,” where coalition always produces an
imbalance of force in favor of attacking the status quo and dispossessing the
possessor. But it only goes some way, and not a very long way either. For it is
clear that while the unstable solution of each round of the distribution game
is the direct consequence of each player acting rationally, a perpetual cycle of
dispossession and redistribution is not going to be the solution of indefinitely
repeated rounds of the same game. The players will soon see new costs and
new incentives appearing, which will alter their view of expected payoffs and
of the rational strategy they must choose to maximize them.
Over any three rounds of this game, each player takes turns to be once “richer,”
once “poorer,” and once “poorest.” The statistical average return to each is one-
third of the property available for redistribution. The players can improve their
joint return from the game by forming a coalition, and having taken all property,
refusing to desert the alliance despite the availability of an even higher payoff to
the deserter in the next round. This refusal to quit a coalition in order to join a
new one imposes a stable solution on the game, i.e., it “stops” it from rotating.
However, is it rational for the “poorer” player not to desert his richer partner?
By deserting, he can only hope to improve his position from “poorer” to
“richer” for a single round. In the round after that, he must expect his partner to
desert him, causing him to fall all the way from “richer” to propertyless “poor-
est.” Therefore standing fast, respecting his richer coalition partner’s property,
and accepting that his position is permanently poorer, would be his best strategy
provided the poorer position represents, in the worst case, not much less than
a one-third share of the property to be divided. This is so because, if the game
is not stabilized and redistribution continues indefinitely, he can statistically
expect to average out with a share of one-third, less the cost and disutility of
periodic dispossession. He will want to do no worse than this (settling for less
would be irrational), but anything better is a bonus.
Note that the decision to “stop the game,” stand fast, and not desert, is the poorer
partner’s alone: if he is prepared to accept his roughly one-third share, the richer
partner cannot permanently improve his own position, and will be happy to stabilize
his share at around two-thirds, rather than revert to the cyclical average of one-third.
The propertyless has no choice if the coalition of the propertied holds.
Note also that while a three-person game under the very abstract conditions
stipulated here produces a stable distribution of about two-thirds or less to
the first player, about one-third or more to the second, and nothing or next to
nothing to the third, an n-person game under less neat and artificial conditions
would probably produce a solution that was messier, less structured, and more
like real-life distributions of wealth, the more so as real-life distributions are
 Conventions: Some Thoughts on the Economics of Ordered Anarchy 331

influenced by many more elements in addition to coalition forming to produce

concentrations of force, influence, or voting strength.
What I have just attempted to demonstrate was that on full reflexion it is
reasonable to expect private property to emerge, and to prevail over the tempta-
tions that threaten it, as a product of the same robust incentives that we would,
perhaps a little hastily, expect to provoke, not respect for property, but theft,
robbery, dispossession, and default instead. This result, let me add, owes nothing
to decency, sympathy, a sense of fairness, and a desire for mutual accommoda-
tion. Such motives, residing in our better nature, are almost certainly important
in human conduct, but it seems to me gratifying that we can find an explanation
that is at least coherent whether or not it is right, for a crucial institution of the
social order, property, from the most elementary assumptions of rationality,
without having recourse to any special motivation springing, not from human
nature tout court, but from our better nature.
The logic of the “distribution game” rests, not on any collective quest for
efficient solutions for a whole group, but on individual maximizing behavior.
The resulting game solution implies an escape from the costly, futile, and sterile
“churning” of repeated redistribution; it stabilizes a set of property relations.
If this is socially efficient, it is so as an almost accidental by-product of each
individual doing the best he can for himself.
Any regard he has for the interests of others serves only to help foresee their
likely reactions to his alternative strategies, in order to let him choose the best
one given that others will also choose their best ones. This, in other words, is still
a Hobbesian world of every man for himself, except that it produces property
relations that are stable and orderly, instead of being precarious and chaotic.
How is this world, where property relations are merely facts of life upheld by
forces that are mightier than the forces that would overthrow them, transformed
into one where they are respected as parts of the legitimate interests of others?
How does the convention of respect for property—not for one’s own, but for
yours, his, and hers—arise and take root? How does any convention arise and
take root whose operation favors some more than others? There is little doubt that
Hume is right: The passage of time lends legitimacy to almost any stable state of
affairs that is not downright vicious or stupidly inefficient. Original occupation,
exclusion, the forcible enclosure of previously accessible common resources, and
their taking into private property, gradually recede into the distant past; passage
of title from the original occupiers and “finders” to new owners by sale, gift, or
bequest comes into the foreground and promotes a sense of legitimacy.
This is not to suggest that the passage of time alone can bring into being a
convention of property that is self-enforcing because everybody’s best policy is
to respect and never to violate it. Property no doubt needs a secondary convention
for its enforcement, protection, and deterrence of violations. Such a second-
ary convention may be self-enforcing (a sufficiently large and strong body of
property-owners supporting it in spontaneous cooperation) or not; in the latter
332 Anarchy and the Law

case, it needs the support of binding contractual arrangements for the provision
of resources devoted to enforcement. It is to contracts, and their enforceability,
the pivotal problem in the social order, that we must finally turn.
While property is best understood as an n-person, and in its most elementary
form a three-person, game, the essence of contract, i.e., a promised exchange,
is a two-person game where the two available pure strategies consist of perfor-
mance of the promise or default. The contract is optimally efficient if the value
of the two performances is equal at the margin to each party. If it were unequal
for one party, it would pay him to increase or reduce the contract sum, and if
this were not consistent with equal marginal value of performances for the
other party, they could both improve their expected gain from the contract by
changing the relative price of the performances to be exchanged until marginal
equality was established. This maximization condition is naturally subject to
the budget constraints of the parties, and to any indivisibilities.
Like the property distribution game, the key to the solution of the contract
game is coalition forming to create an inequality between the forces favoring
rival solutions: the larger payoff attracts the stronger coalition that can impose its
payoff-maximizing strategy on the weaker one. In the property game, the stronger
coalition secures the larger payoff by overriding the status quo. Once secured, it
preserves its larger payoff by stabilizing the new status quo. Where, however, is
the larger payoff in the contract game; how does one get it; and how can stronger
and weaker coalitions be formed in a game that has only two players?
Assuming the gains from trade promised in the contract are maximized,
the value of the two performances is equal at the margin. Let performances be
nonsimultaneous. The player who is meant to move first can choose to perform
or not to perform as promised. In the former case, the second player will default,
because he can make no further gain from the contract by performing what he
promised. In the latter case, he will try to force the first player to perform. In
each of these possible configurations, each party would gain a payoff equal
to the contract sum if he succeeded to make the defaulting party perform;
and each defaulting party would save the contract sum if he successfully re-
sisted the attempt. A rational player would be willing to employ his strength,
or otherwise spend resources up to, but not exceeding, the contract sum to
force the other party to perform.5 Neither side can gain more than this by
frustrating or subduing the other side; hence no side would be willing to
spend more than this to enforce the other side’s performance. Whether the
players act alone, or find extra-game allies to form coalitions, they have (at
least in the ideal contract) strictly offsetting incentives, and would lose even
from successful enforcement if they incurred enforcement costs in excess of the
contract sum. The solution of the game, then, is stalemate: whatever the status
quo (whether neither side performs or one side performs), it can be effectively
protected and will not be overturned by enforcement. The plaintiff will never
subdue the defendant.
 Conventions: Some Thoughts on the Economics of Ordered Anarchy 333

This conclusion, reached after telling the first and most Hobbesian half of
the contract story, is preliminary. It seems strongly to support the standard
belief that contracts, to be binding, require a third-party enforcer who stands
outside the particular contract, and whose capacity and willingness to incur
enforcement expenditure is not limited by the incentives the contract offers.
But what incentives motivate the third-party enforcer? We have seen that the
standard belief runs into nasty obstacles. Third-party enforcement is to let the
genie out of the bottle without knowing however to put it back. It has every
chance to breed a dangerous principal-agent problem, whose putative solution
is either an infinite regress of ever higher-order enforcers, or a deus ex machina
final power, exogenous and unexplained. However, all this is perhaps no great
matter, for the preliminary conclusion, namely that contracts are per se unen-
forceable, is wrong.
8
To get it right, the story of the contract must be told to the end. First, let us
recall that the problem of enforceability impinges primarily, if not exclusively,
on contracts with nonsimultaneous performances, such as credit transactions. It
is a fair guess that such contracts are found indispensable as social cooperation
becomes complex and sophisticated,6 but they are nonetheless only one kind
of contract among two. Second, and more important, the apparently dominant
strategy in such contracts, to “take the money and run,” is seldom really domi-
nant in real life among contracting parties who can calculate.
Running off with the money nearly always involves heavy costs in terms
of rebuilding a life elsewhere, replacing lost goodwill and regaining the status
of an acceptable contract party. It will pay if the runaway leaves little of value
behind, and if the contract sum was big enough; but for understandable reasons
these two conditions tend to be mutually exclusive. He who has no valuable life
to regret, little reputation and goodwill to lose, seldom gets to make contracts
that leave him with big money to run away with. For default to be definitely
a dominant strategy, it is best if the defaulter is anonymous and transient; yet
who will willingly perform first, face to an anonymous and transient second
performer? The usual game theory assumption of anonymous (interchangeable)
players, for all its helpful effect to clarify the logic of a given game, must not
be allowed to confuse a situation where it is plainly not applicable. Anonymity
predictably produces default, but anonymity deprives the party to a contract
of the opportunity to lay his hands on the money that would make defaulting
worthwhile. This point has obvious relevance to the so called “large group
problem,” which I hope to address later (section 9).
Take a two-person contract game witnessed with a minimum of attention by
a nonplaying group of indeterminate size. Members of this “kibitzer” group,
however, have been, are now, and expect in the future to be playing in other
contract games. The first player performs his obligation under the contract, the
334 Anarchy and the Law

second defaults, and the fact comes to be known by some “kibitzers” in the
surrounding group, who in turn can pass this knowledge along if they deem it
worth doing so. The first player as plaintiff now recruits a coalition to help him
enforce the contract,7 offering it a reward up to but not exceeding the contract
sum in case of success, nothing in case of failure. This coalition, however,
may find that it would pay it to incur enforcement expenditure in excess of the
contract sum. The reason for this apparent extravagance is that the maximum
payoff it can expect is not simply the contract sum, but also the value of some
positive externality or “spillover” upon those other contracts to which members
of the coalition are or can expect to be parties. There is a degree of payoff inter-
dependence: first performers to certain contracts benefit from the enforcement
of the claims of other first performers in other contracts. Such spillover effects
enhance the reputation of the enforcers who came to the aid of the plaintiff, teach
a lesson to the defendant and other would-be defaulters, and discourage their
potential coalition partners. As such, they reduce enforcement costs throughout
the group. This gain, a positive externality, is probably more perceptible in the
close “neighborhood” (the same locality, the same line of business, the same
peer group) than at distant points near the edges of the group: hence it is more
likely to be internalized.
The defendant, for reasons symmetrical to the plaintiffs, will also recruit a
coalition to oppose enforcement, holding out as reward some sum up to, but not
exceeding, the contract sum he would save if he could get away with default.
His coalition, however, assuming it is formed, can only hope for a best-case
payoff equal to the reward offered by the defendant less negative spillover
effects on future contracts the coalition members expect to wish to conclude.
The most important negative spillover effect is likely to be the reduced will-
ingness of third parties to enter into contracts with a defaulter’s coalition
partners. Members of both coalitions, if they calculate (however crudely and
with however large a margin of error, as long as the error is not systematically
biased), will internalize the positive and negative spillovers created by coali-
tion action, which would help determine their willingness to enter, or abstain
from, a given coalition.
Internalizing the neighborhood spillover effects increases the coalition payoff
from enforcement, and decreases that from default, relative to their common
benchmark, the contract sum. The asymmetry between the two, reflected in an
asymmetry between the resources either side could rationally spend in order to
win, obviously improves the odds that the enforcing coalition will win. Conse-
quently, in the limit it will not pay at all, but merely entail useless expenditure,
to oppose such a coalition; and the consequence of that, in turn, is that where
potential enforcement is powerful, actual enforcement cost under moderately
favorable conditions may be reduced to vanishing point: if the defendant’s
coalition will not form, it is hardly necessary for the plaintiff’s coalition to
form as long as it is common knowledge that the incentives are present for it
to form as occasion demands.
 Conventions: Some Thoughts on the Economics of Ordered Anarchy 335

At this stage we are, it seems to me, fairly entitled to two deductions: (a)
default will normally fail to find coalition support, and (b) enforcing coalitions
will form readily, and will tend to be sufficiently powerful.
In sections 5 and 6, I have advanced a reason why, among rationally maxi-
mizing individuals, “common pool” resources would pass into private property,
and why a certain, no doubt unequal distribution of property would be finally
stabilized, ultimately giving rise to a convention of respect for property. I have
not tried to prove that the convention would be self-enforcing. Lack of space
forbids the marshalling of arguments or against, but on the whole I think they
are inconclusive: whether a group or an entire society can make its property con-
vention into a complex self-enforcing one depends on contingencies, including
its history, and there can be no certitude about the matter on a priori grounds. It
is this uncertainty that makes a self-enforcing contract convention particularly
critical for the orderly functioning of society: if contracts can be relied on, any
other convention can be made enforceable, for compliance can be contracted
for, and if not, protection from noncompliance and for its punishment can be.
9
My argument that successful enforcement generates positive, default nega-
tive externalities; that prospective coalition partners internalize them; and that
consequently enforcement will attract the support of the stronger coalition, is
for all its simplicity not decisive. Challengers of the theory of ordered anarchy
have a last-resort objection to it, the Large Group problem. This objection enjoys
more generous credit than its intellectual content deserves; but in the present
context it cannot be bypassed. It must be dealt with, if only to show why the
credit it is accorded is excessive.
In the large group, individuals are alleged to lack the incentives that would
lead them to choose cooperative solutions in the same kind of repeated, game-
like interactions that take place in small groups. This belief is based on a putative
analogy between social groups with many members and n-person indefinitely
repeated prisoners’ dilemmas where n is a large number, or the players are
anonymous, or both. This analogy is almost totally false, and based on elemen-
tary mistakes. The subject is large and cannot be done full justice here, but a
few pointers should suffice.
Unlike the abstract large-number supergame where all players are alike,
homogeneous for the purposes of the game, and all play only in the same game
and in no other, the large group in society is always eterogeneous. It is the sum
of small groups, which, in turn, are only homogeneous for some purposes and
heterogeneous for most others; their heterogeneity is often relevant for the
game. All players do not play in one and the same game. The characteristic
configuration is that small groups, their subgroups, and in the vast majority
of cases (i.e., in the most frequent form of social cooperation, the contract of
exchange) pairs of players, each play in a different game, or in other words
are parties to a different contract. Some, probably many, of the same players
336 Anarchy and the Law

take part in different games, running parallel or with a time lead or time lag;
and most of these games are repeated with the participation of some previous
players and some new ones. Hence there is a complex and dense web of com-
munication in which it is both easy to send8 and profitable to receive informa-
tion about prospective players (contract partners). Consequently, the play of
a player is rapidly translated into a reputation that influences his chances of
being invited or admitted to other games, and the terms he can hope to get. In
all these respects, far from an analogy, there is an almost total contrast between
the real-life large group and the n-person game where n is large. Lastly, there is
some, albeit weak, analogy between the real-life large group with its numerous
small subgroups (down to the two-person group made up of the two parties to
one contract) and the n-person game where n is small rather than large. This
weak analogy concerns the vulnerability of cooperative small-group solutions
to the probability that the next game in a repeated series is going to be the last,
beyond which by definition nothing matters, hence the noncooperative strategy
becomes dominant. A contract between two parties who will never deal again
with one another is in this sense a “last game.” But unless neither will ever deal
with anybody else either, the consequences of the noncooperative strategy in
their last contract carry over into contracts with others, where they continue to
matter. Contracting continues in the same and connected localities, trades, and
communities as long as society keeps functioning.
In transposing the “large group” objection from game theory to transactions
cost economics, the objectors claim that economies of scale impose mass markets,
hence a great multitude of “impersonal transactions” between unknown parties9:
thus they bring the faceless, nameless player back into play. It is no doubt true that
there are proportionately more “impersonal” transactions in a modern economy
than in earlier times. Many supermarket customers are unknown to the checkout
girl. But they pay before rolling out their trolley. If not, they produce a credit
card; and the credit card company is not unknown. It is equally true that where
performances are not simultaneous or are incompletely defined in the contract
(cf. Hart, 1991), serious precautions are generally taken to ensure that the second
performer, far from being impersonal, is thoroughly known, vouched for, and has
a reputation to lose.10 It is this that raises entry costs in industries where quality
and service are important, difficult to define and to litigate.
Under these conditions, the invocation of “impersonal exchanges” is hardly
intelligible, as is the claim that third-party enforcement makes such exchanges
possible—for there are no such exchanges, with or without third-party enforce-
ment. They are imaginary constructs, except in the world of cash-and-carry—a
world to which enforcement of any kind is irrelevant.
10
One object of the present paper was to prove that, contrary to James Buchan-
an’s verdict, it is possible for romantic fools both to see coherence and good
 Conventions: Some Thoughts on the Economics of Ordered Anarchy 337

sense in a theory of ordered anarchy and to read Hobbes. In fact, I find Hobbes
a positive help to drawing the outlines of such a theory.
Why, then, is it that states are ubiquitous? The inference is universally drawn
that just as a mammal must have a lung or a brain, a normal developed society
must have a state as a requirement of organic completeness, without which it
cannot function properly; the state as a superior form of social organization is
imposed by the processes of cultural selection no less inexorably than the lung
is by natural selection.
The answer to this type of wide-eyed social determinism had, once again,
best be a Human one. As he remarks with some asperity in the Treatise
(1739/1978), governments “arise from quarrels, not among men of the same
society, but among those of different societies” (p. 540). An anarchic society
may not be well equipped to resist military conquest by a command-directed
one. But this is a less general claim, less decisive and different from the one
underlying practically all received theory of political and economic institutions,
namely that the state is a necessary prior condition of social order in, general,
of property and contract in particular, so that it would be needed and wanted
even in the absence of any threat of foreign attack. To listen to Hume again,
“the stability of possession, its translation by consent, and the performance of
promises…are…antecedent to government” (p. 541).
The weight of arguments seems to me decisive that whatever causes states
to be everywhere and ordered anarchy nowhere, it is not some kind of utility-
maximizing logic, some putative economic necessity due to which property
and contract cannot exist without being enforced by the state. The reasoning,
leading from the prevalence of centralized, sovereign third-party enforcement
to its necessity is manifestly a mistake of inference, a non sequitur.
A more modest claim holds that while ordered anarchy, based on conventions,
with their enforcement “made or bought” by the directly interested parties them-
selves, may well be feasible, it would be inefficient. Among its tools, violence
must figure: and violence is an industry that operates under increasing returns
to scale.11 It is, for this and perhaps other reasons, a “natural” monopoly.12 A
corollary of the increasing returns thesis is that the state, using the threat of
violence, reduces transactions costs below what they would be under private
contract enforcement. Both these proposition run into intrinsic difficulties.
How will monopoly enforcement affect the distribution of income between
the monopolist and its customers? Will transaction costs really be lower if they
must provide monopoly rent to the enforcer?—and so on.13 Such difficulties,
however, are as nothing next to a blunter and more powerful objection. It is that
we have not the faintest idea whether the state is or is not an efficient enforcer,
whether statute laws are efficient substitutes for the conventions of property
and contract, and whether the existence of a state over a territory, or of several
states across territories, raises or lowers transactions costs. Any assertion that
it does one or the other is almost entirely a matter of guesswork based on
338 Anarchy and the Law

practically no evidence. In fact, valid, ceteris paribus evidence is impossible

to produce, since comparisons of public and private enforcement regimes
that cannot coexist are impossible. No one can pretend to know what a place
at a time would be like if the omnipresent state with its monopolistic claims
were absent, and had been absent from Day One, rather than present one day,
crumbling the next, and leaving its moral footprints and material debris on the
ground. The anxious conviction that anarchy is chaos and mayhem, exemplified
by postcolonial Africa, Lebanon in the 1980s, or the ex-Soviet Union in the
1990s, springs from a misunderstood and misplaced empiricism that confuses
historical experience with experiment.

Notes
1. Nozick (1974, p. 176) uses a different route to demonstrate the same result, i.e.,
the internal inconsistency of the Lockean proviso in a world of finite resources.
2. Libecap (1989), suggests that the higher the ratio of benefit to cost, the more likely
it is that a solution will be found.
3. Douglass North, reading with the eyes of the professional historian, wonders whether
“voluntary cooperation can exist without…a coercive state to create cooperative
solutions?” He thinks the answer is contingent on circumstances, and “the jury is
still out” (North, 1990, p. 14, citing North, 1981). He adds (1990, p. 58): “If we
cannot do without the state, we cannot do with it either.” The truth of the matter
is no doubt the obverse: we can live with it if we must, and also without it if we
must. Neither is always comfortable, and both must be learnt by practice.
4. In an even more extreme solution, two players might actually enslave the third.
For this to be an equilibrium solution, the economics of slavery have to be more
favorable than the economics of wage labor. A similar consideration may influence
the choice between leaving the third player wholly propertyless, or letting him have
some property.
5. There is a parallel between this somewhat absurd situation, where the two parties
taken together spend twice as much as their greatest possible gain which only one
of the two can gain, and the economics of thieving as depicted by Gary Becker
(1992, p. 8). In his Nobel lecture, he relates that in his earlier work (1968, n.3),
looking for a way to impute social cost to crime against property, which, at first
sight, looks like a pure transfer from owners to thieves, he has put the social costs
of thieving at approximately equal to the aggregate dollar value stolen, since “ra-
tional criminals would be willing to spend up to that amount on their crimes.” He
then remembers that potential victims would also be willing to spend resources to
protect their property against crime, therefore one should add this expenditure to
the resource cost the thieves incur, to get total social cost. He does not say whether
protective expenditure is equal, greater or less than thieving expenditure, but the two
together are implicitly estimated to exceed, perhaps by a great deal, the aggregate
sum stolen.
6. In fact, such contracts have apparently always been an integral part of exchange.
Primitive tribes bartered with other, strange tribes by leaving their surplus goods
at some conspicuous midway spot. The foreign tribesmen came, picked them up
and left their own surplus goods on the spot. It must be added that although the
parties did not personally know each other, both sides knew perfectly well whom
they were dealing with—which is why the deal, where one party performed first,
 Conventions: Some Thoughts on the Economics of Ordered Anarchy 339

despite the risk that the other party might default and just walk off with the goods,
became a reasonable proposition.
7. An enforcing coalition may use a range of costly self-help measures, from threats
of discrimination and actual ostracism, to violence to compel performance and to
punish. But it may just as well provide money to hire enforcement services. A trade
association may have a budget for such purposes, just as long-distance traders in
antiquity, medieval, and even more recent times used to hire (subsidize) foreign
potentates to protect their interests against brigands, debtors, and interlopers. The
choice between enforcing and hiring enforcement is basically the same as the classic
“make-or-buy” choice, well known from the theory of the firm.
8. In a given line of business, the spread of information about the quality and reputa-
tion of a person or firm spreads like wildfire, and knows no frontiers. Information
is “cheap” to send and “cheap” to obtain, for the less than respectable reason that
businessmen are like idle old women in one respect: in their delight to spread and
to listen to gossip.
9. To quote Douglass North (1990, pp. 55-8) again, third-party enforcement (by the
state) is hard to do without, because self-enforcing solutions require that the game
be played indefinitely between the same parties who must have “perfect informa-
tion,” but “[i]n a world of impersonal exchange, we are exchanging with multiple
individuals and can acquire very little information about them” (p. 58, my italics).
To a practicing businessman, the idea of dealing with nameless unknowns must
be nigh incomprehensible. Whatever the economies of scale he wished to realize,
he would simply see no possible occasion to deal with unknown parties otherwise
than in self-enforcing contracts; least of all would he deal on credit. He would
always place identified parties, banks, brokers, bondsmen, wholesalers, quality
inspectors, and so on, between himself and the “nameless” credit customer. Cash
customers, of course, need no enforcement and may even remain nameless for all
the difference it makes.
10. William Niskanen, one-time chief economist of the Ford Motor Company, relates
that in his day the company had hundreds of component suppliers who had no
written contract whatsoever, which did not hurt either Ford or the suppliers.
11. If this argument were taken really seriously, it would be hard to explain why there
are many states instead of one world state (perhaps returns do not go on increasing
on that scale?); why the number of states, instead of steadily diminishing, waxes and
wanes unpredictably, with some large states breaking up, some small ones trying
to unite. The easy answer, of course, is that when states are getting larger, returns
to scale must be increasing, when states are getting smaller, they are diminishing.
This defense effectively empties the thesis of all possible empirical content.
12. A summary and lucid critique of the family of explanations of the state’s monopoly,
advanced by Engels, Kropotkin, Max Weber, Norbert Elias, and Robert Nozick, is
found in Green (1988, pp.78-82).
13. An intriguing public-choice type problem in this respect concerns the incidence of
a given aggregate burden of transactions costs. Borne by parties having interests in
contracts, they are internalized. Borne by the general public via direct and indirect
taxation, as is the case for the part of enforcement costs assumed by the state, they
are externalized, and no longer impinge on contract parties. This is inefficient, as is
all divorce between the incidence of a benefit and of the cost incurred to secure it.
However, this would not stop the business community cheering as enforcement costs
were shifted to the state and transaction costs were seemingly lowered. However,
their real social cost might have been actually increased by the shift to the state,
for reasons the public choice literature can liberally provide.
340 Anarchy and the Law

References
Anderson, Terry L. and Hill, P. J. (1975) “The Evolution of Property Rights: A Study of
the American West,” Journal of Law and Economics, vol. XVIII, 1.
Becker, Gary S. (1968) “Crime and Punishment: An Economic Approach,” Journal of
Political Economy, 76.
———. (1992) “The Economic Way of Looking at Life,” Stockholm, The Nobel
Foundation.
Buchanan, James M. (1979) What Should Economists Do? Indianapolis: Liberty
Press.
Cowen, Tyler (ed.) (1988) The Theory of Market Failure. Fairfax, Va: George Mason
University Press.
Demsetz, Harold (1964) “The Exchange and Enforcement of Property Rights,” Journal
of Law and Economics, 7, repro in Cowen, 1988.
———. (1967) “Toward a Theory of Property Rights,” American Economic Review,
Proceedings Issue.
Green, Leslie (1988) The Authority of the State. Oxford: Clarendon Press.
Hart, Oliver D. (1991) “Incomplete Contracts and the Theory of the Firm,” in Williamson
and Winter, 1991.
Hobbes, Thomas (1651, 1968) Leviathan, ed. by C. B. Macpherson. Harmondsworth:
Penguin.
Hume, David (1739/1978) A Treatise of Human Nature, 2nd ed. by P. H. Nidditch.
Oxford: Clarendon Press.
Libecap, Gary D. (1989) Contracting for Property Rights. Cambridge: Cambridge
University Press.
North, Douglass C. (1981) Structure and Change in Economic History. New York:
W.W. Norton.
———. (1990) Institutions, Institutional Change and Economic Performance. Cam-
bridge: Cambridge University Press.
Nozick, Robert (1974) Anarchy, State, and Utopia. Oxford: Blackwell.
Streit, Manfred E. (1992) “Economic Order, Private Law and Public Policy: The Freiburg
School of Law and Economics in Perspective,” Journal of Institutional and Theoreti-
cal Economics, vol. 148, 4.
Williamson, Oliver E. and Stanley G. Winter (eds.) (1991) The Nature of the Firm. New
York: Oxford University Press.
 21
Can Anarchy Save Us from Leviathan?
Andrew Rutten
These days, it seems that anarchy is everywhere. Its fans range from Yale law
professors (Ellickson 1991) to pulp novelists (Ferrigno 1996; Mosley 1998).
Last fall, it even showed up in the New Yorker, where it was touted it as “the
next big thing” in law enforcement (Rosen 1997).
At first glance, it is hard to understand this fascination. Most of us equate
anarchy—literally, “the absence of the state”—with chaos and mayhem. Fol-
lowing Hobbes, we reason that without the state to enforce rights, venality
would reign and society would lapse into the war of all against all, making our
lives “solitary, poor, nasty, brutish and short.” Who, except the most depraved
sociopath, would want such a condition?
The advocates of anarchy would answer “not us.” The theme of their work
is that Hobbes, Locke, and almost everyone else are wrong about anarchy.
The advocates point to the growing body of theory and evidence that life in
anarchy isn’t at all as most people imagine it. Whether we look at businessmen
in Wisconsin, diamond merchants in New York, or farmers in Sri Lanka, we
find that “order without law” is not just a slogan but a way of life (Macaulay
1963; Bernstein 1992; Ostrom 1990). Those anarchies work because, contra
Hobbes, they do not lack an enforcer of rights.1 Or rather, instead of a single
enforcer—the centralized monopolist we call the state—anarchies have a vari-
ety of decentralized enforcers, such as markets, firms, and communities. Thus,
anarchies avoid chaos by providing lots of folks with an incentive to pitch in
and punish deviants.
For a small but growing group of anarchists, rehabilitating anarchy is only
the first step toward reconstructing liberal political theory. For them, liberal
theory errs by treating the state as a necessary evil, rather than an unnecessary
one. The anarchists argue that the state is evil because it invariably abuses its
power, violating the rights of some for the benefit of others, and that it is un-
necessary because even without it we would still have social order and respect
for each other’s rights. From their perspective, “limited government” is a
contradiction in terms, a project that simply cannot succeed. Thus, for them,
the job of the political economist is not to tame the state but to teach us how
to do without it.

341
342 Anarchy and the Law

In the essays in Against Politics, one of our leading anarcho-liberals, Anthony

de Jasay, argues the case against the state with flair and insight. He claims that
the only consistent liberal is an anarcho-liberal. He takes his inspiration from
Edmund Burke, who wrote, “In vain you tell me that Artificial Government is
good, but that I fall out only with the abuse. The Thing, the Thing itself is the
Abuse” (p. vii). In explaining why government “itself is the Abuse,” de Jasay
ranges widely, giving us essays on topics from contractarian theories of the state
to multiculturalism and rights. He arranges the essays into two broad sections.
In the first, called “Excuses,” he examines carefully a variety of arguments for
government. Whether we think of the state as necessary (the third party that is
essential to keep us from each other’s throats) or merely convenient (a better
way to keep us from each other’s throats) or fixable (a basically good idea that
has been corrupted by bad people or rules), de Jasay wants us to see that we
are wrong. For him, the analyses that underlie such accounts, whether set in the
state of nature, behind the veil of ignorance, or in the shadow of the prisoners’
dilemma, are just happy fictions designed to hide an unhappy truth: “States are
an imposition, sometimes useful, sometimes a millstone, always costly, never
legitimate, and never a necessity for binding agreements” (p. 36). In the second
part of the book, called “Emergent Solutions,” he expands on the claim that
a successful liberal society—one in which people’s rights are secured against
all aggressors—doesn’t need a state. Against the orthodox view of anarchy as
chaos and mayhem, he argues that anarchy need not be so bad, and usually is
much better. We find that argument novel only because we’ve heard Hobbesian
jeremiads against anarchy so often that we treat them as established fact.
De Jasay makes serious charges. If they are true, then much of what we think
we know about good government is wrong. Unfortunately, even sympathetic
readers may find it hard to go all the way with him. Such readers will almost
certainly agree with his critiques of existing theories of the state, whether
descriptive or prescriptive. They are also likely to agree that anarchy has got-
ten short shrift in the modern world, that far too many of us unthinkingly toe
the party line on the benefits of the state. But before accepting the claim that
anarchy is always superior to the state, they will want more. They will want
an explicit comparison, so they can see for themselves that anarchy actually
is better. Without such a comparison, readers must worry that they are making
the very mistake of which de Jasay accuses his statist foes: simply asserting
that their favorite would win the Hobbesian horse race, rather than proving it
would. Although de Jasay’s accusation may be an understandable response to
three hundred years of statist mendacity, it isn’t good political economy.
At this point, readers may be tempted to conclude that my argument with de
Jasay amounts to arid pedantry, a sectarian tempest in a libertarian teapot. That
would be a mistake. As noted earlier, anarchy is all the rage among those who find
contemporary interest-group politics sordid and ineffective. Because de Jasay has
thought longer and harder about anarchy and the state than most other anarcho-liber-
 Can Anarchy Save Us from Leviathan? 343

als, taking him seriously allows us to better understand their arguments as well.
But close examination shows that anarchy needn’t be as happy as de Jasay
implies. If we treat his defense of anarchy the way he treats liberal analyses of
the state, asking what incentive people have to comply with its rules, we will
not necessarily reach his conclusions. The reason is simple: even in anarchy,
some have power over others. And they can abuse that power, using it to benefit
themselves at the expense of others. Thus, to show that some anarchic arrange-
ment would be superior to the state, we need to show that it wouldn’t be the
sort of anarchy in which people abuse their power. De Jasay doesn’t consider
this issue directly, but examples ranging from Bosnia to the mafia suggest that
he should, that anarchy is not automatically liberal.
Despite this lacuna in his argument, serious liberals ignore de Jasay at their
own risk. Even the reader who agrees with everything I say here would benefit
from reading de Jasay for himself. Obviously, I can touch on only a few of the
themes of his book. But, more important, my own essay is fundamentally de
Jasian, asking of him the same question he asks of traditional liberals: “This
sounds nice, but how will it really work?” Thus, even skeptical readers will
learn much from him. They may even find themselves persuaded.
The Liberal Case for the State: Anarchy Is Intolerable
When asked for their political creed, most liberals would say that they want
a government that protects the rights of its citizens against predators. If pressed
further, most of them would identify that government with a state, an institution
with a monopoly on the legitimate use of violence. They would base their argu-
ment for the state on a comparative institutional analysis, one that examines the
extent of social order provided by various governance institutions.
Most such comparisons are fairly abstract, based on stick-figure renderings
of life under the available alternatives. Since Hobbes, the comparisons have
usually begun by considering a society of people living in the state of nature,
that is, without a state. Nowadays, that society is modeled as some sort of social
dilemma, such as the well-known prisoners’ dilemma.2 The dilemmas arise
whenever people are more productive working with others than working alone,
but individually best off shirking rather than working, no matter what others
do. In such situations, rational people would always shirk, because shirking
is the best response to whatever others do. Of course, when everyone reasons
that way, nobody works and they end up back where they started, in autarky.
Thus, acting rationally leads them to forgo any of the gains from cooperation.
This outcome is both individually sensible (nobody could do better by behav-
ing differently on his own) and wasteful (if only they would cooperate, each
would be better off).
This sorry outcome confronts the members of society with a dilemma:
given the choice between everyone working and everyone shirking, everyone
prefers that they all work; yet given the incentives they face, none of them will
344 Anarchy and the Law

work. They will not work even if they sign a contract promising to do so. Such
promises would not be, in the jargon of game theory, “credible.” Because each
knows that when it comes time to act, everybody will have an incentive to go
back on his word, everyone will treat a promise to work as what it is—empty
talk. Moreover, this situation poses a true social dilemma, because it is rooted
in their strategic circumstance, not their psychology.3
At this point, liberal theorists introduce the state. They do so by asking why
people who are giving up obvious gains don’t get together and find some way
to resolve the dilemma. The traditional liberal answer is that they would do so.
And when they got together, people would adopt a social contract creating a third
party empowered to force them to do what they cannot do themselves: enforce
contracts and other rights. By punishing those who do not respect rights, the
state changes the incentives. With the addition of that threat, people no longer
face social dilemmas. Instead, they face trivial coordination games, in which the
only rational course is to cooperate and reap the gains from trade. Under those
conditions, nobody cheats, cooperation flourishes, and everyone is better off.
For most liberals, recognizing the need for a state is only the first step toward a
sound political economy. After all, there are many different social contracts, or ways
of organizing governments. Should the rulers be chosen from one family, a group
of families, or the general citizenry? And under what terms should they rule? For
life? Until the next election? Or until the revolution? Liberals want answers to these
questions because how a society makes choices—the specific decision rule that it
uses—usually determines what it chooses. The same group of people using different
rules might choose different policies—often, radically different policies.
The recognition that institutional rules influence outcomes has revived inter-
est in constitutional design among fans of limited government. In the past few
decades, liberal scholars from James Buchanan to Robert Nozick to Richard
Epstein have investigated the consequences of a variety of different rules, always
with the hope of finding a rule that, if obeyed, leads to better choices than the
rules we now use. The proposed solutions range from heightened judicial review
to term limits to balanced-budget amendments. In spite of their differences, each
analyst traces inferior policy choices directly to the political structure. In this view,
politicians do not choose the policies because they are less civic-minded than
others; they choose them because the political system gives them both a motive
and an opportunity to do so. A structural ailment requires a structural cure. Of
course, the specific solution depends on the particular problem to be solved.
The Liberal Case against the State:
Let’s Take the Con Out of Constitutional Political Economy
For de Jasay, standard liberal theory is fine as far as it goes, but it does not
go nearly far enough. In particular, he notes that it says nothing about the incen-
tives of politicians to actually obey any particular set of rules. That omission is
hardly a trivial one. After all, to do its job, the state must be strong enough to
 Can Anarchy Save Us from Leviathan? 345

force any other group in society to obey its commands. And, because it consists
of people with their own interests, the state will often have an incentive to abuse
its power by violating the rights of citizens for its own benefit. As a result, it
seems that the liberal simply replaces one problem (how to get citizens to respect
each other’s rights) with another (how to get the sovereign to respect the rights
of citizens). Although some argue that anarchy is so bad that any state, even
an abusive one, would be better, not everyone agrees. Many liberals side with
John Locke, who doubted that “men are so foolish that they take care to avoid
what mischiefs may be done them by pole-cats or foxes; but are content, nay,
think it safety, to be devoured by lions” ([1690] 1980, 50).
Classical liberal theorists of the eighteenth and nineteenth centuries took
Locke’s observation seriously. They worried that the people who make up the
government wouldn’t obey constitutional rules unless doing so was in their
interest. That worry led them to examine the incentives created by the consti-
tutional rules, to see whether they were strong enough to force politicians (and
others) to obey the rules. If the incentives were not compatible with the rules,
a constitution would be, in the words of James Madison, merely “a parchment
barrier” (Madison, Hamilton, and Jay [1788] 1987, 309). To strengthen the bar-
rier, many liberals argued for such institutions as separated powers, federalism,
and an independent judiciary. They wanted those institutions for prudential,
rather than ethical, reasons. Such institutional arrangements, they believed,
would give even the most narrowly self-interested politicians an incentive to
serve the public interest.
Modern liberals agree that the classical liberal institutions failed because the
constitutional rules that they established did not channel self-interest effectively
enough to restrain predation. For them, that failure can be corrected by restruc-
turing the government, changing the rules so as to provide better incentives. Yet,
as de Jasay points out, when asking what new rules we should adopt, liberals
tend to ignore issues of constitutional politics, that is, of how the constitution
will be chosen and maintained. They do not try “to find the conditions, if there
are any, under which [constitutions] would be likely to be adopted, respected
and left intact for long enough to do any good” (p. 53). Instead, contemporary
advocates of limited government implicitly assume that constitutional politics
differs radically from ordinary politics. They justify that assumption by invoking
devices such as the veil of ignorance, behind which people have very little idea
how their decisions will affect them, or unanimous consent, which effectively
gives everyone a veto. Under such conditions, decisions about constitutions are
depoliticized, and therefore people choose constitutions with special features.
But as de Jasay points out, the liberals’ neglect of constitutional politics is
problematic precisely because the analysis of ordinary politics underlying their
critiques of existing constitutions is so convincing. That analysis assumes that
people will do whatever is economic to get outcomes they want. If achieving
their objectives requires altering or overturning the constitution rather than
346 Anarchy and the Law

ordinary politics, they will not be deterred. They will want a constitution that
leads politicians to adopt policies that favor them. Their ability to actually get
the preferred constitution will depend on what others want, and on how they
choose. In the United States, constitutions are normally chosen and amended
using representative methods. Nor are constitutions enforced in an institu-
tional vacuum. In the United States, courts decide whether or not the acts
of the other branches of government are consistent with the constitutional
mandate. The judges who make those decisions are chosen by politicians.
Taken together, the foregoing conditions make it seem likely that real consti-
tutions will be susceptible to venal considerations, contrary to the assumption
of liberal theorists.
These considerations lie at the heart of de Jasay’s critique of liberal constitu-
tionalism. He begins by taking on the idea that a constitution is a social contract,
adopted in the state of nature. “If,” he asks, “contracts require an enforcer, how
could there be a social contract creating an enforcer without its enforcement
being assured by a meta-enforcer created by a meta-social contract, and so on in
an infinite regress?” (p. 5). In other words, is it consistent to assert that people
who could not enforce private contracts could enforce a social contract? Given
the complexity of the social contract, the obvious answer is that they could not.
The contradiction leads de Jasay to label this part of the liberal project “Self-
Contradictory Contractarianism” (chap. 1).
He goes on to argue that showing that a particular constitution could improve
policy does not prove that it would in fact do so. We must also show that any
particular constitution would be chosen and enforced. We need to ask, in the
jargon of economics, whether it is incentive compatible. When it comes time
to enforce the rules, who will do the dirty work? Will those who are supposed
to enforce the rules have any incentive to do so? De Jasay points out that this
problem parallels the one faced by private contractors in the state of nature: how
to create a self-enforcing agreement. As he so charmingly puts it, the constitution
is like “a chastity belt whose key is always within reach” (p. 3), because the
very people against whom the constitution is supposed to be enforced are the
ones who are supposed to enforce it. In a chapter entitled “Is Limited Govern-
ment Possible?” he points out that the logic of democratic politics, in which
coalitions are notoriously unstable, makes it seem likely that compliance will
be fleeting (p. 56). Most of those who lose when the constitution is enforced
will be able to bribe away enough of the complying coalition to form their own,
noncomplying, winning coalition.
The lesson that de Jasay draws from this analysis (and from others) is that the
self-seeking by our fellow citizens creates worse problems than are predicted
by the standard liberal creed. In particular, he argues that liberals are overly
optimistic about their ability to design institutions that will channel self-inter-
est in public-regarding directions. If he is right, it seems that we must choose
between anarchy, in which we are impoverished by the depredations of our
 Can Anarchy Save Us from Leviathan? 347

fellow citizens, and tyranny, in which we are impoverished by the depredations

of the sovereign. Either way, our prospects look bleak.
The Case for Anarchy:
Repeated Prisoners’ Dilemmas Are Not Prisoners’ Dilemmas
At this point, de Jasay makes his most radical claim. He tells us that despite
the failure of the liberal constitutional program, our prospects aren’t so bad. On
the contrary, they are actually pretty good. This is so because it turns out that we
have neglected an option: anarchy. We have limited our options because we have
misunderstood the incentives created by life in anarchy. When we understand
anarchy correctly, we see that it can protect us from each other.
The major difference between the Hobbesian and the de Jasian view of anar-
chy is that de Jasay, like other anarcho-liberals, takes into account a central fact
of social life: not everyone is a stranger. Whether at work or at play, most of us
find ourselves dealing again and again with the same people. This fact makes
a huge difference for strategic behavior. Put crudely, the knowledge that we
will see people again gives us a powerful incentive to be nice to them, because
if we are not, they may not be nice to us in the future. Facing that threat, even
the most narrowly self-interested, brutally calculating egotist might find that
it pays to act like Mother Teresa. Because this account is central to de Jasay’s
claims, and because he touches on it only briefly, it is worthwhile to explore the
underlying logic of the rational-choice account of anarchy in some detail.
Stripped to its core, the argument for anarcho-liberalism is that the Hobbes-
ians mischaracterize anarchy when they treat it as a series of isolated two-person
deals. Doing so ignores the obvious fact that most of our dealings with others
are embedded in a rich web of social relations. In game-theoretic terms, that
embeddedness moves society from one-shot games to repeated games. And, as
is now well known, cooperation is rational in repeated games. It is rational not
because dealing with each other again and again changes peoples’ preferences
or because it allows them to learn who is honest and thus trustworthy. Rather,
people cooperate in repeated games because doing so pays them more than not
cooperating. It pays more because, as long as the future value of the relationship
exceeds the onetime gain from cheating, people can punish each other by not
cooperating in the future.
Thus, in the shadow of the future, people can make what economists call
implicit or self-enforcing contracts, agreements that bind them without the help
of any third parties. Such a contract exemplifies an equilibrium institution, a
set of rules obeyed because everyone finds it in his interest to obey. Of course,
besides following the rules about their own behavior in the social games they
play with each other, people must also follow the rules about monitoring com-
pliance and punishing deviants.
The idea of a self-enforcing contract, if not the terminology, lies behind
much of the empirical literature on “order without law.” For example, few
348 Anarchy and the Law

business arrangements resemble the classic arms-length agreements enforced

by courts that used to populate textbooks in economics and law. Instead, in
many instances real contracts are better thought of as relational contracts,
deals between people who expect to have a long (and prosperous) relationship.
Moreover, in the shadow of the future, people can sustain cooperation even with
strangers. They can do so because, even though we may not deal with any one
person often, we do deal with the same group of people repeatedly. Even in the
modern world, many of our relationships take place in communities, groups
of people who have overlapping relations. We can use those communities to
enforce cooperation by expanding the terms of cooperation, so that we respond
not just to our own history but to everyone else’s history as well. In that way,
people who belong to a community can use the other members as third parties
to enforce their agreements (Greif 1993; Kreps 1990).
In a very real sense, communal enforcement allows one to offer his reputa-
tion as a bond to guarantee his behavior. The reputation embodies the future
value of cooperation with other members of the community. Extending repeated
games from dyads to communities brings the models much closer to what we
usually think of when we think of anarchic institutions such as communities
and norms. Most descriptions of norms stress the importance of reputations and
of communal, third-party enforcement. For example, Robert Ellickson argues
that ranchers and farmers in Shasta County, California, do not rely solely on
self-help to enforce norms. They also rely on the threat that other members of
the community will not cooperate with defectors.
The use of reputations to induce cooperation among the members of a
community increases the level of cooperation, but at a cost. For communal
reputations to work, people need much more information than they have in the
repeated two-person prisoners’ dilemma. Instead of knowing just their own
history, they need to know everyone else’s history as well. Eventually, the costs
of gathering and disseminating that information may become so large that they
exceed all of the gains from cooperation. If people cannot contain those costs,
then the communal reputation mechanism will destroy itself.
Throughout history, people have developed a variety of methods to econo-
mize on the flow of information needed to support reputations. One common
method is to empower some citizens to hear and resolve disputes, leaving en-
forcement of the decision to the general citizenry. Thus, in medieval Europe,
long-distance merchants often brought their disputes to judges at trade fairs
(Milgrom, North, and Weingast 1990). The judges would investigate and
then announce their decision. Losers who did not pay in accordance with a
judge’s ruling faced the threat that other merchants would not trade with them.
Similarly, in East Africa, disputes over cattle were traditionally settled by an
official known as the Leopard Chief, an ordinary citizen with absolutely no
enforcement power (Bates 1981). Yet, once his decision had been announced,
both parties to the dispute abided by it. They did so not only out of respect for
 Can Anarchy Save Us from Leviathan? 349

his abilities and wisdom but also because of the threat that others would punish
them if they did not.
This brief tour of repeated games shows why de Jasay and others invoke
it to argue against the Hobbesian understanding of life without the state. The
repeated-game approach to anarchy has several noteworthy features. First, it
treats the institutions that support cooperation as equilibria that must provide
all parties, including enforcers, with incentives to do their jobs. Second, it treats
anarchic institutions, such as norms, not in isolation but as part of the fabric of
daily life. Like Hobbes, anarcho-liberals start with people in a state of nature
and show how they can build effective institutions. As a result, the incentives to
conform to anarchic institutions must come from the games of daily life among
the citizens; those games are literally the only source of rewards. Finally, not-
withstanding their origin in a Hobbesian state of nature, none of the institutions
that arise are Hobbesian. Even those that rely on a central authority to collect
information rely on decentralized methods to enforce the rules.
The Case against Anarchy: Anarchists Too Will Abuse Their Power
So far, the story of anarchy seems happy: when people deal with each other
repeatedly, as they usually do, they have an effective method of punishing those
who do not respect the rights of others. Thus, it seems that Hobbes was wrong,
that anarchy can work. However, this account must answer an obvious question:
If anarchy is so wonderful, why did so many people believe the Hobbesians?
Were they just blind to the anarchic alternative, or is anarchy perhaps more
complicated than the optimists suggest? Could it be, as suggested by my own
survey, that anarchy promises no particular outcome and that the provision of
social order outside the state may take many forms? For example, we might
buy our justice on the market, as people do when they hire private guards or
arbitrators. Or we might rely on a community for enforcement, as people do
in all traditional societies.
However we conceive of anarchy, we don’t have to look far to see it being
abused. Those who invoke anarcho-capitalism, complete with buying and selling
protection on the market, need look no farther than the mafia, a private institu-
tion that both provides justice and preys on its clients. (Indeed, it uses its power
to force even the unwilling to become its clients; often, the predator it protects
against is itself!) Many anarcho-capitalists argue that in the market for justice,
as in the market for cars, competition will limit rent collection. That argument
ignores some rather obvious opportunities for collusion among anarchists. With
more than one firm providing justice, the firms will have to work together when
their clients have claims against each other. Without more detail, it is hard to see
why such cooperation won’t sometimes lead to collusion against weaker clients
(Cowen 1992). (For a thorough discussion of real-world examples, see Benson
1998.) It is also hard to see why the competition among such firms will be any
more effective than that among politicians, political parties, and jurisdictions
350 Anarchy and the Law

in modern democracies. Yet the anarcho-liberals all agree that existing political
competition does not provide sufficient threat to prevent abuse of power.
Anarchic governance through communities faces similar problems. Through-
out history, most communities have been the setting for various sorts of op-
pression. For example, communal enforcement is easier when the community
is ethnically or religiously homogenous, and many communities treat outsiders
badly. Nor are all insiders treated equally well. For example, traditional societies
often impose heavy burdens on women, among others. Finally, most traditional
societies have enforced harsh norms of equality, often forcibly redistributing
wealth (Cook and Miller 1998). Given the relatively great inequalities in the
distribution of wealth in modern capitalist societies, it is hard to be sanguine that
modern communities will resist the redistributionist urge. Certainly, the record
of small towns opposing “threats” such as Wal-Mart suggests otherwise.
Those familiar with the theory of repeated games will not find these sad sto-
ries surprising. The happy results discussed earlier are only a part of the story of
repeated games. Contrary to the claims of many of its popularizers, that theory
does not show that cooperation is the only rational strategy. Rather, it shows
that in repeated games, many outcomes, including cooperation, are rational. The
reason is simple, and illuminating: there is no single natural or unique way to
distribute the surplus generated by cooperation. As long as all players get more
than they would under feasible alternatives, they will go along. Thus, the proper
interpretation of the theory of repeated games is that repeated play raises a new
question: Among the many different outcomes, all of which distribute the gains
from cooperation differently, which should be chosen? In other words, as de
Jasay points out, repetition turns social dilemmas into coordination games, in
which people want to cooperate, but on terms favorable to them. Whether any
particular anarchy ends up with a liberal outcome, with rights enforced against all
parties, depends on which of the many feasible outcomes the anarchy “chooses.”
Without more information about the choice process, we have no reason to sup-
pose that, in general, anarchy is more liberal that the state.
The lesson here is not that de Jasay is wrong about anarchy and that we can
comfortably return to our traditional statist-liberal verities. No doubt, he and
other anarcho-liberals have shown that anarchic order is both theoretically and
factually robust. Given the weight of that reasoning and evidence, it would be
foolish to argue for a return to the Hobbesian status quo. However, it would
also be foolish to ignore the contrary evidence and to argue that anarchy is
so good that surely we can do without the state. What we need is an anarchic
constitutional political economy, a study of what life would be like under the
various possible anarchic institutions.
The Poetry of Power
In many ways, the preceding criticisms miss the most important lesson of de
Jasay’s book, which is the importance of the poetry of power, that is, of the way
 Can Anarchy Save Us from Leviathan? 351

we talk about governance. Again and again, he urges that we resist seduction
by the easy analogies of liberal statists and refuse to accept as proved what has
merely been asserted. Instead, he would have us join him in going behind such
metaphors as “consent,” “social contract,” and “state of nature” to ask what is
really going on in any particular society. Querying metaphors, we find that they
do not always illuminate; instead, they often lead us to skip over crucial details
that analyses such as de Jasay’s expose and emphasize.
After reading de Jasay, one appreciates that much of the appeal of the
Hobbesian program lies in its congruity with common sense. All of us rely on
some model of what makes people tick to guide us through the social world.
For most of us, that model resembles what philosophers call “folk psychology”
and includes an ample allowance for self-interest and venality. Starting from
that bleak picture of human nature, we easily conclude that Hobbes was right
and that life in the state of nature, where order comes from anarchic institutions,
would be terrible. From that perspective, cooperation without the state seems an
unattainable ideal, a goal that only the most saintly might seek. It seems perverse
or naive to suggest that we rely on anything but the state to protect us.
De Jasay’s account suggests that this presumption is not well founded.
Moreover, the counter-account does not reject folk psychology but embraces
it wholeheartedly. From its perspective, ordered anarchy is not an unattainable
ideal but part of the web of institutions, simply one more way that people order
their social world. And, like other governance institutions such as firms, mar-
kets, and states, anarchic institutions can (and should) be treated as an incentive
system that can be understood only by close examination of the incentives and
opportunities it presents to individuals.
To implement that approach, de Jasay (along with many others) builds models
in which rational egoists confront a much richer strategic environment than they
do in the simple models, such as the prisoners’ dilemma, that generate Hobbes-
ian outcomes. Even the richer models remain sparse and abstract. Nevertheless,
as my brief tour shows, their minimal enrichment of the environment suffices
to overturn completely the Hobbesian account of anarchy. In these models, as
in reality, anarchy can work.
When performed carefully, rational-choice analysis suggests that anarchy
is far more complicated than either de Jasay or his Hobbesian foes make it out
to be. Anarchy’s foes err by asserting that it is inconsistent with social order;
both theory and evidence show that the richness of social relations may lead
even the most brutal egoists to cooperate rationally. And anarchy’s friends, like
de Jasay, err by asserting that its lack of hierarchy is equivalent to a lack of
coercion or that anarchic institutions are accepted in ways that statist institu-
tions are not. The social order in anarchy often rests on appeals to the basest
sort of self-interest. That anarchic institutions are equilibria implies that self-
interest will lead people to “accept” any outcome that gives them more than
they could get in autarky. Hence, compliance need not imply consent in any
352 Anarchy and the Law

ethically interesting fashion. Because people will try to attain those anarchic
institutions that favor them, anarchy is likely to be subject to the same crass
considerations that guide ordinary politics and will not automatically offer an
alternative superior to the state.
Despite these caveats, the evidence shows that de Jasay is right at the most
basic level: it is time to throw off the Hobbesian yoke. For too long, Hobbes’s
claim that anarchy was so bad that anything would be better has limited the
imagination of institutional designers. Seduced by that false inference, they
have ruled out some important options on the grounds that they could not be
effective. But we know too much about both Leviathan and its alternatives to
accept such a view.
Notes
1. For explicit models of anarchic order, see Benson 1990; Klein 1997; Taylor 1982,
1987, and 1996; or the survey in Rutten 1997.
2. For discussion of the extent to which modern game theory captures the approach
of the classics, see Hampton 1986; Kavka 1986; and Taylor 1987.
3. That is why the game is better called the prisoners’ dilemma than the prisoner’s
dilemma.
References
Bates, Robert. 1981. “The Preservation of Order in Stateless Societies: A Reinterpreta-
tion of Evans Pritchards’ ‘The Nuer.’” In Essays in the Political Economy of Rural
Africa. New York: Cambridge University Press.
Benson, Bruce. 1990. The Enterprise of Law: Justice without the State. San Francisco:
Pacific Research Institute.
———. 1998. To Serve and Protect: Privatization and Community in Criminal Justice.
New York: New York University Press.
Bernstein, Lisa. 1992. “Opting Out of the Legal System: Extralegal Contractual Relations
in the Diamond Industry.” Journal of Legal Studies 21 (January): 115-57.
Cook, Kathleen, and Gary Miller. 1998. “Leveling and Leadership in States and Firms.” In
New Institutionalisms: Institutions and Social Order, edited by Karol Soltan, Virginia
Haufler, and Eric Uslaner. Ann Arbor: University of Michigan Press.
Cowen, Tyler. 1992. “Law as a Public Good: The Economics of Anarchy.” Economics
and Philosophy 8: 249-67.
De Jasay, Anthony. 1997. Against Politics: On Government, Anarchy and Order. Lon-
don: Routledge.
Ellickson, Robert. 1991. Order without Law: How Neighbors Resolve Disputes. Cam-
bridge: Harvard University Press.
Ferrigno, Robert. 1996. Dead Silent. New York: Putnam.
Greif, Avner. 1993. “Contract Enforceability and Economic Institutions in Early Trade:
The Maghribi Traders’ Coalition.” American Economic Review 83 (June): 528-48.
Hampton, Jean. 1986. Hobbes and the Social Contract Tradition. New York: Cambridge
University Press.
Kavka, Gregory. 1986. Hobbesian Moral and Political Theory. Princeton: Princeton
University Press.
Klein, Daniel, ed. 1997. Reputation: Studies in the Voluntary Elicitation of Good Con-
duct. Ann Arbor: University of Michigan Press.
Kreps, David. 1990. “Corporate Culture and Economic Theory.” In Perspectives on
Positive Political Theory, edited by James Alt and Kenneth Shepsle. New York:
Cambridge University Press.
 Can Anarchy Save Us from Leviathan? 353

Locke, John. [1690] 1980. The Second Treatise of Government. Edited by C. B. McPher-
son. Indianapolis: Hackett.
Macaulay, Stewart. 1963. “Non-contractual Relations in Business: A Preliminary Study.”
American Sociological Review 28 (June): 55-67.
Madison, James, Alexander Hamilton, and John Jay. [1788] 1987. The Federalist Papers.
Edited by Isaac Kramnick. London: Penguin Books.
Milgrom, Paul, Douglass North, and Barry Weingast. 1990. “The Role of Institutions in
the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs.”
Economics and Politics 2 (March): 1-23.
Mosley, Walter. 1998. Always Outnumbered, Always Outgunned. New York: Norton.
Ostrom, Elinor. 1990. Governing the Commons: The Evolution of Institutions for Col-
lective Action. New York: Cambridge University Press.
Rosen, Jeffrey. 1997. “The Next Crimebuster: The Social Police.” New Yorker, Oct. 20
and 27, 170-81.
Rutten, Andrew. 1997. “Anarchy, Order, and the Law: A Post-Hobbesian View.” Cornell
Law Review 82: 1150-64.
Taylor, Michael. 1982. Community, Anarchy, and Liberty. New York: Cambridge Uni-
versity Press.
———. 1987. The Possibility of Cooperation. New York: Cambridge University
Press.
———. 1996. “Good Government: On Hierarchy, Social Capital, and the Limitations
of Rational Choice Theory.” Journal of Political Philosophy 4 (March): 1-28.
 22
Government: Unnecessary but Inevitable
Randall G. Holcombe
Ludwig von Mises, Friedrich Hayek, and Milton Friedman, perhaps the
best-known twentieth-century academic defenders of liberty, envisioned a role
for limited government in protecting liberty.1 Friedman’s (1962) defense of
freedom includes proposals for a negative income tax and school vouchers;
Hayek (1960) advocates limited government to enforce the rule of law despite
his concern about excessive government;2 and Ludwig von Mises, who also
warns of the dangers of big government,3 states, “the task of the state consists
solely and exclusively in guaranteeing the protection of life, health, liberty,
and private property against violent attacks” (1979, 52). In contrast, by the
end of the twentieth century, many libertarians, guided by the work of Murray
Rothbard and others, viewed orderly anarchy as a desirable and potentially
achievable state of affairs and—some would argue—the only state of affairs
consistent with a libertarian philosophy.4 My purpose in this article is to examine
that proposition critically and to defend and extend the classical liberal idea of
limited government. My conclusions align more with those theorists, such as
Hayek and Mises, who see a need for limited government than with those who
see the libertarian ideal as an orderly anarchy.
The debate over limited government versus orderly anarchy typically turns
on the effectiveness of government versus private means to achieve certain
ends. Government’s defenders argue that markets cannot provide certain goods
and services as efficiently as government can—in some cases, markets may be
completely unable to provide certain desired goods—whereas the advocates
of orderly anarchy argue that private contractual arrangements can provide
every good and service more effectively and can do so without the coercion
inherent in government activity. I maintain, however, that the effectiveness of
government versus that of private arrangements to produce goods and services
is irrelevant to the issue of the desirability of government in a libertarian society.
Governments are not created to produce goods and services for citizens. Rather,
they are created and imposed on people by force, most often for the purpose
of transferring resources from the control of those outside government to the
control of those within it.
Without government—or even with a weak government—predatory groups
will impose themselves on people by force and create a government to extract
income and wealth from these subjects. If people create their own government

354
 Government: Unnecessary but Inevitable 355

preemptively, they can design a government that may be less predatory than the
one that outside aggressors otherwise would impose on them.5
Anarchy as an Alternative to Government
One strand of the libertarian anarchist argument is the claim that everything
the government does, the market can do better, and therefore the government
should be eliminated completely.6 A second strand is the proposition that
government is unethical because of its use of force.7 Murray Rothbard has
been the leading proponent of both arguments, and his 1973 book For a New
Liberty is his most direct defense of orderly anarchy. Rothbard illustrates how
the private sector can undertake more effectively all government activities,
including national defense. All of Rothbard’s arguments are persuasive, but
his national-defense argument is worth reviewing here because it has direct
relevance to my thesis.
Rothbard argues first that national defense is needed only because the gov-
ernments of some countries have differences with the governments of others.
Wars occur between governments, not between the subjects of those govern-
ments. Without a government to provoke outsiders, outside governments would
have no motivation to attack, so a group of people living in anarchy would
face a minimal risk of invasion from a foreign government. An auxiliary line
of reasoning is that if a government does try to use military force to take over
an area with no government, such a takeover would be very difficult because
the aggressor would have to conquer each individual in the anarchistic area. If
those people have a government, a foreign country has only to induce the other
country’s head of state to surrender in order to take over that other country, but
in taking over a country without a government an aggressor faces the much more
daunting task of getting everyone to surrender, going from house to house and
from business to business, a formidable and perhaps impossible undertaking.8
Jeffrey Rogers Hummel offers an interesting extension of Rothbard’s argu-
ments regarding defense. Hummel (1990) argues that national defense against
foreign aggression is a subset of the problem of protecting people from any
state, domestic or foreign, and Hummel (2001) notes that if people can design
institutions to protect themselves from domestic government, those same insti-
tutions should suffice to protect them from foreign governments. In this line of
reasoning, the private production of defense services would occur as a byproduct
of the elimination of domestic government by an orderly anarchy.
These arguments regarding national defense show the flavor of the argument
that people would be better off without government. Orderly anarchy would
eliminate the need for government provision of national defense because the
risks of invasion would be lower and because the private sector can supply any
defense services people want. By considering each activity the government now
undertakes, a substantial literature shows that in each case a superior private-
sector alternative exists or might be created. Private arrangements can provide
public goods, law, and order at any scale. A substantial mainstream academic
356 Anarchy and the Law

literature on the inefficiencies of government production and regulation further

buttresses the case against government. Thus, the libertarian anarchist position
rests heavily on the argument that anything the government does, the private
sector can do more effectively and less coercively.
Why Do Governments Exist?
The argument that people should do away with government because every-
thing the government does the private sector can do better would be persuasive if
governments were created, as their rationales suggest, to improve their subjects’
well-being. In fact, governments are not created to improve the public’s well-
being. In most cases, governments have been imposed on people by force, and
they maintain their power by force for the purpose of extracting resources from
subjects and transferring the control of those resources to those in government.
Sometimes foreign invaders take over territory and rule the people who live
there; more commonly, people already subject to a government overthrow it and
establish a new government in its place. Whether government is more or less
effective in producing public goods or in protecting property is irrelevant.
A possible exception to this claim is the formation of the U.S. government,
which was established to overthrow British rule in the colonies and to replace
it with a new government designed to protect the liberty of its citizens. Much
of the Declaration of Independence consists of a list of grievances against
the king of England, and the American founders wanted to replace what they
viewed as a predatory government with one that would protect their rights. One
can dispute this story,9 but for present purposes the point is that even in what
appears to be the best real-world case in which government was designed for
the benefit of its citizens, it was not designed to produce public goods or to
control externalities or to prevent citizens from free riding on a social contract.
Its underlying rationale had nothing to do with any of the common economic
or political rationales given for government.
The point here is straightforward: despite many theories justifying govern-
ment because its activities produce benefits to its citizens, no government was
ever established to produce those benefits. Governments were created by force
to rule over people and extract resources from them. Thus, the argument that
citizens would be better off if they replaced government activities with private
arrangements and market transactions is irrelevant to the issue of whether an
orderly anarchy would be a desirable—or even feasible—replacement for
government. The real issue is whether a group of people with no government
can prevent predators both inside and outside their group from using force to
establish a government.
Protection and the State
Without government, people would be vulnerable to predators and therefore
would have to find ways to protect themselves. In the anarchy Hobbes described,
life is a war of all against all—nasty, brutish, and short. The strong overpower
 Government: Unnecessary but Inevitable 357

the weak, taking everything the victims have, but the strong themselves do not
prosper in Hobbesian anarchy because there is little for them to take. Nobody
produces when the product will surely be taken away from them. Even under
more orderly conditions than Hobbesian anarchy, predation has a limited payoff
because people who have accumulated assets forcibly resist those who try to
plunder them, and the ensuing battles consume both predators’ and victims’
resources.10
Disorganized banditry produces Hobbesian anarchy in which nobody pros-
pers because nobody has an incentive to be productive. If the predators can
organize, they may evolve into little mafias that can offer their clients some
protection. This evolution will create a more productive society, with more in-
come for both the predators and their prey, but the mafias will have to limit their
take in order for this outcome to arise. If the mafia can assure its clients that in
exchange for payment they will be protected from other predators and allowed
to keep a substantial portion of what they produce, output will increase, and
everybody’s income can rise. Losses from rivalries among mafias will continue
to be borne, however, because competing mafias have an incentive to plunder
individuals who do not contract with them.
If the mafias become even better organized, they can establish themselves
as a state. Predators have every incentive to move from operating as bandits to
operating as states because bandits cannot guarantee themselves a long-term
flow of income from predation and because if banditry is rampant, people have
little incentive to produce wealth. States try to convince citizens that they will
limit their take and that they will protect their citizens in order to provide an
incentive for those citizens to produce. Governments receive more income than
bandits because governments can remain in one place and receive a steady flow
of income rather than snatching once and moving on (Usher 1992). In such a
situation, citizens gain, too (Holcombe 1994).
Nozick (1974) describes this process in more benign terms. Nozick’s pro-
tection agencies establish monopolies and evolve into a minimal state, but
the evolutionary process is the same. The evolution of predatory bandits into
mafias (protection firms) and thence into governments may be inevitable. If
not inevitable, it is desirable because governments have an incentive to be
less predatory than bandits or mafias. Citizens will be more productive, creat-
ing more for predators to take and more for citizens themselves to keep. The
predators gain because they need only threaten to use force in order to induce
the victims to surrender their property. Citizens benefit because they need not
devote resources to using force in defense of their property—the government
protects property, except for the share it takes for itself.11
Successful predation of this type requires a particular institutional arrange-
ment in which government makes a credible promise to limit its take and to
protect its citizens from other predators. Only then do citizens have an incentive
to produce much. Government has an incentive to protect citizens in order to
protect its own source of income.
358 Anarchy and the Law

The contractarian literature of Rawls (1971), Buchanan (1975), and especially

Tullock (1972, 1974) is related to the argument presented here, but it differs in
a significant respect. Noting the problems that exist for citizens in Hobbesian
anarchy, these writers argue that citizens can gain by forming a government to
protect property rights and to enforce contracts. Government is a result of the
contract, not a party to it. The argument here is not that government will be cre-
ated because everyone’s welfare will be enhanced by an escape from anarchy,
but rather that anarchy will not persist because those with the power to create
a government will do so regardless of the desires of those outside of govern-
ment. The creation of government may enhance everyone’s welfare because
government has an incentive to protect the source of its income—its citizens’
productive capacity—but the “contract” that creates government is not made
because everyone agrees to it or because everyone will benefit. Rather, it springs
from the capacity of those in government to force their rule on others.
A Potential Problem with Protection Firms
In an orderly anarchy, potential victims of predation can hire protective firms
to help them protect their assets, and these protective firms may try to cooperate
with each other, as Rothbard (1973) argues. However, with many competing
protective firms, potential problems arise. Firms might prey on their competi-
tors’ customers, as competing mafia groups do, to show those customers that
their current protective firm is not doing the job and thus to induce them to
switch protection firms. This action seems to be a profit-maximizing strategy;
hence, protection firms that do not prey on noncustomers may not survive. The
problem is even more acute if Nozick is correct in arguing that there is a natural
monopoly in the industry. In that case, firms must add to their customer base
or lose out to larger firms in the competition.
Cowan (1992, 1994) argues that this tendency toward natural monopoly is
accentuated because for protection firms to cooperate in the adjudication of dis-
putes, a single arbitration network is required. This network might be established
through the creation of a monopoly protection agency, as Nozick suggests, but
even if many firms participate, the result will be a cartel whose members have
an incentive to act anticompetitively. For the network to work, it must sanction
outlaw firms that try to operate outside the network. The power to sanction
competitors reinforces its monopoly position. As Adam Smith notes, “People of
the same trade seldom meet together, even for merriment and diversion, but the
conversation ends in a conspiracy against the public” ([1776] 1937, 128). The
reasonable argument that protection firms would cooperate to avoid violence and
produce justice thus evolves into the argument that such firms would cartelize
to use their power for their benefit in a conspiracy against the public.
A more general and therefore more serious threat is that using the assets of
a protective firm for both plunder and protection might prove most profitable.12
A protection firm might use armored vehicles, guns, investigative equipment,
and other assets to protect its clients and to recover stolen property or to extract
 Government: Unnecessary but Inevitable 359

damages from people who violated its clients’ rights. The firm might find it more
profitable, however, to use its investigative capacity also to locate assets that
can be stolen and to use guns and other weapons to rob people who are not its
clients. The mafia, for example, does offer protection for a fee, but it also uses
its resources for predation. Profit-maximizing firms with these kinds of assets
can be expected to employ them in the dual roles of protection and predation.
Otherwise, they would not be maximizing their profits, and they would lose mar-
ket share to firms that do use their resources in this profit-maximizing way.
Much of the time protection firms must have excess capacity in their role
as protectors because they need to be able to respond to violations of their
clients’ rights with sufficient force to return stolen property, collect restitution,
and otherwise deal with predators. Most of the time they will need to use their
resources only to guard and monitor their clients’ property, leaving some of
their assets idle.13 Absent government, protection firms might want to display
their excess capacity to use violence conspicuously, in part to reassure their
customers and in part to deter aggressors. They also might use these resources,
however, in a predatory manner against nonclients.
This line of reasoning further bolsters Nozick’s argument that the produc-
tion of protection is a natural monopoly, and it bolsters Cowan’s argument that
even if many protection firms remained in anarchy, they would be pushed to
cartelize, creating the same result as a monopoly protection firm. If potential
customers have to be concerned not only with how well a firm will protect
property, but also with the threat that protection firms they do not contract with
may take their property, they have even more reason to patronize the largest
and most powerful firm. Protection firms do not necessarily offer an escape
from Hobbesian anarchy.14
The Special Case of Protection Services
As noted earlier, one conclusion of the libertarian literature on government
production is that private providers can provide more effectively all of the
goods and services that government now supplies. This conclusion applies to
protection services as much as to any government-provided good or service.
As with other goods and services, though, it applies to the market provision
of protection services within an economy in which government enforces its
rules on all market participants, including protection firms. Economic analysis
that shows the effectiveness of markets in allocating resources does so within
a framework that assumes that property rights are protected and that exchange
is voluntary.15 Economic theorists from Samuelson (1947) to Rothbard (1962)
make the assumption that market exchange arises from mutual agreement,
without theft or fraud. In the analysis of protection firms, this assumption of vol-
untary exchange amounts to an assumption that the industry’s output is already
being produced—as a prerequisite for showing that it can be produced by the
market! As a simple matter of logic, one cannot assume a conclusion to be true
as a condition for showing that it is true. This problem makes the production of
360 Anarchy and the Law

protection services a special case from the standpoint of economic analysis.

The noncoercive nature of market exchange allows competing firms to enter
at any time, regardless of incumbents’ market share or market power. Protection
firms, however, cannot be analyzed on this assumption because they themselves
provide the protection that is assumed to exist in a free market and that underlies
the ability to enter the market. If they can protect themselves, the assumption
is met; if not, the assumption is violated. In the previous section, I explained
why the assumption is likely to be violated. The use of force is an integral part
of these firms’ business activities, and protection firms have an incentive to use
their resources for predatory purposes, which includes keeping competitors
from entering the market.16
In a world dominated by government, how protection firms might behave
in the absence of government is a matter of speculation, but in examining the
turf wars fought by different mafia families and by rival city gangs, we see a
tendency for nongovernmental groups to use force to try to eliminate competi-
tors from the market. Some protection firms might shy away from such activity,
but, as noted in the previous section, using the firm’s resources for predatory as
well as protective activities is a profit-maximizing strategy, and protection firms
that are not predatory will tend to lose out in the competition with those that
are. If protection firms use predatory means to keep competitors from entering,
then one of the fundamental (and usually unstated) institutional assumptions
underlying the demonstration of the efficiency of market activity is violated.
This problem makes the provision of protection services different from the
provision of most services.
In most industries, firms with market power exercise that power through
their pricing decisions, marketing strategies (such as bundling), contractual
means (such as exclusive contracts), or other means that involve only voluntary
activity on the part of everyone involved. Firms with market power in the pro-
tection industry are uniquely in a position to use force to prevent competitors
from entering the market or to encourage people to become their customers,
simply as a result of the nature of their business.17 Nozick presents a relatively
benign description of how private protective firms might evolve into a minimal
state, but in a business where those who are best at using coercion are the most
successful, the actual evolution of protection firms into a state may result in a
very predatory state.
Government Is Inevitable
In the foregoing arguments, I have maintained that although government
may not be desirable, it is inevitable because if no government exists, preda-
tors have an incentive to establish one. From a theoretical standpoint, Nozick’s
argument—that competing protection firms will evolve into a monopoly that
then becomes the state—represents one form of the general argument that
government is inevitable. Because of the prominence of Nozick’s work, I offer
no further theoretical defense of it here. More significant, however, as de Jasay
 Government: Unnecessary but Inevitable 361

notes, “Anarchy, if historical precedent is to be taken as conclusive, does not

survive” (1989, 217). Every place in the world is ruled by government. The evi-
dence shows that anarchy, no matter how desirable in theory, does not constitute
a realistic alternative in practice, and it suggests that if government ever were
to be eliminated anywhere, predators would move in to establish themselves
as one by force.18 One can debate the merits of anarchy in theory, but the real-
world libertarian issue is not whether it would more be desirable to establish
a limited government or to eliminate government altogether. Economist Bruce
Benson notes, “When a community is at a comparative disadvantage in the use
of violence it may not be able to prevent subjugation by a protection racket such
as the state” (1999, 153). Libertarian philosopher Jan Narveson writes, “Why
does government remain in power? Why, in fact, are there still governments?
The short answer is that governments command powers to which the ordinary
citizen is utterly unequal” (2002, 199-200). Government is inevitable, and people
with no government—or even with a weak government—will find themselves
taken over and ruled by predatory gangs who will establish a government over
them.19 As de Jasay observes, “An anarchistic society may not be well equipped
to resist military conquest by a command-directed one” (1997, 200). People
may not need or want government, but inevitably they will find themselves
under government’s jurisdiction.20
Some Governments Are More Predatory Than Others
All governments were established by force and retain their power by force,
but some are more predatory than others. Governments can take more from their
citizens than can bandits or mafias because of their superior organization, but
their advantage in part requires them to be less predatory. Bandits can plunder
everything people have, but then nothing more will be left to take, and people
will have little incentive to produce more if they believe that another complete
plunder awaits them. Bandits must move from victim to victim, using resources
to find victims and forcing them to surrender their wealth. Governments can
remain in one place, continually taking a flow of wealth from the same people,
often with their victims’ cooperation and assistance. If governments nurture
their citizens’ productivity, the amount of their takings can continue to increase
over time. It then becomes increasingly important for government to protect
its source of income from outside predators, so the production of protection
serves the self-interest of those in government as well as the interest of the
mass of citizens.
The longer the government’s time horizon, the less predatory it will be.21 If
a government takes over by force but believes that it will rule for only a limited
time before another gang of predators forces it out, then it has an incentive to take
everything it can while it still has the power to do so. This incentive will obtain
especially if the rulers are unpopular with the citizens and therefore cannot count
on the citizens for support. Governments imposed on people from the outside
are likely to be especially predatory, which gives citizens an incentive to form
their own government preemptively to prevent outsiders from taking over.
362 Anarchy and the Law

If a group of outside predators establishes itself as a government, it will have

every reason to keep most of the surplus for itself, in part because the people in
the predatory group care more about their own welfare than they do about the
welfare of the people they rule. Moreover, the conquered group probably will
resist takeover by the predators, creating ill will between the conquerors and
the conquered. If government is inevitable, and if some governments are better
than others, then citizens have an incentive to create and maintain preemptively
a government that minimizes predation and is organized to preserve, as much
as possible, its citizens’ liberty (Holcombe forthcoming).
Can Government Preserve Liberty?
The arguments developed here frame a challenge to the idea that a minimal
state can be designed to preserve liberty. If government is simply a matter
of the strong forcing themselves on the weak, it should not matter whether
citizens want to create a limited government to protect their rights because in
the end those who have the most power will take over and rule for their own
benefit. That threat is real, and a brief examination of political history shows
many examples. One example is the 1917 Russian Revolution that created the
Soviet Union. Other examples include China and Eastern Europe after World
War II and many African nations at the beginning of the twenty-first century.
Likewise, limited governments such as the U.S. government created in 1776
and the British government in the nineteenth century became less libertarian
and more predatory in the twentieth century. Limited governments may not
remain limited, and any government constitutes a standing threat to liberty. A
challenge to advocates of a minimal state is to explain how people can create
and sustain preemptively a liberty-preserving government.
The historical record also offers some basis for optimism that government’s
predatory impulses can be controlled. History shows that oppressive govern-
ments can be overthrown, as they were in Eastern Europe after the collapse of
the Berlin Wall in 1989, and that even when they are not overthrown, pressures
from their citizens can result in less-predatory states. One would not want to
hold Russia and China up as examples of libertarian governments, but they
do exemplify governments that have reduced their oppression and increased
individual liberty. Governments can become less predatory. Even though the
U.S. government has been firmly entrenched for two centuries, it is less oppres-
sive than many other governments, notwithstanding that it has become more
predatory over time. Thus, the evidence is that the worst thugs do not always
seize and maintain power, and even when they do, reversals toward liberty are
possible. In light of this experience, it should be possible to identify the fac-
tors that make governments less predatory. Such factors fall into two general
categories: economic and ideological.
The economic incentives are relatively straightforward. There are net gains
from establishing a less-predatory government. Gwartney, Holcombe, and
Lawson (1998) have shown that countries with lower levels of government
 Government: Unnecessary but Inevitable 363

spending have higher incomes and faster economic growth, and in examining
economic freedom more broadly Gwartney, Lawson, and Holcombe (1999) have
shown that less government interference in all areas of an economy leads to
greater prosperity. Olson (2000) examines the political conditions under which
less-predatory governments can be established, and a substantial body of work
follows up on Olson’s ideas to promote less-predatory and more market-ori-
ented governments (Azfar and Cadwell 2003; Knack 2003). If less-predatory
governments mean more production, then potentially everyone can gain from
replacing more-predatory government with less-predatory government.
Leaders of predatory governments, however, may do better by preserving
the status quo, and they may generate sufficient political support by promot-
ing a national ideology (Edelman 1964; North 1981, 1988) or by intimidating
potential rivals (Lichbach 1995; Kurrild-Klitgaard 1997) in order to maintain
power. As Olson (1965) explains, even if most people believe that they would
be better off with a less-predatory government, they have an incentive to free
ride on others’ revolutionary activities, which limits the possibilities for change.
Kurrild-Klitgaard (1997) notes, however, that some incentives for revolution-
ary action remain. Moreover, revolution is not the only option. Just as govern-
ment in the United States has grown by small steps, a gradual contraction of
government’s scope and power also may be brought about. The demise of the
Eastern European dictatorships after the collapse of the Berlin Wall in 1989
shows that changes can happen with surprising speed. This development points
toward the second factor: ideology.
In a famous passage of The General Theory of Employment, Interest, and
Money, John Maynard Keynes emphasizes the power of ideas: “Indeed, the
world is ruled by little else. Practical men, who believe themselves to be quite
exempt from any intellectual influences, are usually the slaves of some defunct
economist. Madmen in authority, who hear voices in the air, are distilling their
frenzy from some academic scribbler of a few years back. I am sure that the
power of vested interests is vastly exaggerated compared with the gradual
encroachment of ideas” (1936, 383). The American Revolution of 1776 was
strongly supported by an ideology of freedom (Bailyn 1992; Holcombe 2002a),
as was the fall of the European eastern bloc dictatorships after 1989. At the
beginning of the twenty-first century, citizens of governments throughout the
world are increasingly coming to accept the libertarian ideas of Mises, Hayek,
Friedman, Rothbard, and others.
Together, economic and ideological forces are now creating an environment
more conducive to the advance of liberty than the environment of the twentieth
century. From an economic standpoint, the connection between freedom and
prosperity has become universally recognized. Through most of the twentieth
century, the conventional wisdom held that a government-controlled economy
would be more productive than a market economy, an idea that persisted until
the collapse of the Berlin Wall in 1989. Economic realities have not changed,
but the generally accepted economic view of freedom has. In the twentieth
364 Anarchy and the Law

century, the conventional wisdom held that more freedom came at the cost of a
less-productive economy. In the twenty-first century, the generally accepted view
is that freedom brings prosperity. From an ideological standpoint, the academic
scribbler who had the largest influence on the twentieth century was probably
Karl Marx, whereas at the beginning of the twenty-first century the ideas of
Mises, Hayek, and Friedman have found greater popular acceptance.
A minimal libertarian state would require strong ideological support from its
citizens, and both economic and ideological factors are turning in the direction
of liberty. As Jeffrey Rogers Hummel says of libertarian ideology, “Although
we may never abolish all states, there is little doubt that we can do better at
restraining their power if only we can motivate people with the will to be free”
(2001, 535).
Government and Liberty
History has shown not only that anarchy does not survive, but also that some
governments are better than others. Therein lies the libertarian argument for a
limited government. People benefit from an institutional mechanism to prevent
their being taken over by a predatory gang. They can provide this mechanism
by preemptively establishing their own limited government, in a form they
themselves determine, not on the terms forced upon them by outside predators.
A government created by the people themselves can be designed to produce the
protection they desire while returning to them the bulk of the surplus owing to
peaceful cooperation rather than allowing the state to retain it.
Is it really possible to design a limited government that will protect people’s
liberty? Despite the challenges, it is well known that some institutional arrange-
ments do a better job of securing liberty and creating prosperity than others.
Nations that have protected property rights and allowed markets to work have
thrived, whereas nations that have not done so have remained mired in poverty.22
A libertarian analysis of government must go beyond the issue of whether
government should exist. Some governments are more libertarian than others,
and it is worth studying how government institutions can be designed to mini-
mize their negative impact on liberty. This proposition is obviously true if one
believes that government is inevitable, but even advocates of orderly anarchy
should have an interest in understanding how government institutions can be
designed to maximize their protection of liberty.
Many writers have noted that limited governments usually tend to expand
their scope once established, perhaps suggesting that limited governments, once
established, cannot be controlled (Olson 1982, 2000; Higgs 1987; Holcombe
2002a). Nevertheless, in the real world, some governments are less oppressive
and closer to the libertarian ideal than others. The United States, with one
of the oldest governments in the world, remains one of the freest nations, so
clearly it is possible to preserve a degree of liberty, even if the situation does
not approach the libertarian ideal. In any event, if government is inevitable,
there is no real-world libertarian alternative but to work to make government
 Government: Unnecessary but Inevitable 365

more libertarian. Although ideas have been advanced as to how institutions

might be redesigned to lessen government’s coercive activities (for example, by
Tucker 1990; Anderson and Leal 1991; Holcombe 1995; Holcombe and Staley
2001), there may be no final answer to the question of how to design the ideal
government because any innovations in government designed to protect the
rights of individuals may prompt offsetting innovations by those who want to
use government for predatory purposes. The preservation of liberty will remain
a never-ending challenge.
My argument may convince some readers that limited government is neces-
sary to preserve liberty—to protect citizens from being taken over and ruled by
a predatory government much worse for their liberty than a government they
design themselves. Others may believe, despite the arguments presented here,
that libertarian anarchy remains a feasible and desirable alternative. In any event,
my arguments point to a different direction for the debate between libertarian
anarchists and libertarian minarchists.23 Both groups agree that government is
not necessary to produce public goods or to correct externalities or to get people
to cooperate for the public good—that private parties can undertake voluntarily
and more effectively all of the activities undertaken in the public sector. The
libertarian issue regarding government is whether a society with no government
has the means to prevent predators from establishing one by force.
Rothbard (1973) argues that an anarchistic society can resist such predators,
whereas Nozick (1974) and de Jasay (1989, 1997) argue that anarchy will not
survive. However, most of the arguments supporting a libertarian anarchy have
been framed in terms of whether private arrangements can replace government
activities. Whether private arrangements are superior to government activity,
however, is largely irrelevant.24 Government is not created to produce public
goods, to control externalities, or to enforce social cooperation for the good
of all. It is created by force for the benefit of its creators. The libertarian argu-
ment for a minimal government is not that government is better than private
arrangements at doing anything, but that it is necessary to prevent the creation
of an even more predatory and less-libertarian government.
Notes
1. I refer only to academic defenders of liberty because other libertarians need not be
so rigorous in their analysis of alternatives to the status quo. H. L. Mencken, for
example, could offer trenchant critiques of government without having to offer an
alternative. Ayn Rand, a novelist, did not need to offer alternatives but did offer
them, and she also belongs to the limited-government camp. The Libertarian Party
in the United States runs candidates for political office, a few of whom are elected.
Although some people view libertarianism as consistent with only the elimination
of all government, many people who call themselves libertarians see a role for
limited government.
2. Hayek argues for limited government despite his reservations (for example, in
Hayek [1944]) about the expansion of government.
3. See, for example, Mises (1998), 715-16, for a discussion of the role of government.
Elsewhere, Mises (1945) expresses his reservations about government.
366 Anarchy and the Law

4. Rothbard (1973) explains how private arrangements effectively can replace all of
government’s functions, and Rothbard (1982) gives an ethical argument for the
complete elimination of government.
5. Robert Higgs has written, “Without government to defend us from external aggres-
sion, preserve domestic order, define and enforce property rights, few of us could
achieve much” (1987, 1). He recently reevaluated his position, however, and now
declares, “When I was younger and even more ignorant that I am today, I believed
that government…performs an essential function—namely, the protection of indi-
viduals from the aggressions of others…. Growing older, however, has given me
an opportunity to reexamine the bases of my belief in the indispensability of the
protective services of government…. As I have done so, I have become increas-
ingly skeptical, and I now am more inclined to disbelieve the idea than to believe
it” (2002, 309). In this more recent article, Higgs does not deal with the argument
that private protective services work under the umbrella of the state and that without
the state to check their power they might evolve into organizations more predatory
than a constitutionally limited state. In my view, Higgs’s earlier position retains
merit.
6. In Holcombe forthcoming, I discuss some of this literature. See, for example, the
critiques by de Jasay (1989), Foldvary (1994), and Holcombe (1997) of the pub-
lic-goods rationale for government, and by Berman (1983), Foldvary (1984), D.
Friedman (1989), Benson (1989, 1990, 1998), Stringham (1998-99), and Tinsley
(1998-99) on how law can exist without the state, how property rights can be defined,
and how externalities can be internalized through private arrangements. Rothbard
(1973) and D. Friedman (1989) more generally describe how the private sector
can handle better all activities the state currently undertakes. Another justification
for the state is the social contract theory that goes back at least to Hobbes ([1651]
1950) and appears in the work of Rawls (1971) and Buchanan (1975). De Jasay
(1985, 1997) and Yeager (1985) present extensive critiques of the social contract
theory, and Axelrod (1984), Foldvary (1984), de Jasay (1989), Rothbard (1973),
D. Friedman (1989), Benson (2001), and many others have shown how private ar-
rangements can overcome the prisoners’ dilemma problem. In Holcombe (2002b),
I note that the actual activities of government do not correspond with the social
contractarian framework.
7. See, for example, Rothbard (1982). Rothbard (1956) lays a foundation for both
the ethical and economic arguments against government by reformulating welfare
economics to show that market activity is welfare enhancing, whereas government
activity, which relies on coercion, is not. Along these lines, Brewster (2002) ar-
gues that the state cannot exist if by state one means an organization acting in the
public interest. People act in their own interests, Brewster argues, and the state is
merely designed to appear as if it acts in the public interest. Edelman (1964) lays
an interesting foundation for this point of view.
8. This argument is developed further in Hoppe (1998-99), which argues that in the
absence of government, insurance companies can provide defense services. This
argument is interesting, but it should be noted that companies that offer fire insur-
ance or theft insurance do not provide home security or fire protection services
even in areas where such services are not available from government. Note also
that typical insurance policies often exclude losses owing to war, even though
government provides defense services. In the absence of government, if companies
offered insurance against losses from foreign invasion, they might find it cheaper to
pay their policyholders for their losses than to provide defense services to protect
them.
9. See, for example, Beard (1913), which argues that the U.S. Constitution was written
to further its authors’ interests.
 Government: Unnecessary but Inevitable 367

10. See Tullock (1967), an article titled “The Welfare Costs of Tariffs, Monopolies, and
Theft,” which is focused on the welfare cost of monopolies and tariffs, but whose
arguments about theft apply here. See also Usher (1992) for a Hobbesian view of
life in anarchy. See Bush (1972) for a formal model of the costliness of anarchy
and how it leads to government.
11. Not surprisingly, some people prefer even more protection services, so they hire
private protection services to augment the government’s. Many people, however,
rely entirely on the state’s protection of their persons and assets.
12. Sutter (1995) argues that in anarchy, power would be biased in favor of protection
agencies, which might degenerate into exploitative gangs. Rutten (1999) argues
that an orderly anarchy may not always be very liberal because some people or
groups might abuse the power they have over others, as the mafia does.
13. Private protection firms under the umbrella of government do not need as much
excess capacity because when they detect a violation, their normal response is to call
the police to marshal the additional force needed to respond to rights violations.
14. Note also Rutten’s (1999) more general argument that protection firms would tend
to abuse their power, much like the mafia, sacrificing liberty in any event.
15. Sutter (1995) shows how asymmetric power can lead to the exploitation of some
people in this situation. See also Rutten (1999) on this point.
16. Those who argue that private protection firms would negotiate among themselves
to settle disputes are in effect arguing that competitors would not enter the market
unless they also entered the dispute-resolution cartel.
17. Of course, other types of firms might try to use force as a competitive tool—for
example, by saying, “If you don’t deal exclusively with us, we will burn your house
down.” Such actions, however, lie outside the type of market activity normally
incorporated into economic analysis, whereas the use of force is an integral part
of a protection firm’s business activity.
18. Perhaps the most recent examples of areas effectively without government were
Bosnia, Somalia, and Afghanistan in the 1990s, which fell well short of being
anarchistic utopias.
19. Much has been made in libertarian literature of the case of Iceland from about A.D.
800 to 1262. For the historical details, see D. Friedman (1979). Yet this example
ended nearly 750 years ago, and it existed in a world much different from the modern
one. Iceland was remote, given the transportation technology of the day, it was poor,
and it had an undesirable climate, making it an undesirable target for predators.
Nevertheless, a government was eventually established from the inside.
20. This argument is aimed at libertarians and takes a libertarian perspective. Libertar-
ians should keep in mind, however, that the overwhelming majority of people, if
given the choice, would choose government over anarchy, and a substantial number of
people would like a bigger and more powerful government than they have today.
21. Levi (1988) discusses the effect of the rulers’ time horizon and other factors on the
degree to which they act in a predatory manner. Hoppe (2001) argues that monarchy
is superior to democracy because political leaders have a longer time horizon.
22. Landes (1998) considers the historical evidence and makes a powerful case for this
connection.
23. Although I argue that libertarian anarchy is not a viable alternative, I do not mean
to suggest that the libertarian anarchist literature has no merit. In fact, this litera-
ture has made valuable contributions in two broad ways. First, it has shown the
viability of market institutions in areas where the mainstream literature argues the
necessity of government, thus making significant advances in our understanding
of both markets and government. Second, it helps promote the libertarian ideology
required to rein in the power of predatory government.
368 Anarchy and the Law

24. My argument also suggests that claims that government is immoral (as in Rothbard
[1982]) are not relevant to the issue of whether people should have government. If
government is inevitably imposed on them by force, they have no choice.

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Acknowledgments: The author gratefully acknowledges helpful comments

from Bruce Benson, Fred Foldvary, Gil Guillory, Robert Higgs, Hans Hoppe,
and two anonymous reviewers of this journal. All arguments presented in the
article and any of the article’s remaining shortcomings remain the author’s
responsibility.
 23
Is Government Inevitable?
Comment on Holcombe’s Analysis
Peter Leeson and Edward P. Stringham
Randall G. Holcombe’s article “Government: Unnecessary but Inevitable”
(2004) offers excellent insights into the sustainability of anarchy and the
creation of government. Holcombe recognizes that “government was not cre-
ated for the benefit of its citizens, it was created for the benefit of those who
rule.” Although he agrees that government is unnecessary for the provision
of public goods, he believes that libertarian anarchists ignore more practical
questions about the sustainability of anarchy. He argues that because the stron-
ger individuals will always get their way and form a government, the relevant
debate among advocates of liberty should be about how weaker individuals
can “create and sustain preemptively a liberty-preserving government.” The
inevitability of the state forces society to decide between evils. Instead of
advocating anarchy, Holcombe believes that libertarians should advocate the
establishment of minimal governments that can prevent takeover by more
tyrannical ones.
Inspired by Holcombe’s discussion, we reconsider here some of his claims.
Despite Holcombe’s interesting hypothesis, we believe that his argument fails
on two counts: he does not show, first, that anarchy must break down and,
second, that limited government will remain limited. The arguments he uses
against the viability of anarchy can be applied to the viability of limited govern-
ment, and the arguments he uses for the viability of limited government can be
applied to the viability of anarchy. In this comment, we discuss the problems
of Holcombe’s theoretical arguments and the historical evidence that shows
he cannot have his cake and eat it too. Holcombe, who might be considered a
pessimistic anarchist, is in our opinion too pessimistic about anarchy and too
optimistic about government.
Some Observations Concerning the Sustainability of Anarchy
Building on earlier criticisms of anarchy (Tullock 1972, 1974; Nozick 1974;
Cowen 1992), Holcombe argues that government is inevitable. Conventional
wisdom is that stateless orders must be short-lived because of their susceptibil-
ity to outside forces. There may be truth in this claim, but we believe that the
historical record calls it into question.
The ubiquity of government today causes us to forget that many societies
were stateless for most of their histories and that many remained so well into

371
372 Anarchy and the Law

the twentieth century. The historical presence of long-standing, primitive, an-

archic societies spans the globe. Consider, for example, societies such as the
Eskimo tribes of the North American Arctic, Pygmies in Zaire, the Yurok of
North America, the Ifugao of the Philippines, the Land Dyaks of Sarawak, the
Kuikuru of South America, the Kabyle Berbers of Algeria, the Massims of East
Papua-Melanesia, and the Santals of India—none of which had governments
(Leeson forthcoming).
Many stateless societies also populated precolonial Africa; a few encom-
passed significant numbers of people. Consider, for example, the Tiv, which
included more than one million individuals; the Nuer, whose population has
been estimated at four hundred thousand; or the Lugbara, with more than three
hundred thousand members. In Africa, the Barabaig, Dinka, Jie, Karamojong,
Turkana, Tiv, Lugbara, Konkomba, Plateau Tonga, and others long existed
as stateless or near-anarchic orders as well. Today Somalia is essentially
stateless and has remained effectively so since its government dissolved in
1991 despite predictions that a new government would emerge immediately
(Little 2003).
More striking yet is that the world as a whole has operated and continues to
operate as international anarchy (Cuzan 1979, 156). The continuing presence
of numerous sovereigns creates massive ungoverned interstices for many of the
interactions between the inhabitants of different nations as well for the interac-
tions between sovereigns themselves (Stringham 1999). Many of the stateless
orders mentioned earlier disappeared with the extension of colonial rule in the
nineteenth century. However, the international sphere remains anarchic and
shows few signs of coming under the rule of formal government soon.
Holcombe is correct, however, that no modern nation has what can be con-
sidered libertarian anarchy.1 He believes that because anarchy is not practiced
today, we should expect that it never will be practiced. He writes, “Every place
in the world is ruled by government. The evidence shows that anarchy, no matter
how desirable in theory, is not a realistic alternative in practice” (2004, 333).
But this evidence does not prove his point. Suppose that someone had used the
same argument against democracy in the year 1500: “Every place in the world
is ruled by monarchy. The evidence shows that democracy, no matter how
desirable in theory, is not a realistic alternative in practice.” Over the past few
centuries, political systems have changed dramatically. Just because monarchy
was pervasive a half millennium ago does not mean that it was inevitable, as
Holcombe’s logic suggests. The rarity of democracy five hundred years ago does
not “show” that democracy was “not realistic in practice.” The evidence shows
only that democracy was uncommon a half millennium ago and that anarchy
is uncommon today. To show that government is inevitable, Holcombe must
advance a theory that explains why anarchy is impossible, as Nozick (1974),
Cowen (1992), and the contributors in Gordon Tullock’s collection Explorations
in the Theory of Anarchy (1972) have attempted to do.2
 Is Government Inevitable? Comment on Holcombe’s Analysis 373

Is Government Truly Inevitable?

Building on the arguments of his professors James Buchanan (1972) and
Gordon Tullock (1972), Holcombe gives some theoretical reasons in support of
his claim that government is inevitable. He maintains that stronger agents will be
tempted to use force against the weak and impose government on them. Because
some agents are stronger than others, they will see that using force is cheaper
than engaging in peaceful interaction, such as trade. Although parts of the argu-
ment may ring true, they do not establish the state’s inevitability. Two special
assumptions must be made if we are to arrive at Holcombe’s conclusion.
First, strengths must be so disparate that the strong have little to lose by en-
gaging in conflict with the weak. This assumption may be unrealistic. Imagine
what would happen if everyone were of similar strengths. If one stood a 50
percent chance of losing any fight, then as long as fighting entails costs, the use
of force would not be the income-maximizing strategy. Even if one has supe-
rior strength, the use of force may not be the income-maximizing strategy. As
long as weaker parties can commit to injuring the stronger party in the course
of fights, the stronger party who consistently “wins” may still be worse off by
engaging in fighting (Friedman 1994b).
The critical question is not whether some are more powerful than others, but
whether power is so lopsided that the strong face few risks by engaging in conflict.
Consider again the state of global anarchy in which we find ourselves. Although
some nations can win wars against others consistently, they would do so at sig-
nificant cost. The use of guerilla warfare or terrorist tactics by others can make
victory extremely costly for stronger powers. The ability of even small nations
to inflict harm on larger nations may explain why violent confrontations between
states are less common than confrontations between individuals in New York’s
Central Park. Thus, in discussing the anarchy of the international sphere, it would
be inappropriate to assume that anarchy necessarily leads to the establishment
of hegemony by one state over others. This remark is not to say that invasions
never take place. It is merely to point out that the presence of asymmetric power
is insufficient to prove the inevitability of world government.
The second assumption required for Holcombe’s conclusion is that weaker
individuals cannot find private solutions to transform the incentives of the
strong to plunder. This assumption also can be questioned, as certain historical
events suggest. For example, the environment in which individuals interacted in
nineteenth-century West Central Africa satisfied the conditions that Holcombe
describes for the inevitable emergence of the state. Traveling middlemen who
made connections between the producers of exports in the remote interior of
Africa and the European exporters on the coast of Angola were substantially
stronger than the producers with whom they interacted. No formal authority
policed the interactions between the members of these two groups—they inter-
acted in the context of anarchy. The middlemen thus faced a strong incentive to
steal the goods they desired rather than to obtain them by means of trade.
374 Anarchy and the Law

Holcombe’s argument suggests that these middlemen would establish a

government over the producers, but the historical record indicates that they did
not do so. Why not? Producers devised several informal institutions, such as
middleman credit, for transforming the stronger middlemen’s incentive from
banditry to exchange. Producers decided not to produce anything, so that if
middlemen came to plunder their goods, nothing would be available for them
to steal. After having incurred a costly trip to the interior to plunder producers,
middlemen who approached producers and found nothing to take therefore faced
two options. They could either go home empty handed, or they could agree to
exchange with producers on credit. Because the former choice involved certain
losses and the latter involved the prospect of profits, middlemen agreed to credit
agreements with producers. Middlemen would pay up front, and producers
would agree to harvest the goods and make them available at a future date. In
order to repay the middlemen, producers had to be alive and healthy. This ar-
rangement created a strong incentive for credit-offering middlemen to protect
the producers from others who might try to harm or steal from them. Credit
thus transformed producers from targets of plunder to valuable productive assets
that the middlemen desired to protect (Leeson 2004).
This arrangement is just one of several such private mechanisms that pro-
ducers employed to alter the relative payoffs of plunder versus trade faced by
middlemen. We do not mean to suggest that introducing credit will prevent the
emergence of government in all cases, but this example illustrates how weaker
agents may be able to prevent predatory actions by stronger agents. Another
example of a stateless society altering incentives to protect property rights is
the potlatch system of the Kwakiutl Indians described by Johnsen (1986). If
private mechanisms are devised that alter the cost-benefit structure of activities
for stronger agents, the imposition of force need not be inevitable.
Would Preemptive Government Work?
Besides questioning the alleged inevitability of government, we also ques-
tion Holcombe’s belief in the viability of constitutional government. Holcombe
claims that individuals can achieve a more limited state by forming a constitu-
tional government preemptively. Let us assume for the moment that he is cor-
rect that anarchy must break down. Do his assumptions warrant his conclusion
regarding preemptive state formation? It seems to us that the answer must be
no. The reasons are straightforward.
According to Holcombe, individuals can achieve smaller government if “they
design [it] themselves” (2004, 338). For this alternative to work, he points out,
they must have a will and a desire for greater liberty. Except for revolutionary
change, however, he fails to specify the process by which individuals might
arrive at this government. This failure is a major problem because it leaves us
wondering which individuals are to do the designing.
It seems uncontroversial that any such process must involve political agents,
but once we admit political agents, these agents’ self-interest enters the picture
(Powell and Coyne 2003). In light of this ruler self-interest, coupled with the
 Is Government Inevitable? Comment on Holcombe’s Analysis 375

superior strength that Holcombe describes, does any hope remain for limits
on government? Rather than creating the minimal state as Holcombe desires,
these political actors will deliver much more than anyone bargained for. If we
agree with Holcombe that government is created by force, why then would we
assume that its creators will produce the minimal state?
Holcombe points to one way out of this dilemma: if citizens are strongly
unified against the political agents’ will, then those agents will be forced to
consider the public’s desires. Notice, however, that now Holcombe is relying on
ideology, not constitutional constraints, as the main check on government. Yet
if one accepts the hypothesis that ideology can trump government force, then
anarchy becomes a sustainable socioeconomic organization, which is just the
opposite of what Holcombe wants to argue. Ideology, after all, is what libertar-
ian anarchists such as Hummel (1990, 2001) believe can stave off the violent
formation of the state. If the public agrees on the principles of liberty and can
act in concert to maintain the minimal state, the public can act in concert also
to maintain libertarian anarchy. Just as the public can constrain the minimal
state from becoming more coercive, the public can constrain private protection
agencies from becoming more coercive.
The preemptive creation of limited government in Holcombe’s argument
faces another serious problem as well. If we assume that the stronger agents will
always use their superior strength to overawe the weak, what prevents stronger
authoritarian states that devote most of their resources to military buildup from
taking over societies that have preemptively created limited governments? Un-
less we assume that the society that has designed this limited government also
designs the strongest government, its people will again be confronted with the
problem they faced in anarchy: being dominated by a stronger party.
Conclusions
Holcombe’s argument represents an advance over the argument of public-
choice economists who analyze the formation of government as a voluntary
social contract. He introduces a more realistic view in which government is not
created to solve public-goods problems. Holcombe’s pessimistic anarchism, with
its recognition that government is unnecessary, is a welcome improvement over
the offerings of other advocates of limited government. Nevertheless, we believe
that he is too pessimistic about anarchy and too optimistic about government
as we know it. Although we recognize the important advances in Holcombe’s
discussion, we believe that his conclusions should be questioned.
Notes
1. Somalia may be a possible exception, although libertarians disagree.
2. Rothbard (1977) and Childs (1977) question Nozick’s theories; Friedman (1994a)
and Caplan and Stringham (2003) question Cowen’s theories; and the contributors in
Stringham forthcoming question the theories in Tullock 1972, arguing that Nozick,
Cowen, and other contributors to this volume do not offer compelling reasons why
anarchy must break down.
376 Anarchy and the Law

References
Buchanan, James. 1972. “Before Public Choice.” In Explorations in the Theory of
Anarchy, edited by Gordon Tullock, 27-38. Blacksburg, Va.: Center for the Study
of Public Choice.
Caplan, Bryan, and Edward Stringham. 2003. “Networks, Law, and the Paradox of
Cooperation.” Review of Austrian Economics 16: 309-26.
Childs, Roy. 1977. “The Invisible Hand Strikes Back.” Journal of Libertarian Studies
1: 23-33.
Cowen, Tyler. 1992. “Law as a Public Good: The Economics of Anarchy.” Economics
and Philosophy 8: 249-67.
Cuzan, Alfred. 1979. “Do We Ever Really Get Out of Anarchy?” Journal of Libertarian
Studies 3: 151-58.
Friedman, David. 1994a. “Law as a Private Good: A Response to Tyler Cowen on the
Economics of Anarchy.” Economics and Philosophy 10: 319-27.
———. 1994b. “A Positive Account of Property Rights.” Social Philosophy and Policy
11: 1-16.
Holcombe, Randall G. 2004. “Government: Unnecessary but Inevitable.” The Indepen-
dent Review 8, no. 3: 325-42.
Hummel, Jeffrey Rogers. 1990. “National Goods Versus Public Goods: Defense, Disar-
mament, and Free Riders.” Review of Austrian Economics 4: 88-122.
———. 2001. “The Will to Be Free: The Role of Ideology in National Defense.” The
Independent Review 5, no. 4: 523-37.
Johnsen, D. B. 1986. “The Formation and Protection of Property Rights among the
Southern Kwakiutl Indians.” Journal of Legal Studies 15: 41-67.
Leeson, Peter. 2004. Trading with Bandits. Working Paper. Fairfax, Va.: George Mason
University.
———. Forthcoming. “Cooperation and Conflict: Evidence on Self-Enforcing Ar-
rangements and Heterogeneous Groups.” American Journal of Economics and
Sociology.
Little, Peter. 2003. Somalia: Economy Without State. Bloomington: Indiana University
Press.
Nozick, Robert. 1974. Anarchy, State, and Utopia. New York: Basic.
Powell, Benjamin, and Christopher Coyne. 2003. “Do Pessimistic Assumptions about
Human Behavior Justify Government?” Journal of Libertarian Studies 17: 17-38.
Rothbard, Murray. 1977. “Robert Nozick and the Immaculate Conception of the State.”
Journal of Libertarian Studies 1: 45-57.
Stringham, Edward. 1999. “Market Chosen Law.” Journal of Libertarian Studies 14:
53-77.
———, ed. Forthcoming. Anarchy, State, and Public Choice. Cheltenham, United
Kingdom: Edward Elgar.
Tullock, Gordon, ed. 1972. Explorations in the Theory of Anarchy. Blacksburg, Va.:
Center for the Study of Public Choice.
———, ed. 1974. Further Explorations in the Theory of Anarchy. Blacksburg, Va.:
Center for the Study of Public Choice.

Acknowledgments: The authors have benefited greatly from discussions with

Bryan Caplan, Christopher Coyne, David Friedman, and Benjamin Powell.
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 377

Section III: History of Anarchist Thought

24
Gustave de Molinari and the
Anti-statist Liberal Tradition (excerpts)
David Hart
The Intellectual Origins of Liberal Anti-statism
1. Edmund Burke, William Godwin and Benjamin Constant
The origins of liberal anti-statism go back at least to the radical dissent of
the Levellers in the English Revolution of the seventeenth century. Their efforts
to defend themselves against the power of the state, which wanted to control or
prohibit their religious practices, resulted in some of the earliest liberal defenses
of property rights and the natural right of the individual to enjoy his liberty. One
of the most thoroughgoing statements of the Leveller defense of natural rights
in property and liberty is Richard Overton’s “An Arrow Against All Tyrants,”
written from prison in 1646. In this tract, Overton was able to abstract the
principles of natural rights from the more general question of religious liberty
and was thus able to develop a secular theory of rights as a basis for political
rights. He began his pamphlet with he following paragraph:

To every individual in nature is given an individual property by nature, not to be in-

vaded or usurped by any: for every one as he is himselfe, so he hath a selfe propriety,
else could he not be himselfe, and on this no second may presume to deprive any
of, without manifest violation and affront to the very principles of nature, and of the
Rules of equity and Justice between man and man; mine and thine cannot be, except
this be: No man hath power over my rights and. liberties, and I over no man’s; I may
be but an individual, enjoy my selfe and my selfe propriety, and may write my selfe
no more [than] my selfe, or presume any further; if I doe, I am an encroacher and an
invader upon another man’s Right, to which I have no Right. For by natural birth, all
men are equally and alike borne to like propriety, liberty and freedom, and as we are
delivered of God by the hand of nature into this world, every one with a naturall, innate
freedome and propriety (as it were writ in the table of every man’s heart, never to be
obliterated) even so are we to live, everyone equally and alike to enjoy his Birthright
and privilege; even all whereof God by nature hath made him free.1

However, it was not until the eighteenth century that these liberal ideas of
liberty and property were developed into a more comprehensive theory of the
state. The young Edmund Burke, for example, in his Vindication of Natural
Society written in 1756, extended the religious dissenter’s criticism of “artificial,”
imposed religion to the institutions of government.2 In what is probably the first

377
378 Anarchy and the Law

individualist, liberal anarchist tract ever written, Burke condemned all forms of
political society for being the main cause of war, suffering and misfortune.3
Making a distinction common to many anti-statist liberals, Burke divided
society into two types. Natural society, “founded in natural appetites and in-
stincts, and not in any positive institution,” was not based on force and allowed
individuals to freely exercise their God-given natural rights as their individual
consciences directed. Artificial or political society, on the other hand, was based
on the imposition of “artificial” laws and regulations, thus usurping the proper
function of the individual to determine his own peaceful behavior.4 Immediately,
conflict arises from the division of society into two classes, the governed and the
governors, the latter seeking to increase its power and wealth at the expense of
the former. After cataloguing the political history of the world, a “history dyed
in blood, and blotted and confounded by tumults, rebellions, massacres, assas-
sinations, proscriptions,”5 Burke squarely places the blame on political society
of whatever kind.6 He accused all states of being essentially the same, in that
they are based on force and exist for the benefit of those privileged minorities
who are powerful or influential enough to control them. He wrote:
We have shown them [the three simple forms of artificial society: democracy, mon-
archy and aristocracy], however they may differ in name or in some slight circum-
stances, to be all alike in effect; in effect to be all tyrannies…. In vain you tell me
that artificial government is good, but that I fall out only with the abuse. The thing!
the thing itself is the abuse!7
Burke recognized that even in “natural society” there would still exist the
need for the protection of life, liberty and property because “[it] was observed
that men had ungovernable passions, which made it necessary to guard against
the violence they might offer to each other.”8 As Molinari was to argue later,9
the “grand error”10 that men made in attempting to solve this problem of how
to protect themselves from aggression was to establish or accept a monopoly
government with the powers to provide this service. Men now found themselves
worse off than when they were without the state11 because they now faced a
nationally organized engine of oppression, whereas before they had faced only
disorganized bandits or, at most, local feudal lords and their mercenaries. The
perennial problem arose of who was to guard against the guardians.12
Burke’s failure was in not being able to provide a positive view of the form
his “natural society” would take. He limited himself to a bri1liant criticism of
the basis of all political institutions from a natural rights’ perspective and did
not elaborate on “natural society” save for the assertion that “[in] a state of
nature it is an inevitable law that a man’s acquisitions are in proportion to his
labours”13 and that each individual would have the right to defend his person
and property as he saw fit.14 Burke did not have the tools at hand which were
necessary to explain how an anarchist15 society would function. He lacked the
Smithian free-market economics that Molinari later used to explain how soci-
ety could provide itself with defense services without resorting to the coercive
monopoly of the state.
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 379

A similar problem was faced by William Godwin. Like Burke, he defended

individualism and the right to property,16 drawing considerably, in fact, from
Burke’s Vindication for his criticism of the state,17 and he concluded that the state
was an evil which had to be reduced in power if not eliminated completely.
Above all we should not forget that government is, abstractly taken, an evil, an usur-
pation upon the private judgment and individual conscience of mankind; and that,
however, we may be obliged to admit it as a necessary evil for the present, it behooves
us, as the friends of reason and the human species, to admit as little of it as possible,
and carefully to observe, whether, in the consequence of the gradual elimination of
the human mind, that little may not hereafter be diminished.18
Godwin looked forward to the day when the entire state could be done away
with completely.
With what delight must every well-informed friend of mankind look forward to
the auspicious period, the dissolution of political government, of that brute engine
which has been the only perennial cause of the vices of mankind, and which, as has
abundantly appeared in the present work, has mischief of various sorts incorporated
with its substance, and no otherwise removable than by its utter annihilation!19
But he still faced the difficult problem of adequately explaining how the
stateless society which he envisioned could work in practice. Godwin’s state-
less society presupposed a sudden change in the behavior of the individuals
comprising that society. He was convinced of the essential goodness of uncor-
rupted men and believed that when political institutions disappeared men would
become “reasonable and virtuous.”
Simplify the social system in the manner which every motive but those of usurpation
and ambition powerfully recommends; render the plain dictates of justice level to
every capacity; remove the necessity of implicit faith; and we may expect the whole
species to become reasonable and virtuous.20
Godwin’s solution to the problem of aggression involved the use of juries
which would act as advisory bodies in “adjusting controversies.” These juries
would reason with the offender, urging him to forsake his errors, and if this
failed, could subject the offender to the criticism and ostracism of his peers.21
But it is difficult to see how these juries could exercise this function without
using force to capture criminals and, as Molinari was at pains to argue in Les
Soirées de Jarue Saint-Lazare, how they could recompense the victims for any
losses caused by the crime. Godwin’s unreasonable optimism about the unag-
gressive nature of man in a stateless society unfortunately was common to many
other anarchists, especially communist anarchist thinkers of the nineteenth and
twentieth centuries.22
It is quite probable that Molinari was well aware of William Godwin’s and,
through him, Edmund Burke’s anti-statism. Godwin’s ideas were brought to
France by Benjamin Constant among others. Constant had studied at the Univer-
sity of Edinburgh from 1783 to 1784 and was aware of English political think-
ing of this entire period. He corresponded with Godwin in 1795 and 1796 and
expressed his desire to translate Godwin’s Enquiry Concerning Political Justice
380 Anarchy and the Law

into French. Godwin had even sent a copy to the French National Convention
via John Fenwick on February 15, 1793, and his novel, Caleb Williams, had
been reviewed in La Decade in January 1796. In 1799, Constant announced his
forthcoming translation of the Enquiry but it never appeared due to the “political
events then and in the future” which “caused the indefinite postponement of its
publication.”23 However, Constant was able to popularize many of Godwin’s
anti-statist ideas through his writings and his speeches at the Tribunate. Only
with the publication of Constant’s Oeuvres manuscrites de 1810 did 576 pages
of translation appear, along with an essay on Godwin and his ideas.24 Constant
was influenced by Godwin to reject state intervention and coercion and to support
all forms of voluntary and peaceful activity and he, in turn, influenced many of
the laissez-faire liberals who worked with and influenced Molinari.25
2. Adam Smith and Jean-Baptiste Say
The other major intellectual current that influenced the anti-statism of the
French laissez-faire liberals, and Molinari in particular, was the economic ideas
of Adam Smith and Jean-Baptiste Say. Both these theorists described how soci-
ety would operate in the absence of government control and intervention in the
economy. Smith argued that government intervention was immoral, because it
violated individuals’ natural rights to property, and that it was generally inef-
ficient. The selfish actions of individuals in the unhampered market promoted
the general interest in spite of having no explicit intention of doing so:
[E]very individual necessarily labours to render the annual revenue of the society as
great as he can. He generally, indeed, neither intends to promote the public interest,
nor knows how much he is promoting it…and by directing that industry in such a
manner as its produce may be of the greatest value, he intends only his own gain,
and he is in this, as in many other cases, led by an invisible hand to promote an end
which was no part of his intention. Nor is it always the worse for the society that it
was no part of it. By pursuing his own interest he frequently promotes that of society
more effectively than when he really intends to promote it.26
In the stateless economy ‘‘the simple system of natural liberty” would
prevail and this “spontaneous order”27 of the market, rather than the imposed
order of the state, would maximize wealth and ensure the uninterrupted use of
each individual’s justly acquired (whether by first use or by peaceful exchange)
property. Thus:
All systems of preference or restraint therefore being completely taken away, the
obvious and simple system of natural liberty establishes itself of its own accord.
Every man, as long as he does not violate the laws of justice, is left perfectly free to
pursue his own interest his own way, and to bring both his industry and capital into
competition with those of any other man, or order of men. The sovereign is com-
pletely discharged from a duty, in the attempting to perform which he must always
be exposed to innumerable delusions, and for the proper performance of which no
human wisdom or knowledge could ever be sufficient; the duty of superintending the
industry of private people, and of directing it towards the employments most suitable
to the interest of the society.28
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 381

Molinari was to use Smith’s two concepts—the spontaneous order of the mar-
ket and the system of natural liberty—to build his theory of extreme liberal
anti-statism.
Jean-Baptiste Say popularized and extended Smith’s ideas of the free market.
He defended the right to property more rigorously than Smith and his conclu-
sions had a greater influence on the anti-statism of Molinari. Say considered
any barrier to the free use or abuse of property a violation of the individual’s
rights.29 He condemned slavery and military conscription30 and argued against
taxes for the same reasons,31 especially if they were in excess of the “minimum”
necessary to protect the public. In that case
it would be difficult indeed not to view this excess as a theft, a gratuitous sacrifice
seized from individuals by force. I say “seized by force” even under representa-
tive governments, because even their authority may be so great as to brook no
refusal.32
To a liberal like Say, force could never legitimize the activity of the state,
even in so important a matter as taxation. Say, like Molinari, went to great pains
to denounce the use of force in all human affairs, especially when used by the
state or the privileged political classes.33 The state was nothing more than a
tool used by the politically privileged to maintain an “artificial order” which
“endures only through force, and which can never be reestablished without
injustice and violence.”34 It was because the state was an artificial body that it
had to be limited in scope as much as possible. Say concluded that it must “never
meddle in production” and, as a general principle, “[if] government intervention
is an evil, a good government makes itself as unobtrusive as possible” because
government “can unfortunately always rely upon the negligence, incompetence
and odious condescensions of its own agents.”35
The greatest enemies of the laissez-faire liberals were the monopolies,
whether granted to privileged individuals or exercised by the state itself. Con-
sistent with his defense of property rights and his general disdain for the state,
Say made an initial attack on all government monopolies which Molinari was
later to develop into his theory of free-market anarchism. Say argued:
The government violates the property of each in his own person and faculties when
it monopolizes certain professions such as those of bankers and brokers and sells
to privileged elites these exclusive rights. It violates property even more seriously
when, under the pretext of public security or simply that of the security of the state,
it prevents a man from traveling or authorizes an officer or commissioner of police
or judge to arrest him, so that no man is ever completely certain of the disposition of
his time and faculties or of his ability to complete any enterprise. Could the public
safety be any more effectively threatened by a criminal whom everyone is against
and who is always so quickly caught?36
Not only was monopoly a violation of individual property rights but it was
also inefficient. No central authority could know the needs of all consumers
because this information was dispersed throughout the economy.37
382 Anarchy and the Law

Say even made a tentative step towards Molinari’s anarchism when he sug-
gested that public services should be made competitive by having their coer-
cive monopoly destroyed. His scheme was to “open all public services to free
competition” in order to make them as cheap and efficient as other industries
whose activities were regulated by the market.
While recognizing the extreme difficulty involved in allowing the payment of public
services to be regulated by the same principle of free competition which presides
over the majority of all other social transactions, we must agree that the more this
principle is applied to the administration of States, the better managed will be their
interests.38
Like Molinari, Say quotes the important passage from Smith’s Wealth of
Nations which argues that the reason justice was so cheap in England was that
the separate courts competed for clients by offering them the speediest service at
the lowest price.39 As a principle of justice, Say argued that those who consume
a good or service should be the ones to pay for it.40 When the production of
security is monopolized by the state, the purchaser’s rights are violated because
the range of choice has been artificially limited and he thus is forced to pay
a monopoly price. The excess of the monopoly price over the “necessary” or
free-market price is equivalent to the theft of that amount of property from the
consumer.41 To overcome this problem, Say proposed to follow Smith’s example
in Wealth of Nations and allow competition in the pricing of court services.
Each litigant would be free to choose the court and judge that best suited him.
Fees would be made up of three components: a levy set by the province, a
premium paid to the particular judge, and an honorarium proportional to the
“values under litigation” which would be payable after the judgment had been
given. In some cases, for example in criminal trials, the costs would be borne
by the losing party.42
Anticipating Molinari by some twenty years, Say argued that only the com-
petition provided by the free market could give the consumers of security a
service that was “prompt, equitable and of reasonable cost.” The market would
encourage the courts and the judges to recognize the interests of the consumers
since it would be their voluntary patronage that paid their salaries. In order to
attract as many clients to their court as they could, the judges would be
interested in being honest in order to garner a wide reputation for equity and be fre-
quently called to sit in judgment. They would be motivated to end trials promptly in
order to expedite the greatest number. Finally, the cost of litigation would not be out
of proportion to the interests in question and there would be no useless costs.43
Molinari later added considerably to Say’s early formulation of free-market
anarchism by introducing the idea of paying for police services and protection
by contracting individually with insurance companies. He was even to argue
that national defense could be better supplied by competing companies on the
free market and that small proprietary communities would gradually replace the
leviathan state. It was with Molinari that the two different currents of anarchist
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 383

thought converged: he combined the political anarchism of Burke and Godwin

with the nascent economic anarchism of Adam Smith and Say to create a new
form of anarchism that has been variously described as individualist anarchism,
anarcho-capitalism, or free-market anarchism.
3. The Ideologues: Charles Comte and Charles Dunoyer
Both Comte and Dunoyer were influenced by the economic liberalism of
Say. Together with Saint-Simon they developed the doctrine of industrielisme
based on their class analysis of society in which the warrior class, with political
privilege, and the industrial class, the result of the unhampered market, were in
constant conflict. In their economic theories Comte and Dunoyer argued that the
market, with all the voluntary exchanges that took place in it, was the antithesis
of force. Thus the market, identified with society, was completely separate from
the state and antagonistic towards it. As the historian Albert Schatz argued:
Liberalism thus tends to create a fundamental antagonism between the individual
and the State—an antagonism which does not exist in classical doctrine, one which
views the individual and the State as two forces inversely proportional to one an-
other. Consequently, there is a tendency in liberalism, at first potential, later active,
to strip the State of any role in the economy. We will see this originate in Dunoyer’s
extension of classical doctrine and later result in a more or less disguised form of
anarchism.44
There can be no question about the implicit anarchism of Comte’s and
Dunoyer’s liberalism. Dunoyer, for example, thought that in the future the state
would merely be an appendage of the market and would gradually wither and die
as the market expanded.45 Perfection would be reached when “everyone works
and no one governs,”46 and “the maintenance of public safety would no longer
demand the intervention of a permanent, special force, the government to this
extent disappears.”47 A colleague and fellow liberal, Augustin Thierry, echoed
Dunoyer’s sentiments when he wrote that “it was in losing their powers that the
actions of governments [have] ameliorate[d]” and that, if given a choice between
an oppressive state apparatus and “anarchy,” he believed that “the excesses of
the police are far more fatal than the absence of the police.”48 In Comte’s words:
“the less [government] makes itself felt, the more the people prosper.”49
The anarchism of Comte and Dunoyer was dependent on their view of the
evolution of societies. Like Molinari, they believed that “as we become more
civilized, there is less need for police and courts.”50 The advance of industri-
elisme would dissolve the state until there was complete freedom to trade and
move across national borders:
These monstrous aggregations were formed and made necessary by the spirit of
domination. The spirit of industry will dissolve them. One of its last, greatest and
most salutary effects will be to municipalize the world…. Centers of actions will
multiply and ultimately the vastest regions will contain but a single people composed
of an infinite number of homogeneous groups bound together without confusion and
without violence by the most complex and simplest of ties, the most peaceful and
the most profitable of relationships.51
384 Anarchy and the Law

J. L. Talmon described the final stage of this gradual evolution of the indus-
trial society of the liberals as a community where
among themselves they would settle matters by way of contract, warranted by their
own corporations and their laws and customs. Since the feudal-military-clerical
State was in no position to render real assistance, but only to do harm, or worse, to
extort ransom, the industrial classes developed almost a religion of non-interference
by the State. Liberty became identified with the absence of government, individual
freedom with isolationism. The experience of feudal-clerical rule was universalized
into a philosophy teaching that government as such is a natural enemy.52 (Emphasis
added)
Comte and Dunoyer contributed to the Journal des Economistes (Dunoyer
was in fact one of the founders of the Société d’Économie Politique in 1842), so
the writings of these two theorists were well known in free trade Liberal circles.53
Molinari acknowledged his debt to Comte in the Dictionnaire biography and
admitted that he owed his insights into the application of economic analysis
of state functions to Dunoyer.54 A closer examination of Molinari’s views will
show how he adapted the insights of the political and economic anarchists to
forge a new and ultimately more devastating critique of the state and its coercive
monopolization of the production of security.
The above summary has attempted to show that Molinari was working
within a tradition of liberal anti-statism that stretched back at least as far as
the seventeenth century. The influence of Molinari’s anti-statist ideas will be
briefly examined in the discussion of the influence of Molinari’s ideas, where
it will be argued that a continuous thread of liberal anti-statist thought has
existed until the present day, largely due to the pioneering work of Gustave
de Molinari.55
Gustave de Molinari (1819-1912)
Man appropriates to himself the sum total of elements and powers, both physical
and moral, which make up his being. This appropriation is the result of an effort in
discovering and recognizing these elements and powers and in their application for
the satisfaction of his needs, in other words their utilization. This is self-ownership.
Man appropriates and possesses himself. He also appropriates, by another effort in
discovering and occupying, transforming and adapting, the earth, the material and
powers of his immediate surroundings, as much as they can be appropriated. This
is real and personal property. Man continually acts, under the impetus of his self-
interest, to conserve and increase these elements and agents which he has appropri-
ated in his person and in his immediate surroundings and which constitute values.
He fashions them, transforms them, modifies them or exchanges them at will, as
he deems it beneficial. This is liberty. Property and liberty are the two factors or
components of sovereignty.
What is the self-interest of the individual? It is to have absolute ownership of his
person and the things that he has appropriated outside of his person, and to be able
to dispose of them as he wishes. It is to be able to work alone or to freely combine
his powers and other property, either wholly or in part, with that of others. It is to
be able to exchange the products that he gets from the use of his private property,
whether personal or real, or even to consume or conserve them. In one word, it is to
possess in all its fullness “individual sovereignty.”56
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 385

Molinari was not French by birth, for he was the son of Baron de Molinari,
a former officier supérieur in Napoleon’s Empire, who had subsequently settled
in Liège as a physician. From the time of his birth on March 3, 1819, until he
left Belgium for Paris in 1840, little is known of Molinari’s life and upbringing.
Like many others who wished to follow a carrière de lettres, he was attracted
to Paris, the political and cultural center of the French-speaking world. As
he hoped to establish himself in journalism, particularly in the new field of
“economic propagandism,” it is possible that he became associated with the
Société d’économie Politique which had been established in 1842 and included
in its membership some of the most active political economists in France. Like
Michel Chevalier, who had already established himself as a political economist
as Rossi’s successor at the Collège de France in 1840,57 Molinari took an early
interest in the effect of railways on the industrialization which Europe was
undergoing, and his first published essay dealt with that question.58 In 1846 he
became involved in the Association pour la liberté des échanges following a
meeting of distinguished liberals in Paris at which he was invited to join the
board of the newly formed association and be the secrétaire adjoint. Indeed, it
is likely that Molinari had helped found the Paris free-trade association as it was
only the second of its kind in France after Bordeaux. In addition, he became
one of the editors of the association’s journal, Libre-Échange.
In the mid-1840s, Molinari became increasingly active in the free-trade
press in Paris, defending his ideas in the Courrier français (1846-47), the
Revue nouvelle, Commerce (1848), the Journal des Économistes (of which
he became an editor in 1847), and La Patrie (1849-51). He also published the
first of his many books on economic and political themes. In 1846 appeared his
Études économiques: sur l’organisation de la liberté industrielle et l’abolition
de l’esclavage and, in the following year, the Histoire du tarif: I. Les fers et
les huiles; II. Les céréales.59 In 1848, he was commissioned to edit and anno-
tate volume two of the Mélanges d’Économie politique in the Collection des
Principaux Économistes. Molinari’s most famous work appeared in 1849, Les
Soirées de la rue Saint-Lazare, entretiens sur les lois économiques et défense
de la propriété, in which he pushed to its ultimate limits his opposition to all
state intervention in the economy. Arguing that the market could better satisfy
the public’s need for security than could the compulsory monopoly of the state,
Molinari became the most consistent of the French free-trade liberal school,
with his insistence that all spheres of human activity could be described and
explained by economic law.
Molinari continued his argument in the October 1849 issue of the Journal
des Économistes in the essay “De la Production de la Sécurité,” which sparked
a lively debate in the Société d’Économie Politique. Although his colleagues
could not agree with his foray into economic anarchism, Molinari continued
to elaborate his thesis on free-market security for fifty years until old age and
pessimism overtook him. Nevertheless, Molinari must be credited with being
the first person to solve the antistatists’ problem of how to explain the function-
386 Anarchy and the Law

ing of a fully free society. Previously, anarchist or near-anarchist theorists had

preferred to leave unexplained how their utopia would operate. They had simply
asserted that the future society would not require a police force since mankind
would no longer need protection; either there would no longer be property to
steal or men would no longer want to steal, for public pressure would deter
the criminal. Molinari was the first “free market proprietary anarchist”60 who,
working within the tradition of Adam Smith and the early nineteenth century
French liberals Constant, Say, Comte and Dunoyer, combined antistatism with
the political economist’s understanding of the market and how it operated to
satisfy the needs of consumers.
1. The Production of Security—1849
Molinari’s most original contribution to political and economic thought is
his thesis that the market can provide more cheaply and more efficiently the
service of police protection of life, liberty and property. Hitherto, this had been
considered to be the monopoly of the state, and it was Molinari’s insight that the
laws of political economy could and should be applied to the management of
state functions.61 His attempt to apply economic laws to the state led him to con-
clude that the market could in fact replace the state monopoly of police as well
as the provision of roads, lighting, garbage collection, sewerage and education.
Molinari argues, in summary, that if the market was more efficient in providing
people with shoes or bread then, for exactly the same reasons, it would be better
to hand over the monopoly-state functions to the market. Thus the argument is
tacitly made that “proprietary anarchism”62 is inherent in the logic of the free
market and that consistency requires that one pursue the minimization of the
state power to its logical conclusion, i.e., no government at all.
As far as it can be determined, Molinari’s first efforts in applying the laws
of political economy to the state were made in a short essay printed in the
Courrier français in July 1846,63 in which he likens the state to a grand mutual
insurance company. In his ideal state, individuals would only form a society in
order to guarantee their security from outside threats. Only those who consent to
“take part in a society” would become members of the association. Only those
who realized the benefits of organized society would be prepared to make the
sacrifices necessary to sustain it. The individual members of the society would
be required to “contribute to the maintenance of the government charged by
society with the maintenance of security for the profit of all [its members].”64
However, it is unclear whether Molinari accepted the idea that consent should
be available to individuals who now compose the society (one of the major
arguments of the anarchists) or whether this “act of incorporation” had taken
place at one time in the past and was somehow binding on those living in the
present. The latter thought seems to be implicit in this early essay, and it would
not be until he published his essay “De la production de la sécurité” in 1849 that
he would take the major step of abandoning the binding nature of the original
social contract.
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 387

The inevitable consequence of subjecting state monopolies to the close

scrutiny of political economy was to question the state’s very right to have
monopolies, and even to question the right of the state to exist at all. Between
1846, when he wrote “Le droit électoral,” and 1849, when the result of his
enquires into the nature of the state monopoly of protection was published in
the Journal des Économistes, Molinari had been undergoing this revolution in
his thought. Unfortunately, little is known about his activities during this period
except for the fact that he had been giving some lectures at the Athénée royal de
Paris in 1847 which were published in 1855 as his Cours d’économie politique.
In the Cours Molinari deals at length with the problem of state monopolies,
and it is possible that he felt compelled to push political economy to its logical,
anarchist limits as he organized his material for the introductory lectures at the
Athénée royal. As he rethought the role of competition in the free market and
the acknowledged weakness of state-run enterprises, perhaps he was struck
by the compelling logic that these universal, natural laws governing economic
behavior should also apply to the state and its activities. The result was the
historic 1849 essay “De la production de la sécurité.”
So radical was Molinari’s proposal that private, competitive insurance com-
panies could and should replace that state for the provision of police protection
of life and property, that the editor of the Journal des Économistes, Joseph
Garnier, felt obliged to write a short defense of his decision to print the article.
Although he criticized the article for “smacking of utopia in its conclusions,”
he praised the attempt to delineate more clearly the true function of the state,
which “up till now has been treated in a haphazard manner.”65 Few political
theorists then, as now, were prepared to analyze the assumptions upon which
their defense of the state rested. It is to the credit of the économistes that at least
some of then were willing to do just that and this was recognized by Garnier.
Those who “exaggerated the essence and properties of government”66 had been
challenged by Molinari to justify and defend their position, and it is indeed
unfortunate that more did not come to adopt his position.
The Influence of Molinari’s Ideas
1. The Coincidence of Liberal Anti-statism: Herbert Spencer and Aubberon
Herbert
Two years after Molinari has first proposed his theory of the “production
of security,” the English political philosopher, Herbert Spencer, independently
pushed free-market liberalism to its anarchist limits in his book Social Statics.67
Spencer argued that the state was not an “essential” institution and that it would
not necessarily last forever.68 As society progressed, government would inevi-
tably become smaller and “decay” as voluntary market organizations replaced
the coercive political institutions of the state.
Using arguments that Molinari was to borrow for his later works (especially
his double work on the evolution of societies, L’Évolution politique et la revo-
lution [1884] and L’Évolution économique du XIXe siècle [1880]), Spencer
388 Anarchy and the Law

asserted that this evolution “always [tended] towards perfection…towards a

complete development and a more unmixed good, subordinating in its uni-
versality all petty irregularities and fallings back, as the curvature of the earth
subordinates mountains and valleys.”69
Spencer deduced from the principle of equal liberty the individual’s “right to
ignore the state.” In a chapter with the same name, which was deleted in later
editions of Social Statics as Spencer drifted away from his radical anti-statism,
he advocated the right of the individual to refuse to pay taxes to the state for the
protection of his life and property. Spencer compared this right with the right
claimed by the Dissenters to refuse to pay dues to the church and argued that
if religious separation and independence was just, then this, “if consistently
maintained, implies a right to ignore the state entirely.”70 By exercising their
natural rights to property and uncoerced activity, the political protestant who
refused to pay taxes to the state became a “voluntary outlaw” who merely
had exercised his right to “drop connection with the state—to relinquish its
protection and to refuse paying towards its support.”71 If the state refused to
recognize this right to peacefully withdraw from the state, then “its acts must
be essentially criminal.”72
Spencer’s alternative to the coercive monopoly of the state was to convert
it into a “mutual-safety confederation”73 which would provide protection to all
who paid its “taxes.” Those who decided to secede would be free to make their
own arrangements for defense, but Spencer did not go as far as Molinari in
arguing that “competing governments” would spring up to provide the security
of those who withdrew. He did, however, hint that this would be the case with
the statement that if,
as was shown, every man has a right to secede from the state, and if, as a consequence,
the state must be regarded as a body of men voluntarily associated, there remains
nothing to distinguish it in the abstract from any other incorporated body.74
Spencer also hinted that this voluntary defense organization would be run on
business principles. On several occasions he described it as a “mutual assurance,”
“insurance” or “joint-stock protection society confine[d]…to guaranteeing the
rights of its members.”75 From Spencer’s position it would be only a small step
to the full free-market competing defense agencies as described by Molinari.
There is no evidence to connect the very similar views of the young Molinari
and the young Spencer on the right of the individual to either compete with or
withdraw from the monopoly of the state. In the absence of such evidence, it
must be assumed that the two thinkers arrived at their positions independently
of one another, suggesting that anti-statism is inherent in the logic of the free
market. Both men were prepared to push their liberal ideas to their furthest logi-
cal extent, so long as they were consistent with the natural right of the individual
to act freely and to enjoy the uncoerced use of his property.
Another “liberty philosopher” who was struck with the internal logic of
liberty was a disciple of Herbert Spencer. Auberon Herbert was drawn to a
similar anti-statist position. As he argued in 1885,
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 389

They are…the necessary deductions from the great principle—that a man has in-
alienable rights over himself, over his own faculties and possessions—and those,
who having once accepted this principle, who having once offered their allegiance
to liberty, are prepared to follow her frankly and faithfully wherever she leads, will
find, unless I am mistaken, that they are irresistibly drawn step by step to the same
or to very similar conclusions.76
He was aware that there were few men who were prepared to “loyally submit
themselves to a great principle” and accept the conclusion that “if the great
principle justifies itself anywhere, it justifies itself everywhere.”77 Herbert,
however, was such a man and he was prepared to go even further than Spencer
in defending the right of the individual to refuse to pay taxes to a coercive
government.
Like Molinari, Herbert believed that, if the market were given a chance to
operate free from the restrictions of the state, “every want that we have will be
satisfied by means of a voluntary combination.”78 He extended Spencer’s idea
of the joint-stock protection society and argued that a “system of insurance”
would develop on the free market whereby “voluntary protective associations
of every kind and form” would replace the monopoly of the state.79 These
protective associations would be financed by “voluntary taxes”—insurance
premiums in Molinari’s system—paid by those individuals who voluntarily
placed themselves under the jurisdiction of each association. In this “deofficial-
ized” fully voluntary society80
the state should compel no services and exact no payments by force, but should
depend entirely upon voluntary services and voluntary payments…it should be free
to conduct many useful undertakings…but that it should do so in competition with
all voluntary agencies, without employment of force, in dependence on voluntary
payments, and acting with the consent of those concerned, simply as their friend
and their adviser.81
The similarity of Herbert’s ideas to those of Molinari is quite striking and,
again, there is no evidence suggesting that he had ever read or even heard of
Molinari. Neither Spencer nor Herbert went as far as Molinari’s suggestion that
these voluntary defense agencies would be fully professional business organiza-
tions whose prices would be determined on the market by competition. They
merely limited themselves to criticizing the monopoly of the state and arguing
that the individual had the right to organize freely.
Herbert faced the same problem that Molinari had with labeling his phi-
losophy. Like Molinari, he rejected the term “anarchism,” which he associated
with the socialism of Proudhon and the terrorism of the “detestable bomb,”
even though he was quite tolerant of Tolstoy’s and Benjamin Tucker’s “most
peaceful and reasonable forms.”82 Herbert argued that the “sane, peaceful and
reasonable section of anarchists,” Tucker for example, were mistaken in their
rejection of “government.” He argued, like Molinari, that even in a fully free
society there would exist a need for protection from aggression. Any organi-
zation which provided this service was called a “government,” even if it did
390 Anarchy and the Law

not have monopoly; thus the protective associations of the anarchists merely
provided a government decentralized “to the furthest point, [split] up into min-
ute fragments of all sizes and shapes.”83 In Herbert’s mind, a true “anarchist”
wished to do away with all organized forms of protection and, since this was
impossible given human nature, “anarchy, or ‘no government,’ is founded on
a fatal mistake.” Thus
by the necessity of things, we are obliged to choose between regularly constituted
government, generally accepted by all citizens for the protection of the individual,
and irregularly constituted government, irregularly accepted, and taking its shape
just according to the pattern of each group. Neither in the one case nor in the other
case is government got rid of.84
However, unlike Molinari and Herbert, it has been argued in this paper that
the second form of “government,” the “irregularly constituted government”
of Herbert and the “competitive governments” of Molinari, is in fact a new
form of anarchism, since the most important aspect of the modern state, the
monopoly of the use of force in a given area, is rejected in no uncertain terms
by both men.
2. The Influence of Molinari on Benjamin Tucker
An (admittedly minor) figure who was probably influenced by Molinari was
P. E. De Puydt. De Puydt wrote an essay in 1860 extolling the virtues of “Pan-
archy,” a system very similar to Molinari’s, where “governmental competition”
would permit “as many regularly competing governments as have ever been
conceived and will ever be invented” to exist simultaneously.85 Governments
would become political churches, only having jurisdiction over their congre-
gations who had elected to become members of that particular denomination.
Disputes between “governments” would be settled by “international” courts and
an individual could change from one government to another, without leaving his
home, by registering his decision, for a small fee, with a “Bureau of Political
Membership.”86 De Puydt described his “panacea” as simply free competition
in the business of government. Everyone has the right to look after his own
welfare as he sees it, and to obtain security under his own conditions. On the
other hand, this means progress through contest between governments forced
to compete for followers. True, worldwide liberty is that which is not forced
on anyone, being to each just what he wants for it; it neither suppresses nor
deceives, and is always subject to a right of appeal. To bring about such a liberty,
there would be no need to give up either national traditions or family ties, no
need to learn to think in a new language, no need at all to cross rivers or seas,
carrying the bones of one’s ancestors. It is simply a matter of declaring before
one’s local political commission, for one to move from republic to monarchy,
from representative government to autocracy, from oligarchy to democracy, or
even to Mr. Proudhon’s anarchy, without so much as removing one’s dressing
gown and slippers.87
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 391

Given the similarity of De Puydt’s ideas to those of Molinari’s and given the
fact that De Puydt was familiar with the writings of the political economists,88
it would be reasonable to conclude that De Puydt was influenced by Molinari’s
anti-statism, although giving it a new twist with his concept of “panarchy.”
Benjamin Tucker, the American individualist anarchist, was not reluctant
to call his own laissez-faire liberalism a variant of anarchism. In fact, Tucker
argued that “the only true believers in laissez faire are the Anarchists”89 and
hailed Auberon Herbert as “a true anarchist in everything but name.”90 Tucker
was definitely aware of Molinari’s work and at least one of Molinari’s books was
reviewed in Tucker’s magazine.91 He shared Molinari’s view that the production
of security was an economic commodity which could be better supplied by the
free and unhampered market, thus going beyond the criticism of Herbert and
Spencer and, arguing with Molinari, that the market could offer a positive and
practical alternative to state monopoly defense. These “political abolitionists”92
argued that defense is a service like any other service; that it is labor both use-
ful and desired, and therefore an economic commodity subject to the law of
supply and demand; that in a free market this commodity would be furnished
at the cost of production; that, competition prevailing, patronage would go to
those who furnished the best article at the lowest price; that the production and
sale of this commodity are now monopolized by the State; and that the State,
like almost all monopolists, charges exorbitant prices;…and, finally, that the
State exceeds all its fellow-monopolists in the extent of its villainy because it
enjoys the unique privilege of compelling all people to buy its product whether
they want it or not.93
The Modern Libertarian Movement
After the death of Molinari in 1912 and the political retirement of Tucker in
1908 when a fire destroyed his bookshop and publication office,94 liberal anti-
statism virtually disappeared until it was rediscovered by the economist Murray
Rothbard in the late 1950s. As a political philosophy, it had led a precarious
existence, emerging in seventeenth-century England, mixing with Smithian
economic ideas in France in the early nineteenth century, and coming to an
unsteady maturity simultaneously in mid-century England and France. Molinari
was its most radical and original expositor and, for nearly fifty years, he defended
and elaborated these ideas without assistance or support. Liberal anti-statism
died out in both France and England during the twentieth century, but it was
revived in the United States by a group of laissez-faire economists, Rothbard in
particular,95 who have combined a natural-law defense of property and the liberty
of the individual with economic theory drawn from the Austrian rather than
the classical school of economics.96 A leading member of the Austrian school,
Friedrich Hayek, who won the Nobel Prize for economics in 1974, has stated
as recently as October 1976, in terms reminiscent of Molinari, that regional and
local governments, limited by the same uniform laws with regard to the manner
in which they could make their individual inhabitants contribute to their revenue,
392 Anarchy and the Law

would develop into business-like corporations. They would compete with each
other for citizens, who could “vote with their feet” for that corporation which
offered the highest benefits compared with the price charged.97
Thus liberal anti-statism, seemingly an aberration in the development of
laissez-faire and liberal ideas, has in fact been an adjunct of mainstream liber-
alism from its origin in the seventeenth century to the present. It is a tradition
of thought which many adherents have claimed to be a logical extension of the
classical liberal notions of the right to property and the freedom to exchange
on the market. The importance of Molinari’s contribution to this tradition was
to put forward, for the first time, a theory of how the market could replace the
state’s monopoly of police, law courts and defense. He therefore deserves atten-
tion from scholars interested in the development of classical liberal as well as
anarchist thought in order to explain, firstly, the interconnection between these
two streams of thought and the rise of the modern nation-state, and, secondly,
the continued interest expressed in these ideas in the present.
Notes
1. Richard Overton, “An Arrow Against All Tyrants and Tyranny, Shot from the Prison
of Newgate into the Prerogative Bowels of the Arbitrary House of Lords, and all
other Usurpers and Tyrants Whatsoever,” in G. B. Aylmer, ed., The Levellers in the
English Revolution (Ithaca, N.Y.: Cornell University Press, 1975), pp. 68-69. See
also C. B. MacPherson, “The Levellers: Franchise and Freedom,” The Political
Theory of Progressive Individualism (Oxford: Oxford University Press, 1975), pp.
107-59.
2. Burke wrote: “the cause of artificial society is more defenseless even than that of
artificial religion…the design [of this work] was to show that, without the exten-
sion of any considerable forces, the same engines which were employed for the
destruction of religion might be employed with equal success for the subversion
of government…. If you say that natural religion is a sufficient guide without the
foreign aid or revelation, on what principle should political laws become neces-
sary? Is not the same reason available in the theology and in politics? If the laws
of nature are the laws of God, is it consistent with divine wisdom to prescribe rules
to us, and leave the enforcement of them to the folly of human institutions? Will
you follow truth but to a certain point?” (Edmund Burke, A Vindication of Natural
Society: Or a View of the Miseries and Evils Arising to Mankind from every Spe-
cies of Artificial Society. In a Letter to Lord—by a late Nobel Writer, in The Works
of the Right Honorable Edmund Burke [1756; Oxford: Oxford University Press,
1906-1907], 1:53, 4, 53).
3. For the view that Burke’s Vindication of Natural Society was not written as a satire,
as is commonly believed, see Murray N. Rothbard, “A Note on Burke’s Vindication
of Natural Society,” Journal of the History of Ideas (1958), pp. 114-18; Elie Halevy,
The Growth of Philosophical Radicalism (London: Faber and Faber, 1952); and
Isaac Kramnick, “Vindication Burke’s Vindication,” The Rage of Edmund Burke:
Portrait of an Ambivalent Conservative (New York: Basic Books, 1977), pp. 88-93.
The internal evidence suggests that Burke did not believe that he was able to state
his real opinions openly because of the dangers faced by radical political theorists
and other dissenting authors. “I have defended natural religion against a confed-
eracy of atheists and divines. I now plead for natural society against politicians,
and for natural reason against all three. When the world is in a fitter temper than
it is at present to hear truth, or when I shall be more indifferent about its temper,
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 393

my thoughts may become more public. In the meantime, let them repose in my
own bosom, and in the bosoms of such men as are fit to be initiated in the sober
mysteries of truth and reason…. A man is allowed sufficient freedom of thought,
provided he knows how to choose his subject properly. You may criticize freely upon
the Chinese constitution, and observe with as much severity as you please upon
the absurd tricks or destructive bigotry of the bonzees. But the scene is changed
as you come homeward, and atheism or treason may be the names given in Britain
to what would be reason and truth if asserted of China” (Burke, A Vindication of
Natural Society, pp. 37,40-41).
4. Burke, A Vindication of Natural Society, p. 9. Political society he defined as “the
usurpation of man” (ibid., p. 46).
5. Ibid., p. 16.
6. “I charge the whole of these effects on political society…political society is justly
chargeable with much the greatest part of this destruction of the species…. I still
insist in charging it to political regulations that these broils are so frequent, so cruel,
and attended with consequences so deplorable” (ibid., pp. 20-21).
7. Ibid., pp. 35, 37.
8. Ibid., p. 37.
9. See the discussion of Molinari’s “Production of Security” in Part II of the present
essay, in the Journal of Libertarian Studies, no. 4.
10. Burke, A Vindication of Natural Society, p. 37.
11. Burke writes: “the greatest part of the governments on earth must be concluded
tyrannies, impostures, violations of the natural rights of mankind, and worse than
the most disorderly anarchies” (ibid., p. 28).
12. “They appointed governors over them for this reason (to defend themselves)! but
a worse and more perplexing difficulty arises, how to be defended against the
governors? Quis custodiet ipsos custodes?” (ibid., p. 37).
13. Ibid., p. 47.
14. “I am at full liberty to defend myself, or make reprisal by surprise or by cunning,
or by any other way in which I may be superior to him” (ibid., p. 46).
15. “Anarchy” and “anarchic” are used in this paper in the sense of chaos, disorder
and lawlessness. “Anarchism” or “anarchist,” on the other hand, are used in the
sense of a political theory which advocates the maximum amount of individual
liberty, a necessary condition of which is the elimination of governmental or other
organized force. The kind of anarchism developed by Molinari and others is not
lawless or chaotic but depends on the observance of natural law and the market for
the establishment of a just and peaceful economic order.
16. “I ought to appropriate such part of the fruits of the earth as by any accident comes
into my possession, and is not necessary to my benefit, to the use of others; but
they must obtain it from me by argument and expostulation, not by violence. It
is in this principle that what is commonly called the right of property is founded.
Whatever then comes into my possession, without violence to any other man, or to
the institutions of society, is my property” (William Godwin, Enquiry Concerning
Political Justice and Its Influence on Modern Morals and Happiness, ed. Isaac
Kramnick [Harmondsworth: Penguin Classics, 1976], p. 199).
17. Godwin’s footnote acknowledging his debt to Burke is in ibid., p. 88. See also F.E.L.
Priestley’s edition of Enquiry Concerning Political Justice (Toronto: University
of Toronto Press, 1969), 3:39, 117, 125-26. Remaining references in this essay,
however, are to the Kramnick edition.
18. Godwin, Enquiry Concerning Political Justice, p.408.
19. Ibid., p. 554.
394 Anarchy and the Law

20. Ibid., p. 553.

21. “It might then be sufficient for juries to recommend a certain mode of adjusting
controversies, without assuming the prerogative of dictating that adjustment. It
might then be sufficient for them to invite offenders to forsake their errors. If
their expostulations proved, in a few instances, ineffectual, the evils arising out
of this circumstance would be of less importance than those which proceed from
the perpetual violation of the exercise of private judgment. But, in reality, no evils
would arise: for, where the empire of reason was so universally acknowledged,
the offender would either readily yield to the expostulations of authority; or, if he
resisted, though suffering no personal molestation, he would feel so uneasy, under
the equivocal disapprobation, and observant eye, of public judgment, as willingly
to remove to a society more congenial to his errors” (ibid., pp. 553-54). On juries
and the division of society into “parishes,” exercising this function of social control
by “banishment, “ see ibid., pp. 545-46.
22. George Woodcock, Anarchism: A History of Libertarian Ideas and Movements
(New York: Meridian, 971), p. 92.
23. Leonard P. Liggio, “Charles Dunoyer and French Classical Liberalism,” Journal of
Libertarian Studies 1, no. 3 (Summer 1977): 173. See also Elizabeth W. Schermer-
horn, Benjamin Constant: His Private Life and His Contribution to the Cause of
Liberal Government in France, 1767-1830 (Boston: Houghton-Mifflin, 1924), pp.
179, 188.
24. Benjamin Constant, Écrits et Discours politiques. ed. O. Pozzo di Borgo (Paris:
Chez Jean-Jacques Pauvert, 1964), 1:234-35; and idem, “De Godwin et de son
ouvrage sur la justice politique,” Recueil d’Artides: Le Mercure t la Renommée,
ed. Ephraim Harpaz (Geneva: Droz, 1972), 1:214-26.
25. A short biographical sketch of Godwin was done for the Dictionnaire de l’économie
polilique (ed. Coquelin and Guillaumin, 2 vols. [Paris: Guillaumin, 1852], 1:933),
by Joseph Garnier, a friend and colleague of Molinari, which suggests the ideas of
Godwin were known to the économistes.
26. Adam Smith, The Wealth of Nations (London: J. M. Dent and Sons, 1933), vol. 1,
bk. 4, chap. 2, p. 400.
27. Adam Ferguson explained “spontaneous order” as “the result of human actions but
not of human design,” as quoted in F. A. Hayek, Law, Legislation and Liberty, 3
vols. (Chicago: University of Chicago Press, 1973-79), 1:20.
28. Smith, Wealth of Nations, vol. 2, bk. 4, chap. 9, p. 150.
29. “I will say that we can violate a man’s property rights not only by seizing the
products of his lands, capital and industry, but also by hindering him in the free
use of these means of production. For the right to property as it is defined by the
jurisconsults is the right to use, and even to abuse” (Jean-Baptiste Say, Traité
d’économie politique, vol. 9, Collections des Principaux Économistes, ed. Horace
Say (1841; reprint ed., Onsbruck: Otto Zeller, 1966), p. 134.
30. J.-B. Say describes slavery as that “which thus violates the most indisputable of
properties” (ibid., p. 13). On conscription: “It is the most scandalous violation of
property and of all natural rights” (Cours d’économie politique, vols. 10 and 11,
Collections des Principaux Économistes, 11:64).
31. “Taxes, even when authorized by the public, are a violation of property…a theft”
(J.-B. Say, Traité d’économie politique, p. 136).
32. J.-B. Say, Cours d’économie politique, 11:514.
33. J.-B. Say: “force never constitutes a right, even when it commands obedience”
(ibid., 11:273).
34. Ibid., 10:555.
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 395

35. J.-B. Say, Traité d’économie politique, p. 198.

36. Ibid., p. 135.
37. “Under free competition, the better an industrious man defends his own interests,
the better he serves the national wealth. The meddling interference of authority
cannot comprehend these interests any better than the individual. Each regulation
is fatal, because it can never take the place of the intelligence of producers and it
hinders their actions, the principal means of their successes” (J .-B. Say, Cours
d’économie politique, 10:555). For a modern statement of this argument, see Hayek,
“Economics and Knowledge,” Individualism and Economic Order (Chicago: Henry
Regnery, 1972).
38. J.-B. Say, Cours d’économie politique, 11:62. “We see that it is not impossible to
introduce into public service the principle of free competition from which we have
reaped such happy consequences in productive activities” (ibid., 11:227).
39. J.-B Say, Traité d’économie politique, p. 222. The quote is from Smith, Wealth of
Nations, vol. 2, bk. 4, chap. 7, p. 206ff., and can be found in the appendix to this
essay, Journal of Libertarian Studies 6, no. 1.
40. “If equity commands that consumption be paid for by those who have enjoyed it,
then in this respect the best administered countries are those where each class sup-
ports the cost of public expenses to the extent that they have benefited from them”
(J.-B Say, Traité d’économie politique, p. 501).
41. “The price of goods based upon a monopoly is, by virtue of this privilege, higher
than its cost of production and is to that extent an assault upon the property of the
buyer. A tax which is raised higher than the cost necessary to procure the taxpayer
the security he desires is likewise an assault upon the property of the taxpayer” (J
.-B. Say, Cours d’économie politique, 11:389).
42. “Smith wished to have civil suits paid for by the parties involved. This idea would
be even more practical if judgments were made not by officially chosen tribunals
but by arbiters chosen by the parties from among those men singled out by public
confidence. If these arbiters, acting as a jury of equity, were paid in proportion to
the sum in dispute without regard to the length of the proceeding, they would be
motivated to simplify and shorten the procedure in order to save their own time
and to judge fairly in order to assure their continued employment” (J.-B. Say,
Traité d’économie politique, pp. 501-502). “Arbiters would be paid by the parties,
or perhaps by the losing party only, according to the importance of the interests
in question not of the length of the trial. The parties would or would not employ
the services of lawyers and advocates as they pleased. Thus, the honorarium of
the judge would be composed: (1) of a fixed sum for each province, a very moder-
ate sum paid simply to have a man keep himself at the disposition of the public,
(2) an ad hoc premium when he is called to be an arbiter, and (3) an honorarium
proportional to the value in dispute, payable after judgment” (J.-B. Say, Cours d’
économie politique, 11:267-77).
43. Ibid., 11:276.
44. Albert Schatz, L’Individualisme économique et sociale: Ses origines, son évolution,
ses formes contemporaines (Paris: Librairie Armand Colin, 1907), p. 197.
45. In a well ordered state, the government ought to be nothing more than an aid to
production, a commission charged and paid for by producers to look after the safety
of their persons and property while they work and to guard them against all parasites”
(Charles Dunoyer, Censeur européen, 2:102; quoted in Edgar Allix, “La Déforma-
tion de l’économie politique liberale après J.-B. Say.: Charles Dunoyer,” Revue
d’histoire des doctrines économiques et sociales [1911], p. 118). Schatz observed
of Dunoyer’s ideas: “In this view, the functions of government would requite only
a small number of agents. The mass of workers would remain available to increase
396 Anarchy and the Law

the sum of social utilities other than security. It is appropriate therefore to reduce
the number of both public functions and public functionaries, employing the only
effective means which is the reduction of their profits or salaries. The title of the
company charged with the public safety is of little importance, be it monarchy or
republic, provided that it costs little and does not interfere, and that it progressively
realizes the ideal of a society so perfectly educated that the government might
disappear altogether leaving the people to the full enjoyment of their time, their
income and their liberty” (Schatz, L’Individualisme, pp. 210-11). Molinari was to
show in Les Soirées de la rue Saint-Lazare (Paris: Guillaumin, 1849) that there was
no need to assume that society or individuals would become progressively more
educated before society could do without government monopoly security.
46. Dunoyer, Censeur européen, 2:102, quoted in Allix, “La Déformaltion de l’économie
politique,” p. 119.
47. Ibid., 7:92, quoted in Allix, “La Deformation de I’economie politique,” p. 119.
48. Thierry, Censeur européen, 8:230, 241, quoted in Mark Weinburg, “The Social
Analysis of Three Early 19th Century French liberals: Say, Comte, and Dunoyer,”
Journal of Libertarian Studies 2, no. 1 (Winter 1978): 54.
49. Charles Comte, Traité de legislation, 1:448,quoted in Weinburg, “The Social
Analysis,” p. 57.
50. Dunoyer, Oeuvres de Charles Dunoyer (Paris: Guillaumin, 1886), 1:297, quoted
in Allix, “La Deformation de l’économie politique,” p. 131.
51. Dunoyer, L’lndustrie et la morale, considérées dans leurs rapports avec la liberté
(Paris: A. Sautelet, 1825), pp. 366-67.
52. J. L. Talmon, Political Messianism: The Romantic Phase (London: Seckar & War-
burg, 1960), pp. 48-50, quoted in Liggio, “Charles Dunoyer and French Classical
Liberalism,” p. 171.
53. “Dunoyer,” Supplement du Nouveau Dictionnaire de l’éeonomie politique de M.
Leon Say et Joseph Chailley-Bert (Paris: Guillaumin, 1897), pp. 142-44; Obituary
of Dunoyer, Journal des Économistes (henceforth JDE), 2nd ser. 36 (October-De-
cember 1862): 442. Gustave de Molinari wrote the biographical study of Charles
Comte for the Dictionnaire, 1:446-47.
54. Molinari, Cours d’économie politique. 2nd ed. rev. and enl., 2 vols. (1855; Paris,
Guillaumin, 1863), 1:186.
55. See Part II of the present essay, in Journal of Libertarian Studies 6, no. 1.
56. Molinari, L’Evolution politique et la révolution (Paris: C. Reinwald, 1884), p.
394.
57. See Emile Levasseur’s address to the “Quarantieme anniversaire de la fondation
de la Sociciété Économie politique,” JDE, 4th ser., 20 (1882), p. 297.
58. Molinari, “L’avenir des chemins de fer” (1843), first published in La Nation, then
in La Gazzette de France.
59. This was the first of Molinari’s books to be published by the great liberal publisher
Guillaumin, who was to publish many of his later works and under whose impress
appeared a large number of important and influential liberal works throughout the
nineteenth century.
60. See Laurence S. Moss, “Private Property Anarchism: An American Variant,” in
Further Explorations in the Theory of Anarchism (Blacksburg, Va.: University
Publications, 1974).
61. “We have been accustomed to believing that government—charged with a sublime
mission—has nothing in common in its establishment and functioning with the
multitude of other enterprises. Similarly, no one has ever thought that the laws
which apply to it are the same as those which apply to the others” (Molinari, Cours
d’économie politique, 2nd ed. rev. and enl., 2 vols. [1855; Paris: Guillaumin, 1863],
2:515, 521).
 Gustave de Molinari and the Anti-statist Liberal Tradition (excerpts) 397

62. It will be argued in section 2, which follows, that there are two main kinds of
anarchist thought: “left-wing” communist anarchism which denies the right of an
individual to seek profit, charge rent or interest and to own property, and “right-
wing” proprietary anarchism, which vigorously defends these rights.
63. Molinari, “Le droit électoral,” Courrier français. July 23, 1846, reprinted in “La
liberté de governement II,” Questions d’économie politique et de droit public, 2
vols. (Brussels; Lacroix; Paris: Guillaumin. 1861), Set. 3.
64. Ibid.
65. Molinari, “De la production de la securite,” Journal des Économists (henceforth
JDE) 21 (1849): 277, n. 1. Reprinted in Molinari, Questions d’économie politique,
1:245; translated by J. Huston McCulloch. “The Production of Security,” Occasional
Paper Series #2 (New York: Center for Libertarian Studies, 1977).
66. Ibid.
67. Herbert Spencer, Social Statics (1851; New York: Robert Schalkenbach Foundation,
1970).
68. Ibid., p. 13.
69. Ibid., p. 263.
70. Ibid., p. 191.
71. Ibid., p. 185.
72. Ibid., p. 189.
73. Ibid., p. 185.
74. Ibid., p. 224.
75. Ibid., pp. 241, 247.
76. Auberon Herbert, “The Right and Wrong of Compulsion by the State,” in The
Right and Wrong of Compulsion of the State, and Other Essays, ed. Eric Mack
(Indianapolis, Ind.: Liberty Classics, 1978), pp. 176-77. Molinari did become
aware of Auberon Herbert’s views well after he had developed his free-market
anarchism. Herbert’s book, A Politician in Trouble about His Soul, was reviewed
by Yves Guyot in the Journal des Économists, 4th ser. 30 (1885):246. In addition,
many of Spencer’s books were translated into French and reviewed in the Journal
des Économistes, but, surprisingly, not Social Statics.
77. Herbert, “The Right and Wrong,” pp. 177, 178.
78. Ibid., p. 185. Herbert argues for “Friendly voluntary cooperation, as free men and
women, for all public wants and services” (“Mr. Spencer and the Great Machine,”
in The Right and Wrong, p. 303).
79. Herbert, “The Right and Wrong,” pp. 186-88.
80. Herbert, “The Principles of Voluntaryism and Free Life,” in The Right and Wrong,
p. 378.
81. Ibid., p. 390.
82. Herbert, “Mr. Spencer,” p. 311.
83. Herbert, “The Principles of Voluntaryism,” p. 383.
84. Ibid.
85. P. E. De Puydt, “Panarchy,” trans. Adrian Falk, in An A.B.C. Against Nuclear War,
ed. John Zube (Berrima, N.S.W.: Peace Plans, 1975), p. 229; reprinted from Revue
Trimestrielle (Brussels, July 1860).
86. “If a disagreement came about between subjects of different governments, or
between one government and a subject of another, it would simply be a matter
of observing the principles heretofore observed between neighboring peaceful
states. Anything else would be the business of common courts of justice” (ibid., p.
227).
87. Ibid.
398 Anarchy and the Law

88. “It is from the works of the economists that I have derived the principle whereof
I propose a new application, still farther reaching and no less logical than all oth-
ers” (ibid., p. 223). It is most likely that De Puydt was aware of Molinari because
Molinari was at that time living and teaching in Belgium and De Puydt quotes
from a work of Charles de Brouckere, who had arranged for Molinari to teach at
the Musee royal, the Principes generaux d’économie politique (1851). See also
the obituary of de Brouckere, Journal des Économistes, 2nd ser. 26 (April-June
1860):265.
89. Benjamin R. Tucker, Instead of a Book by a Man Too Busy to Write One: A Frag-
mentary Exposition of Philosophical Anarchism (1897; New York: Haskell House,
1969), p. 371.
90. Liberty 15 (December 1906):16; quoted in Mack, The Right and Wrong, p.20.
91. Review of The Society of Tomorrow (1904), the English translation of Molinari’s
Esquisse de L’organisation politique et économique de société future (1899), in
Liberty 14 (September 1904):2. Albert Schatz, the French historian of individual-
ism, was struck by the similarity of Tucker’s and Molinari’s rejection of the state’s
monopoly of security. See his L’Individualisme économique et social: Ses origines,
son évolution, ses formes contemporaines (Paris: Librairie Armand Colin, 1907),
p. 514.
92. Tucker, Instead of a Book, p. 54.
93. Ibid., pp. 32-33, 14.
94. James J. Martin, Men Against the State: The Expositors of Individualist Anarchism
in America, 1827-1846 (Colorado Springs, Colo.: Ralph Myles, 1970), p. 273.
95. Murray N. Rothbard, Man, Economy and State: A Treatise on Economic Principles
(Los Angeles: Nash Publishing, 1970), 2:884; idem, Power and Market: Govern-
ment and the Economy (Menlo Park, Calif.: Institute for Humane Studies, 1910),
esp. chap. 1, “Defense Services on the Free Market,” pp. 1-7; and idem, For a New
Liberty: The Libertarian Manifesto (rev. ed., New York: Collier Macmillan, 1978),
esp. chap. 12, “The Public Sector, Ill: Police, Law and the Courts,” pp. 215-4l.
96. See also Jarrett B. Wollstein, Society without Coercion: A New Concept of Social
Organization (Society for Rational Individualism, 1969); reprinted in Society with-
out Government, The Right Wing Individualist Tradition in America, ed. Murray
N. Rothbard and Jerome Tuccille (New York: Arno Press and the New York Times,
1972); Morris and Linda Tannehill, The Market for Liberty (Lansing, Mich.: n.p.,
1970); and Richard and Ernestine Perkins, Precondition for Peace and Prosper-
ity: Rational Anarchy (Ontario: Phibbs, 1871). For a non-Austrian, neo-classical
approach to the same concept, see David Friedman, The Machinery of Freedom:
Guide to a Radical Capitalism (New York: Harper Colophon, 1973). For a discus-
sion of market orders, economic and legal, see F. A. Hayek’s magnum opus, Law,
Legislation and Liberty, vol. I, Rules and Order (Chicago: University of Chicago
Press, 1913); Bruno Leoni, Freedom and the Law (Los Angeles: Nash Publishing,
1972); and Lon Fuller, The Morality of the Law (New Haven: Yale University Press,
1964).
97. Hayek, “Whither Democracy,” lecture given before the Institute of Public Affairs,
Sydney, October 8, 1976, in Social Justice, Socialism and Democracy: Three Aus-
tralian Lectures (Sydney: Centre for Independent Studies, 1979).
 25
Vindication of Natural Society (excerpt)
Edmund Burke
I now come to shew, that Political Society is justly chargeable with much
the greatest Part of this Destruction of the Species. To give the fairest Play
to every side of the Question, I will own that there is a Haughtiness, and
Fierceness in human Nature, which will cause innumerable Broils, place Men
in what Situation you please; but owning this, I still insist in charging it to
political Regulations, that these Broils are so frequent, so cruel, and attended
with Consequences so deplorable. In a State of Nature, it had been impossible
to find a Number of Men, sufficient for such Slaughters, agreed in the same
bloody Purpose; or allowing that they might have come to such an Agreement,
(an impossible Supposition) yet the Means that simple Nature has supplied
them with, are by no means adequate to such an End; many Scratches, many
Bruises undoubtedly would be received upon all hands; but only a few, a very
few Deaths. Society, and Politicks, which have given us these destructive Views,
have given us also the Means of satisfying them. From the earliest Dawnings
of Policy to this Day, the Invention of Men has been sharpening and improving
the Mystery of Murder, from the first rude Essays of Clubs and Stones, to the
present Perfection of Gunnery, Cannoneering, Bombarding, Mining, and all
these Species of artificial, learned, and refined Cruelty, in which we are now
so expert, and which make a principal Part of what Politicians have taught us
to believe is our principal Glory.1
How far mere Nature would have carried us, we may judge by the Examples
of those Animals, who still follow her Laws, and even of those to whom she has
given Dispositions more fierce, and Arms more terrible than ever she intended
we should use. It is an incontestable Truth, that there is more Havock made in
one Year by Men, of Men, than has been made by all the Lions, Tygers, Panthers,
Ounces, Leopards, Hyenas, Rhinoceroses, Elephants, Bears, and Wolves, upon
their several Species, since the Beginning of the World; though these agree ill
enough with each other, and have a much greater Proportion of Rage and Fury
in their Composition than we have. But with respect to you, ye Legislators, ye
Civilizers of Mankind! ye Orpheuses, Moseses, Minoses, Solons, Theseuses,
Lycurguses, Numas!2 with Respect to you be it spoken, your Regulations have
done more Mischief in cold Blood, than all the Rage of the fiercest Animals in
their greatest Terrors, or Furies, have ever done, or ever could do!

399
400 Anarchy and the Law

These Evils are not accidental. Whoever will take the pains to consider the
Nature of Society, will find they result directly from its Constitution. For as
Subordination, or in other Words, the Reciprocation of Tyranny, and Slavery,
is requisite to support these Societies, the Interest, the Ambition, the Malice, or
the Revenge, nay even the Whim and Caprice of one ruling Man among them,
is enough to arm all the rest, without any private Views of their own, to the
worst and blackest Purposes; and what is at once lamentable and ridiculous,
these Wretches engage under those Banners with a Fury greater than if they
were animated by Revenge for their own proper Wrongs.
It is no less worth observing, that this artificial Division of Mankind, into
separate Societies, is a perpetual Source in itself of Hatred and Dissention among
them. The Names which distinguish them are enough to blow up Hatred, and
Rage. Examine History; consult present Experience; and you will find, that far
the greater Part of the Quarrels between several Nations, had scarce any other
Occasion, than that these Nations were different Combinations of People, and
called by different Names;—to an Englishman, the Name of a Frenchman, a
Spaniard, an Italian, much more a Turk, or a Tartar, raise of course Ideas of
Hatred, and Contempt. If you would inspire this Compatriot of ours with Pity
or Regard, for one of these, would you not hide that Distinction? You would not
pray him to compassionate the poor Frenchman, or the unhappy German. Far
from it; you would speak of him as a Foreigner, an Accident to which all are
liable. You would represent him as a Man: one partaking with us of the same
common Nature, and subject to the same Law. There is something so averse
from our Nature in these artificial political Distinctions, that we need no other
Trumpet to kindle us to War, and Destruction. But there is something so benign
and healing in the general Voice of Humanity, that maugre all our Regulations
to prevent it, the simple Name of Man applied properly, never fails to work a
salutary Effect.
This natural unpremediated Effect of Policy on the unpossessed Passions of
Mankind, appears on other Occasions. The very Name of a Politician, a States-
man, is sure to cause Terror and Hatred; it has always connected with it the
Ideas of Treachery, Cruelty, Fraud and Tyranny; and those Writers who have
faithfully unveiled the Mysteries of State-freemasonry, have ever been held in
general Detestation, for even knowing so perfectly a Theory so detestable. The
Case of Machiavelli seems at first sight something hard in that Respect. He is
obliged to bear the Iniquities of those whose Maxims and Rules of Government
he published. His Speculation is more abhorred than their Practice.
But if there were no other Arguments against artificial Society than this I am
going to mention, methinks it ought to fall by this one only. All Writers on the
Science of Policy are agreed, and they agree with Experience, that all Govern-
ments must frequently infringe the Rules of Justice to support themselves; that
Truth must give way to Dissimulation; Honesty to Convenience; and Humanity
itself to the reigning Interest.3 The Whole of this Mystery of Iniquity is called
 Vindication of Natural Society (excerpt) 401

the Reason of State. It is a Reason, which I own I cannot penetrate. What Sort
of a Protection is this of the general Right, that is maintained by infringing the
Rights of Particulars? What sort of Justice is this, which is inforced by Breaches
of its own Laws? These Paradoxes I leave to be solved by the able heads of
Legislators and Politicians. For my part, I say what a plain Man would say on
such an Occasion. I can never believe, that any Institution agreeable to Nature,
and proper for Mankind, could find it necessary, or even expedient in any Case
whatsoever to do, what the best and worthiest Instincts of Mankind warn us to
avoid. But no wonder, that what is set up in Opposition to the State of Nature,
should preserve itself by trampling upon the Law of Nature.
To prove, that these Sort of policed Societies are a Violation offered to Nature,
and a Constraint upon the human Mind, it needs only to look upon the sanguinary
Measures, and Instruments of Violence which are every where used to support
them. Let us take a Review of the Dungeons, Whips, Chains, Racks, Gibbets,
with which every Society is abundantly stored, by which hundreds of Victims
are annually offered up to support a dozen or two in Pride and Madness, and
Millions in an abject Servitude, and Dependence. There was a Time, when I
looked with a reverential Awe on these Mysteries of Policy; but Age, Experience,
and Philosophy have rent the Veil; and I view this Sanctum Sanctorum, at least,
without any enthusiastick Admiration. I acknowledge indeed, the Necessity of
such a Proceeding in such Institutions; but I must have a very mean Opinion
of Institutions where such Proceedings are necessary.
It is a Misfortune, that in no Part of the Globe natural Liberty and natural
Religion are to be found pure, and free from the Mixture of political Adultera-
tions. Yet we have implanted in us by Providence Ideas, Axioms, Rules, of what
is pious, just, fair, honest, which no political Craft, nor learned Sophistry, can
entirely expel from our Breasts. By these we judge, and we cannot otherwise
judge of the several artificial Modes of Religion and Society, and determine of
them as they approach to, or recede from this Standard.
The simplest form of Government is Despotism, where all the inferior
Orbs of Power are moved merely by the Will of the Supreme, and all that are
subjected to them, directed in the same Manner, merely by the occasional Will
of the Magistrate. This Form, as it is the most simple, so it is infinitely the
most general. Scarce any Part of the World is exempted from its Power. And
in those few Places where Men enjoy what they call Liberty, it is continually
in a tottering Situation, and makes greater and greater Strides to that Gulph of
Despotism which at last swallows up every Species of Government. This Man-
ner of ruling being directed merely by the Will of the weakest, and generally
the worst Man in the Society, becomes the most foolish and capricious Thing,
at the same time that it is the most terrible and destructive that well can be con-
ceived. In a Despotism the principal Person finds, that let the Want, Misery, and
Indigence of his Subjects, be what they will, he can yet possess abundantly of
every thing to gratify his most insatiable Wishes. He does more. He finds that
402 Anarchy and the Law

these Gratifications increase in proportion to the Wretchedness and Slavery of

his Subjects. Thus encouraged both by Passion and Interest to trample on the
publick Welfare, and by his Station placed above both Shame and Fear, he pro-
ceeds to the most horrid and shocking Outrages upon Mankind. Their Persons
become Victims of his Suspicions. The slightest Displeasure is Death; and a
disagreeable Aspect is often as great a Crime as High-treason. In the court of
Nero a Person of Learning, of unquestioned Merit, and of unsuspected Loyalty,
was put to Death for no other Reason than that he had a pedantick Countenance
which displeased the Emperor.4 This very Monster of Mankind appeared in the
Beginning of his Reign to be a Person of Virtue. Many of the greatest Tyrants on
the Records of History have begun their Reigns in the fairest Manner. But the
Truth is, this unnatural Power corrupts both the Heart, and the Understanding.
And to prevent the least Hope of Amendment, a King is ever surrounded by a
Crowd of infamous Flatterers, who find their Account in keeping him from the
least Light of Reason, till all Ideas of Rectitude and Justice are utterly erased
from his Mind. When Alexander had in his Fury inhumanly butchered one of
his best Friends, and bravest Captains; on the Return of Reason he began to
conceive an Horror suitable to the Guilt of such a Murder. In this Juncture, his
Council came to his Assistance. But what did his Council? They found him out
a Philosopher who gave him Comfort. And in what Manner did this Philosopher
comfort him for the Loss of such a Man, and heal his Conscience, flagrant
with the Smart of such a Crime? You have the Matter at Length in Plutarch.
He told him, “that let a Sovereign do what he will, all his actions are just and
lawful, because they are his.”5 The Palaces of all Princes abound with such
courtly Philosophers. The Consequence was such as might be expected. He
grew every Day a Monster more abandoned to unnatural Lust, to Debauchery,
to Drunkenness, and to Murder. And yet this was originally a great Man, of
uncommon Capacity, and a strong Propensity to Virtue. But unbounded Power
proceeds Step by Step, until it has eradicated every laudable Principle. It has
been remarked, that there is no Prince so bad, whose Favourites and Ministers
are not worse. There is hardly any Prince without a Favourite, by whom he
is governed in as arbitrary a Manner as he governs the Wretches subjected to
him. Here the Tyranny is doubled. There are two Courts, and two Interests;
both very different from the Interests of the People. The Favourite knows that
the Regard of a Tyrant is as unconstant and capricious as that of a Woman; and
concluding his Time to be short, he makes haste to fill up the Measure of his
Iniquity, in Rapine, in Luxury, and in Revenge. Every Avenue to the Throne
is shut up. He oppresses, and ruins the People, whilst he persuades the Prince,
that those Murmurs raised by his own Oppression are the Effects of Disaffec-
tion to the Prince’s Government. Then is the natural Violence of Despotism
inflamed, and aggravated by Hatred and Revenge. To deserve well of the State
is a Crime against the Prince. To be popular, and to be a Traitor, are considered
as synonimous Terms. Even Virtue is dangerous, as an aspiring Quality, that
 Vindication of Natural Society (excerpt) 403

claims an Esteem by itself, and independent of the Countenance of the Court.

What has been said of the chief, is true of the inferior Officers of this Species
of Government; each in his Province exercising the same Tyranny, and grind-
ing the People by an Oppression, the more severely felt, as it is near them, and
exercised by base and subordinate Persons. For the Gross of the People; they
are considered as a mere Herd of Cattle; and really in a little Time become no
better; all Principle of honest Pride, all Sense of the Dignity of their Nature, is
lost in their Slavery. The Day, says Homer, which makes a Man a Slave, takes
away half his Worth;6 and in fact, he loses every Impulse to Action, but that
low and base one of Fear. In this kind of Government human Nature is not
only abused and insulted, but it is actually degraded and sunk into a Species of
Brutality. The Consideration of this made Mr. Locke say, with great Justice, that
a Government of this kind was worse than Anarchy; indeed it is so abhorred,
and detested by all who live under Forms that have a milder Appearance, that
there is scarce a rational Man in Europe, that would not prefer Death to Asiatick
Despotism. Here then we have the Acknowledgement of a great Philosopher,
that an irregular State of Nature is preferable to such a Government; we have
the Consent of all sensible and generous Men, who carry it yet further, and
avow that Death itself is preferable; and yet this Species of Government,7 so
justly condemned, and so generally detested, is what infinitely the greater Part
of Mankind groan under, and have groaned under from the Beginning. So that
by sure and uncontested Principles, the greatest Part of the Governments on
Earth must be concluded Tyrannies, Impostures, Violations of the Natural Rights
of Mankind, and worse than the most disorderly Anarchies. How much other
Forms exceed this, we shall consider immediately.
In all Parts of the World, Mankind, however debased, retains still the Sense of
Feeling; the Weight of Tyranny, at last, becomes insupportable; but the Remedy
is not so easy; in general, the only Remedy by which they attempt to cure the
Tyranny, is to change the Tyrant. This is, and always was the Case for the greater
Part. In some Countries however, were found Men of more Penetration; who
discovered, “that to live by one Man’s Will, was the Cause of all Men’s Misery.”8
They therefore changed their former Method, and assembling the Men in their
several Societies, the most respectable for their Understanding and Fortunes,
they confided to them the Charge of the publick Welfare. This originally formed
what is called an Aristocracy. They hoped, it would be impossible that such
a Number could ever join in any Design against the general Good; and they
promised themselves a great deal of Security and Happiness, from the united
Counsels of so many able and experienced Persons. But it is now found by
abundant Experience, that an Aristocracy, and a Despotism, differ but in Name;
and that a People, who are in general excluded from any Share of the Legisla-
tive, are to all Intents and Purposes, as much Slaves, when twenty, independent
of them, govern, as when but one domineers. The Tyranny is even more felt, as
every Individual of the Nobles has the Haughtiness of a Sultan; the People are
404 Anarchy and the Law

more miserable, as they seem on the Verge of Liberty, from which they are for
ever debarred, this fallacious Idea of Liberty, whilst it presents a vain Shadow
of Happiness to the Subject, binds faster the Chains of his Subjection. What is
left undone, by the natural Avarice and Pride of those who are raised above the
others, is compleated by their Suspicions, and their Dread of losing an Author-
ity, which has no Support in the common Utility of the Nation. A Genoese,
or a Venetian Republick, is a concealed Despotism; where you find the same
Pride of the Rulers, the same base Subjection of the People, the same bloody
Maxims of a suspicious Policy. In one respect the Aristocracy is worse than
the Despotism. A Body Politick, whilst it retains its Authority, never changes
its Maxims; a Despotism, which is this Day horrible to a Supreme Degree, by
the Caprice natural to the Heart of Man, may, by the same Caprice otherwise
exerted, be as lovely the next; in a Succession, it is possible to meet with some
good Princes. If there have been Tiberiuses, Caligulas, Neros, there have been
likewise the serener Days of Vespasians, Tituses, Trajans, and Antonines;9 but
a Body Politick is not influenced by Caprice or Whim; it proceeds in a regular
Manner; its Succession is insensible; and every Man as he enters it, either has,
or soon attains the Spirit of the whole Body. Never was it known, that an Ar-
istocracy, which was haughty and tyrannical in one Century, became easy and
mild in the next. In effect, the Yoke of this Species of Government is so galling,
that whenever the People have got the least Power, they have shaken it off with
the utmost Indignation, and established a popular Form. And when they have
not had Strength enough to support themselves, they have thrown themselves
into the Arms of Despotism, as the more eligible of the two Evils. This latter
was the Case of Denmark, who sought a Refuge from the Oppression of its
Nobility, in the strong Hold of arbitrary Power. Poland has at present the Name
of Republick, and it is one of the Aristocratick Form; but it is well known, that
the little Finger of this Government, is heavier than the Loins of arbitrary Power
in most Nations. The People are not only politically, but personally Slaves, and
treated with the utmost Indignity. The Republick of Venice is somewhat more
moderate; yet even here, so heavy is the Aristocratick Yoke, that the Nobles have
been obliged to enervate the Spirit of their Subjects by every Sort of Debauchery;
they have denied them the Liberty of Reason, and they have made them amends,
by what a base Soul will think a more valuable Liberty, by not only allowing,
but encouraging them to corrupt themselves in the most scandalous Manner.
They consider their Subjects, as the Farmer does the Hog he keeps to feast upon.
He holds him fast in his Stye, but allows him to wallow as much as he pleases
in his beloved Filth and Gluttony. So scandalously debauched a People as that
of Venice, is to be met with no where else. High, Low, Men, Women, Clergy,
and Laity, are all alike. The ruling Nobility are no less afraid of one another,
than they are of the People; and for that Reason, politically enervate their own
Body by the same effeminate Luxury, by which they corrupt their Subjects.
They are impoverished by every Means which can be invented; and they are
 Vindication of Natural Society (excerpt) 405

kept in a perpetual Terror by the Horrors of a State-inquisition; here you see

a People deprived of all rational Freedom, and tyrannized over by about two
thousand Men; and yet this Body of two thousand, are so far from enjoying any
Liberty by the Subjection of the rest, that they are in an infinitely severer State of
Slavery; they make themselves the most degenerate, and unhappy of Mankind,
for no other Purpose than that they may the more effectually contribute to the
Misery of an whole Nation. In short, the regular and methodical Proceedings
of an Aristocracy, are more intolerable than the very Excesses of a Despotism,
and in general, much further from any Remedy.
Thus, my Lord, we have pursued Aristocracy through its whole Progress;
we have seen the Seeds, the Growth, and the Fruit. It could boast none of the
Advantages of a Despotism, miserable as those Advantages were, and it was
overloaded with an Exuberance of Mischiefs, unknown even to Despotism itself.
In effect, it is no more than a disorderly Tyranny. This Form therefore could be
little approved even in Speculation, by those who were capable of thinking, and
could be less borne in Practice by any who were capable of feeling. However,
the fruitful Policy of Man was not yet exhausted. He had yet another Farthing-
candle to supply the Deficiencies of the Sun. This was the third Form, known
by political Writers under the Name of Democracy. Here the People transacted
all publick Business, or the greater Part of it, in their own Persons: their Laws
were made by themselves, and upon any Failure of Duty, their Officers were
accountable to themselves, and to them only. In all appearance, they had secured
by this Method the Advantages of Order and good Government, without paying
their Liberty for the Purchace. Now, my Lord, we are come to the Master-piece
of Grecian Refinement, and Roman Solidity, a popular Government. The earliest
and most celebrated Republic of this Model, was that of Athens. It was con-
structed by no less an Artist, than the celebrated Poet and Philosopher, Solon.10
But no sooner was this political Vessel launched from the Stocks, than it overset,
even in the Lifetime of the Builder. A Tyranny immediately supervened;11 not
by a foreign Conquest, not by Accident, but by the very Nature and Constitu-
tion of a Democracy. An artful Man became popular, the People had Power in
their Hands, and they devolved a considerable Share of their Power upon their
Favourite; and the only Use he made of this Power, was to plunge those who
gave it into Slavery. Accident restored their Liberty, and the same good Fortune
produced Men of uncommon Abilities and uncommon Virtues amongst them.
But these Abilities were suffered to be of little Service either to their Possessors
or to the State. Some of these Men, for whose Sakes alone we read their His-
tory, they banished; others they imprisoned; and all they treated with various
Circumstances of the most shameful Ingratitude. Republicks have many Things
in the Spirit of absolute Monarchy, but none more than this; a shining Merit is
ever hated or suspected in a popular Assembly, as well as in a Court; and all
Services done the State, are looked upon as dangerous to the Rulers, whether
Sultans or Senators. The Ostracism at Athens was built upon this Principle. The
406 Anarchy and the Law

giddy People, whom we have now under consideration, being elated with some
Flashes of Success, which they owed to nothing less than any Merit of their
own, began to tyrannize over their Equals, who had associated with them for
their common Defence. With their Prudence they renounced all Appearance of
Justice. They entered into Wars rashly and wantonly. If they were unsuccess-
ful, instead of growing wiser by their Misfortune, they threw the whole Blame
of their own Misconduct on the Ministers who had advised, and the Generals
who had conducted those Wars; until by degrees they had cut off all who could
serve them in their Councils or their Battles. If at any time these Wars had an
happier Issue, it was no less difficult to deal with them on account of their Pride
and Insolence. Furious in their Adversity, tyrannical in their Successes, a Com-
mander had more Trouble to concert his Defence before the People, than to plan
the Operations of the Campaign. It was not uncommon for a General, under
the horrid Despotism of the Roman Emperors, to be ill received in proportion
to the Greatness of his Services. Agricola is a strong Instance of this. No Man
had done greater Things, nor with more honest Ambition. Yet on his Return
to Court, he was obliged to enter Rome with all the Secrecy of a Criminal. He
went to the Palace, not like a victorious Commander who had merited and might
demand the greatest Rewards, but like an Offender who had come to supplicate
a Pardon for his Crimes. His Reception was answerable: “Brevi osculo, & nullo
sermone exceptus, turbæ servientium immistus est.”12 Yet in that worse Season
of this worst of monarchical* Tyrannies, Modesty, Discretion, and a Coolness
of Temper, formed some kind of Security even for the highest Merit. But at
Athens, the nicest and best studied Behaviour was not a sufficient Guard for a
Man of great Capacity. Some of their bravest Commanders were obliged to fly
their Country, some to enter into the Service of its Enemies, rather than abide
a popular Determination of their Conduct, lest, as one of them said, their Gid-
diness might make the People condemn where they meant to acquit; to throw
in a black Bean, even when they intended a white one.
* Sciant quibus moris illicita mirari, posse etiam sub malis principibus
magnos viros, etc. See 42 to the End of it.13
The Athenians made a very rapid Progress to the most enormous Excesses.
The People under no Restraint soon grew dissolute, luxurious, and idle. They
renounced all Labour, and began to subsist themselves from the publick Rev-
enues. They lost all Concern for their common Honour or Safety, and could bear
no Advice that tended to reform them. At this time Truth became offensive to
those Lords the People, and most highly dangerous to the Speaker. The Orators
no longer ascended the Rostrum, but to corrupt them further with the most ful-
some Adulation. These Orators were all bribed by foreign Princes on the one
Side or the other. And besides its own Parties, in this City there were Parties, and
avowed ones too, for the Persians, Spartans, and Macedonians, supported each
of them by one or more Demagogues pensioned and bribed to this iniquitous
Service. The People, forgetful of all Virtue and publick Spirit, and intoxicated
 Vindication of Natural Society (excerpt) 407

with the Flatteries of their Orators (these Courtiers of Republicks, and endowed
with the distinguishing Characteristicks of all other Courtiers) this People, I
say, at last arrived at that Pitch of Madness, that they coolly and deliberately,
by an express Law, made it capital for any Man to propose an Application of
the immense Sums squandered in publick Shows, even to the most necessary
Purposes of the State. When you see the People of this Republick banishing or
murdering their best and ablest Citizens, dissipating the publick Treasure with
the most senseless Extravagance, and spending their whole Time, as Spectators
or Actors, in playing, fiddling, dancing, and singing, does it not, my Lord, strike
your Imagination with the Image of a sort of a complex Nero? And does it not
strike you with the greater Horror, when you observe, not one Man only, but a
whole City, grown drunk with Pride and Power, running with a Rage of Folly
into the same mean and senseless Debauchery and Extravagance? But if this
People resembled Nero in their Extravagance, much more did they resemble and
even exceed him in Cruelty and Injustice. In the Time of Pericles,14 one of the
most celebrated Times in the History of that Commonwealth, a King of Egypt
sent them a Donation of Corn. This they were mean enough to accept. And had
the Egyptian Prince intended the Ruin of this City of wicked Bedlamites,15 he
could not have taken a more effectual Method to do it, than by such an ensnar-
ing Largess. The Distribution of this Bounty caused a Quarrel; the Majority set
on foot an Enquiry into the Title of the Citizens; and upon a vain Pretence of
Illegitimacy, newly and occasionally set up, they deprived of their Share of the
royal Donation no less than five thousand of their own Body. They went further;
they disfranchised them; and having once begun with an Act of Injustice, they
could set no Bounds to it. Not content with cutting them off from the Rights
of Citizens, they plundered these unfortunate Wretches of all their Substance;
and to crown this Masterpiece of Violence and Tyranny, they actually sold
every Man of the five thousand as Slaves in the publick Market. Observe, my
Lord, that the five thousand we here speak of, were cut off from a Body of no
more than nineteen thousand; for the entire Number of Citizens was no greater
at that Time. Could the Tyrant who wished the Roman People but one Neck;
could the Tyrant Caligula himself have done, nay, he could scarcely wish for a
greater Mischief, than to have cut off, at one Stroke, a fourth of his People? Or
has the Cruelty of that Series of sanguine Tyrants, the Caesars, ever presented
such a Piece of flagrant and extensive Wickedness? The whole History of this
celebrated Republick is but one Tissue of Rashness, Folly, Ingratitude, Injustice,
Tumult, Violence, and Tyranny, and indeed of every Species of Wickedness that
can well be imagined. This was a City of Wisemen, in which a Minister could
not exercise his Functions; a warlike People amongst whom a General did not
dare either to gain or lose a Battle; a learned Nation, in which a Philosopher
could not venture on a free Enquiry. This was the City which banished Them-
istocles, starved Aristides, forced into Exile Miltiades, drove out Anaxagoras,
and poisoned Socrates.16 This was a City which changed the Form of its Gov-
408 Anarchy and the Law

ernment with the Moon; eternal Conspiracies, Revolutions daily, nothing fixed
and established. A Republick, as an ancient Philosopher has observed, is no one
Species of Government, but a Magazine of every Species;17 here you find every
Sort of it, and that in the worst Form. As there is a perpetual Change, one rising
and the other falling, you have all the Violence and wicked Policy, by which
a beginning Power must always acquire its Strength, and all the Weakness by
which falling States are brought to a complete Destruction.
Rome has a more venerable Aspect than Athens; and she conducted her
Affairs, so far as related to the Ruin and Oppression of the greatest Part of the
World, with greater Wisdom and more Uniformity. But the domestic Oeconomy
of these two States was nearly or altogether the same. An internal Dissention
constantly tore to Pieces the Bowels of the Roman Commonwealth. You find
the same Confusion, the same Factions which subsisted at Athens, the same
Tumults, the same Revolutions, and in fine, the same Slavery. If perhaps their
former Condition did not deserve that Name altogether as well. All other Re-
publicks were of the same Character. Florence was a Transcript of Athens. And
the modern Republicks, as they approach more or less to the Democratick Form,
partake more or less of the Nature of those which I have described.
We are now at the Close of our Review of the three simple Forms of artificial
Society, and we have shewn them, however they may differ in Name, or in some
slight Circumstances, to be all alike in effect; in effect, to be all Tyrannies. But
suppose we were inclined to make the most ample Concessions; let us concede
Athens, Rome, Carthage,18 and two or three more of the ancient, and as many
of the modern Commonwealths, to have been, or to be free and happy, and to
owe their Freedom and Happiness to their political Constitution. Yet allowing
all this, what Defence does this make for artificial Society in general, that these
inconsiderable Spots of the Globe have for some short Space of Time stood as
Exceptions to a Charge so general? But when we call these Governments free,
or concede that their Citizens were happier than those which lived under differ-
ent Forms, it is merely ex abundanti. For we should be greatly mistaken, if we
really thought that the Majority of the People which filled these Cities, enjoyed
even that nominal political Freedom of which I have spoken so much already.
In reality, they had no Part of it. In Athens there were usually from ten to thirty
thousand Freemen: This was the utmost. But the Slaves usually amounted to
four hundred thousand, and sometimes to a great many more. The Freemen of
Sparta and Rome were not more numerous in proportion to those whom they
held in a Slavery, even more terrible than the Athenian. Therefore state the Mat-
ter fairly: The free States never formed, though they were taken all together,
the thousandth Part of the habitable Globe; the Freemen in these States were
never the twentieth Part of the People, and the Time they subsisted is scarce
any thing in that immense Ocean of Duration in which Time and Slavery are so
nearly commensurate. Therefore call these free States, or popular Governments,
or what you please; when we consider the Majority of their Inhabitants, and
 Vindication of Natural Society (excerpt) 409

regard the Natural Rights of Mankind, they must appear in Reality and Truth,
no better than pitiful and oppressive Oligarchies.19
After so fair an Examen, wherein nothing has been exaggerated; no Fact
produced which cannot be proved, and none which has been produced in any
wise forced or strained, while thousands have, for Brevity, been omitted; after
so candid a Discussion in all respects; what Slave so passive, what Bigot so
blind, what Enthusiast so headlong, what Politician so hardened, as to stand
up in Defence of a System calculated for a Curse to Mankind? a Curse under
which they smart and groan to this Hour, without thoroughly knowing the
Nature of the Disease, and wanting Understanding or Courage to apply the
Remedy.
I need not excuse myself to your Lordship, nor, I think, to any honest Man,
for the Zeal I have shewn in this Cause; for it is an honest Zeal, and in a good
Cause. I have defended Natural Religion against a Confederacy of Atheists and
Divines.20 I now plead for Natural Society against Politicians, and for Natural
Reason against all three. When the World is in a fitter Temper than it is at present
to hear Truth, or when I shall be more indifferent about its Temper; my Thoughts
may become more publick. In the mean time, let them repose in my own Bosom,
and in the Bosoms of such Men as are fit to be initiated in the sober Mysteries of
Truth and Reason. My Antagonists have already done as much as I could desire.
Parties in Religion and Politics make sufficient Discoveries concerning each
other, to give a sober Man a proper Caution against them all. The Monarchic,
Aristocratical, and Popular Partizans have been jointly laying their Axes to the
Root of all Government, and have in their Turns proved each other absurd and
inconvenient. In vain you tell me that Artificial Government is good, but that I
fall out only with the Abuse. The Thing! the Thing itself is the Abuse! Observe,
my Lord, I pray you, that grand Error upon which all artificial legislative Power
is founded. It was observed, that Men had ungovernable Passions, which made
it necessary to guard against the Violence they might offer to each other. They
appointed Governors over them for this Reason; but a worse and more perplex-
ing Difficulty arises, how to be defended against the Governors? Quis custodiet
ipsos custodes?21 In vain they change from a single Person to a few. These few
have the Passions of the one, and they unite to strengthen themselves, and to
secure the Gratification of their lawless Passions at the Expence of the general
Good. In vain do we fly to the Many. The Case is worse; their Passions are less
under the Government of Reason, they are augmented by the Contagion, and
defended against all Attacks by their Multitude.
I have purposely avoided the mention of the mixed Form of Government, for
Reasons that will be very obvious to your Lordship. But my Caution can avail
me but little. You will not fail to urge it against me in favour of Political Society.
You will not fail to shew how the Errors of the several simple Modes are cor-
rected by a Mixture of all of them, and a proper Ballance of the several Powers
in such a State. I confess, my Lord, that this has been long a darling Mistake of
410 Anarchy and the Law

my own; and that of all the Sacrifices I have made to Truth, this has been by far
the greatest. When I confess that I think this Notion a Mistake, I know to whom
I am speaking, for I am satisfied that Reasons are like Liquors, and there are
some of such a Nature as none but strong Heads can bear. There are few with
whom I can communicate so freely as with Pope.22 But Pope cannot bear every
Truth. He has a Timidity which hinders the full Exertion of his Faculties, almost
as effectually as Bigotry cramps those of the general Herd of Mankind. But
whoever is a genuine Follower of Truth, keeps his Eye steady upon his Guide,
indifferent whither he is led, provided that she is the Leader. And, my Lord, if
it be properly considered, it were infinitely better to remain possessed by the
whole Legion of vulgar Mistakes, than to reject some, and at the same time to
retain a Fondness for others altogether as absurd and irrational. The first has at
least a Consistency, that makes a Man, however erroneously, uniform at least;
but the latter way of proceeding is such an inconsistent Chimæra and Jumble
of Philosophy and vulgar Prejudice, that hardly any thing more ridiculous can
be conceived. Let us therefore freely, and without Fear or Prejudice, examine
this last Contrivance of Policy. And without considering how near the Quick
our Instruments may come, let us search it to the Bottom.
First then, all Men are agreed, that this Junction of Regal, Aristocratic, and
Popular Power, must form a very complex, nice, and intricate Machine, which
being composed of such a Variety of Parts, with such opposite Tendencies and
Movements, it must be liable on every Accident to be disordered. To speak
without Metaphor, such a Government must be liable to frequent Cabals, Tu-
mults, and Revolutions, from its very Constitution. These are undoubtedly as ill
Effects, as can happen in a Society; for in such a Case, the Closeness acquired
by Community, instead of serving for mutual Defence, serves only to increase
the Danger. Such a System is like a City, where Trades that require constant
Fires are much exercised, where the Houses are built of combustible Materials,
and where they stand extremely close.
In the second Place, the several constituent Parts having their distinct Rights,
and these many of them so necessary to be determined with Exactness, are yet
so indeterminate in their Nature, that it becomes a new and constant Source
of Debate and Confusion. Hence it is, that whilst the Business of Government
should be carrying on, the Question is, who has a Right to exercise this or that
Function of it, or what Men have Power to keep their Offices in any Function.
Whilst this Contest continues, and whilst the Ballance in any sort continues, it
has never any Remission; all manner of Abuses and Villanies in Officers remain
unpunished, the greatest Frauds and Robberies in the publick Revenues are
committed in Defiance of Justice; and Abuses grow, by Time and Impunity, into
Customs; until they prescribe against the Laws, and grow too inveterate often
to admit a Cure, unless such as may be as bad as the Disease.
Thirdly, the several Parts of this Species of Government, though united,
preserve the Spirit which each Form has separately. Kings are ambitious; the
 Vindication of Natural Society (excerpt) 411

Nobility haughty; and the Populace tumultuous and ungovernable. Each Party,
however in appearance peaceable, carries on a Design upon the others; and it
is owing to this, that in all Questions, whether concerning foreign or domestick
Affairs, the Whole generally turns more upon some Party-Matter than upon the
Nature of the Thing itself; whether such a Step will diminish or augment the
Power of the Crown, or how far the Privileges of the Subject are like to be ex-
tended or restricted by it. And these Questions are constantly resolved, without
any Consideration of the Merits of the Cause, merely as the Parties who uphold
these jarring Interests may chance to prevail; and as they prevail, the Ballance is
overset, now upon one side, now upon the other. The Government is one Day,
arbitrary Power in a single Person; another, a juggling Confederacy of a few to
cheat the Prince and enslave the People; and the third, a frantick and unmanage-
able Democracy. The great Instrument of all these Changes, and what infuses
a peculiar Venom into all of them, is Party. It is of no Consequence what the
Principles of any Party, or what their Pretensions are, the Spirit which actuates
all Parties is the same; the Spirit of Ambition, of Self-Interest, of Oppression,
and Treachery. This Spirit entirely reverses all the Principles which a benevolent
Nature has erected within us; all Honesty, all equal Justice, and even the Ties of
natural Society, the natural Affections. In a word, my Lord, we have all seen,
and if any outward Considerations were worthy the lasting Concern of a wise
Man, we have some of us felt, such Oppression from Party Government as no
other Tyranny can parallel. We behold daily the most important Rights, Rights
upon which all the others depend; we behold these Rights determined in the last
Resort, without the least Attention even to the Appearance or Colour of Justice;
we behold this without Emotion, because we have grown up in the constant
View of such Practices; and we are not surprised to hear a Man requested to
be a Knave and a Traitor, with as much Indifference as if the most ordinary
Favour were asked; and we hear this Request refused, not because it is a most
unjust and unreasonable Desire, but that this Worthy has already engaged his
Injustice to another. These and many more Points I am far from spreading to
their full Extent. You are sensible that I do not put forth half my Strength; and
you cannot be at a Loss for the Reason. A Man is allowed sufficient Freedom of
Thought, provided he knows how to chuse his Subject properly. You may criticise
freely upon the Chinese Constitution,23 and observe with as much Severity as
you please upon the Absurd Tricks, or destructive Bigotry of the Bonzees. But
the Scene is changed as you come homeward, and Atheism or Treason may
be the Names given in Britain, to what would be Reason and Truth if asserted
of China. I submit to the Condition, and though I have a notorious Advantage
before me, I wave the Pursuit. For else, my Lord, it is very obvious what a Pic-
ture might be drawn of the Excesses of Party even in our own Nation. I could
shew, that the same Faction has in one Reign promoted popular Seditions, and
in the next been a Patron of Tyranny; I could shew, that they have all of them
betrayed the publick Safety at all Times, and have very frequently with equal
412 Anarchy and the Law

Perfidy made a Market of their own Cause, and their own Associates. I could
shew how vehemently they have contended for Names, and how silently they
passed over Things of the last importance. And I could demonstrate, that they
have had the Opportunity of doing all this Mischief, nay, that they themselves
had their Origin and Growth from the Complex Form of Government which
we are wisely taught to look upon as so great a Blessing. Revolve, my Lord,
our History from the Conquest. We scarce ever had a Prince, who by Fraud,
or Violence, had not made some Infringement on the Constitution. We scarce
ever had a Parliament which knew, when it attempted to set Limits to the Royal
Authority, how to set Limits to its own. Evils we have had continually calling
for Reformation, and Reformations more grievous than any Evils. Our boasted
Liberty sometimes trodden down, sometimes giddily set up, ever precariously
fluctuating and unsettled; it has been only kept alive by the Blasts of continual
Feuds, Wars, and Conspiracies. In no Country in Europe has the Scaffold so often
blushed with the Blood of its Nobility. Confiscations, Banishments, Attainders,
and Executions, make a large Part of the History of such of our Families as are
not utterly extinguished by them. Formerly indeed Things had a more ferocious
Appearance than they have at this Day. In these early and unrefined Ages, the
jarring Parts of a certain chaotic Constitution supported their several Pretensions
by the Sword. Experience and Policy have since taught other Methods.
Res vero nunc agitur tenui pulmone rubetæ.24 But how far Corruption, Venal-
ity, the Contempt of Honour, the Oblivion of all Duty to our Country, and the
most abandoned publick Prostitution, are preferable to the more glaring and
violent Effects of Faction, I will not presume to determine. Sure I am that they
are very great Evils.
I have done with the Forms of Government. During the Course of my En-
quiry you may have observed a very material Difference between my Manner
of Reasoning and that which is in Use amongst the Abetors of artificial Society.
They form their Plans upon what seems most eligible to their Imaginations,
for the ordering of Mankind.25 I discover the Mistakes in those Plans, from the
real known Consequences which have resulted from them. They have inlisted
Reason to fight against itself, and employ its whole Force to prove that it is an
insufficient Guide to them in the Conduct of their Lives. But unhappily for us,
in proportion as we have deviated from the plain Rule of our Nature, and turned
our Reason against itself, in that Proportion have we increased the Follies and
Miseries of Mankind. The more deeply we penetrate into the Labyrinth of Art,
the further we find ourselves from those Ends for which we entered it.26 This
has happened in almost every Species of Artificial Society, and in all Times.
We found, or we thought we found, an Inconvenience in having every Man the
Judge of his own Cause. Therefore Judges were set up, at first with discretion-
ary Powers. But it was soon found a miserable Slavery to have our Lives and
Properties precarious, and hanging upon the arbitrary Determination of any one
Man, or Set of Men. We flew to Laws as a Remedy for this Evil. By these we
 Vindication of Natural Society (excerpt) 413

persuaded ourselves we might know with some Certainty upon what Ground
we stood. But lo! Differences arose upon the Sense and Interpretation of these
Laws. Thus we were brought back to our old Incertitude. New Laws were made
to expound the old; and new Difficulties arose upon the new Laws; as Words
multiplied, Opportunities of cavilling upon them multiplied also. Then Recourse
was had to Notes, Comments, Glosses, Reports, Responsa Prudentum, learned
Readings: Eagle stood against Eagle: Authority was set up against Authority.
Some were allured by the modern, others reverenced the ancient. The new were
more enlightened, the old were more venerable. Some adopted the Comment,
others stuck to the Text. The Confusion increased, the Mist thickened, until it
could be discovered no longer what was allowed or forbidden, what Things
were in Property, and what common. In this Uncertainty, (uncertain even to the
Professors, an Ægyptian Darkness to the rest of Mankind) the contending Par-
ties felt themselves more effectually ruined by the Delay than they could have
been by the Injustice of any Decision. Our Inheritances are become a Prize for
Disputation; and Disputes and Litigations are become an Inheritance.
The Professors of Artificial Law have always walked hand in hand with the
Professors of Artificial Theology. As their End, in confounding the Reason of
Man, and abridging his natural Freedom, is exactly the same, they have adjusted
the Means to that End in a Way entirely similar. The Divine thunders out his
Anathemas with more Noise and Terror against the Breach of one of his posi-
tive Institutions, or the Neglect of some of his trivial Forms, than against the
Neglect or Breach of those Duties and Commandments of natural Religion,
which by these Forms and Institutions he pretends to enforce. The Lawyer
has his Forms, and his positive Institutions too, and he adheres to them with a
Veneration altogether as religious. The worst Cause cannot be so prejudicial
to the Litigant, as his Advocate’s or Attorney’s Ignorance or Neglect of these
Forms. A Law-suit is like an ill-managed Dispute, in which the first Object is
soon out of Sight, and the Parties end upon a Matter wholly foreign to that on
which they began. In a Law-suit the Question is, Who has a Right to a certain
House or Farm? And this Question is daily determined, not upon the Evidences
of the Right, but upon the Observance or Neglect of some Forms of Words in use
with the Gentlemen of the Robe, about which there is even amongst themselves
such a Disagreement, that the most experienced Veterans in the Profession can
never be positively assured that they are not mistaken.
Let us expostulate with these learned Sages, these Priests of the sacred
Temple of Justice. Are we Judges of our own Property? By no means. You
then, who are initiated into the Mysteries of the blindfold Goddess, inform
me whether I have a Right to eat the Bread I have earned by the Hazard of
my Life, or the Sweat of my Brow? The grave Doctor answers me in the Af-
firmative. The reverend Serjeant replies in the Negative; the learned Barrister
reasons upon one side and upon the other, and concludes nothing. What shall
I do? An Antagonist starts up and presses me hard. I enter the Field, and retain
414 Anarchy and the Law

these three Persons to defend my Cause. My Cause, which two Farmers from
the Plough could have decided in half an Hour, takes the Court twenty Years. I
am however at the end of my Labour, and have in Reward for all my Toil and
Vexation, a Judgment in my Favour. But hold—a sagacious Commander, in the
Adversary’s Army has found a Flaw in the Proceeding. My Triumph is turned
into Mourning. I have used or, instead of and, or some Mistake, small in Ap-
pearance, but dreadful in its Consequences, and have the whole of my Success
quashed in a Writ of Error. I remove my Suit; I shift from Court to Court; I fly
from Equity to Law, and from Law to Equity; equal Uncertainty attends me
every where: And a Mistake in which I had no Share, decides at once upon my
Liberty and Property, sending me from the Court to a Prison, and adjudging my
Family to Beggary and Famine. I am innocent, Gentlemen, of the Darkness and
Uncertainty of your Science. I never darkened it with absurd and contradictory
Notions, nor confounded it with Chicane and Sophistry. You have excluded me
from any Share in the Conduct of my own Cause; the Science was too deep
for me; I acknowledged it; but it was too deep even for yourselves: You have
made the way so intricate, that you are yourselves lost in it: You err, and you
punish me for your Errors.
The Delay of the Law is, your Lordship will tell me, a trite Topic, and which
of its Abuses have not been too severely felt not to be often complained of?
A Man’s Property is to serve for the Purposes of his Support; and therefore to
delay a Determination concerning that, is the worst Injustice, because it cuts
off the very End and Purpose for which I applied to the Judicature for Relief.
Quite contrary in Case of a Man’s Life, there the Determination can hardly be
too much protracted. Mistakes in this Case are as often fallen into as in any
other, and if the Judgment is sudden, the Mistakes are the most irretrievable of
all others. Of this the Gentlemen of the Robe are themselves sensible, and they
have brought it into a Maxim. De morte hominis nulla est cunctatio longa.27
But what could have induced them to reverse the Rules, and to contradict that
Reason which dictated them, I am utterly unable to guess. A Point concerning
Property, which ought, for the Reasons I just mentioned, to be most speedily
decided, frequently exercises the Wit of Successions of Lawyers, for many
Generations. Multa virum volvens durando sæcula vincit.28 But the Question
concerning a Man’s Life, that great Question in which no Delay ought to be
counted tedious, is commonly determined in twenty-four Hours at the utmost.
It is not to be wondered at, that Injustice and Absurdity should be inseparable
Companions.
Ask of Politicians the End for which Laws were originally designed; and
they will answer, that the Laws were designed as a Protection for the Poor and
Weak against the Oppression of the Rich and Powerful.29 But surely no Pretence
can be so ridiculous; a Man might as well tell me he has taken off my Load,
because he has changed the Burthen.30 If the poor Man is not able to support his
Suit, according to the vexatious and expensive manner established in civilized
 Vindication of Natural Society (excerpt) 415

Countries, has not the Rich as great an Advantage over him as the Strong has
over the Weak in a State of Nature? But we will not place the State of Nature,
which is the Reign of God, in competition with Political Society, which is the
absurd Usurpation of Man. In a State of Nature, it is true, that a Man of superior
Force may beat or rob me; but then it is true, that I am at full Liberty to defend
myself, or make Reprisal by Surprize or by Cunning, or by any other way in
which I may be superior to him. But in Political Society, a rich Man may rob
me in another way. I cannot defend myself; for Money is the only Weapon with
which we are allowed to fight. And if I attempt to avenge myself, the whole
Force of that Society is ready to complete my Ruin.
A good Parson once said, that where Mystery begins, Religion ends. Can-
not I say, as truly at least, of human Laws, that where Mystery begins, Justice
ends? It is hard to say, whether the Doctors of Law or Divinity have made the
greater Advances in the lucrative Business of Mystery. The Lawyers, as well
as the Theologians, have erected another Reason besides Natural Reason; and
the Result has been, another Justice besides Natural Justice. They have so be-
wildered the World and themselves in unmeaning Forms and Ceremonies, and
so perplexed the plainest Matters with metaphysical Jargon, that it carries the
highest Danger to a Man out of that Profession, to make the least Step without
their Advice and Assistance. Thus by confining to themselves the knowledge
of the Foundation of all Men’s Lives and Properties, they have reduced all
Mankind into the most abject and servile Dependence. We are Tenants at the
Will of these Gentlemen for every thing; and a metaphysical Quibble is to de-
cide whether the greatest Villain breathing shall meet his Desserts, or escape
with Impunity, or whether the best Man in the Society shall not be reduced to
the lowest and most despicable Condition it affords. In a word, my Lord, the
Injustice, Delay, Puerility, false Refinement, and affected Mystery of the Law
are such, that many who live under it come to admire and envy the Expedition,
Simplicity, and Equality of arbitrary Judgments. I need insist the less on this
Article to your Lordship, as you have frequently lamented the Miseries derived
to us from Artificial Law, and your Candor is the more to be admired and ap-
plauded in this, as your Lordship’s noble House has derived its Wealth and its
Honours from that Profession.
Before we finish our Examination of Artificial Society, I shall lead your
Lordship into a closer Consideration of the Relations which it gives Birth to,
and the Benefits, if such they are, which result from these Relations. The most
obvious Division of Society is into Rich and Poor; and it is no less obvious, that
the Number of the former bear a great Disproportion to those of the latter. The
whole Business of the Poor is to administer to the Idleness, Folly, and Luxury of
the Rich; and that of the Rich, in return, is to find the best Methods of confirming
the Slavery and increasing the Burthens of the Poor. In a State of Nature, it is
an invariable Law, that a Man’s Acquisitions are in proportion to his Labours.
In a State of Artificial Society, it is a Law as constant and as invariable, that
416 Anarchy and the Law

those who labour most, enjoy the fewest Things; and that those who labour not
at all, have the greatest Number of Enjoyments. A Constitution of Things this,
strange and ridiculous beyond Expression. We scarce believe a thing when we
are told it, which we actually see before our Eyes every Day without being in the
least surprized. I suppose that there are in Great-Britain upwards of an hundred
thousand People employed in Lead, Tin, Iron, Copper, and Coal Mines; these
unhappy Wretches scarce ever see the Light of the Sun; they are buried in the
Bowels of the Earth; there they work at a severe and dismal Task, without the
least Prospect of being delivered from it; they subsist upon the coarsest and
worst sort of Fare; they have their Health miserably impaired, and their Lives
cut short, by being perpetually confined in the close Vapour of these malignant
Minerals. An hundred thousand more at least are tortured without Remission
by the suffocating Smoak, intense Fires, and constant Drudgery necessary in
refining and managing the Products of those Mines. If any Man informed us
that two hundred thousand innocent Persons were condemned to so intolerable
Slavery, how should we pity the unhappy Sufferers, and how great would be our
just Indignation against those who inflicted so cruel and ignominious a Punish-
ment? This is an Instance, I could not wish a stronger, of the numberless Things
which we pass by in their common Dress, yet which shock us when they are
nakedly represented. But this Number, considerable as it is, and the Slavery,
with all its Baseness and Horror, which we have at home, is nothing to what
the rest of the World affords of the same Nature. Millions daily bathed in the
poisonous Damps and destructive Effluvia of Lead, Silver, Copper, and Arsenic.
To say nothing of those other Employments, those Stations of Wretchedness and
Contempt in which Civil Society has placed the numerous Enfans perdus31 of
her Army. Would any rational Man submit to one of the most tolerable of these
Drudgeries, for all the artificial Enjoyments which Policy has made to result
from them? By no means. And yet need I suggest to your Lordship, that those
who find the Means, and those who arrive at the End, are not at all the same
Persons. On considering the strange and unaccountable Fancies and Contriv-
ances of artificial Reason, I have somewhere called this Earth the Bedlam of
our System. Looking now upon the Effects of some of those Fancies, may we
not with equal Reason call it likewise the Newgate, and the Bridewell of the
Universe.32 Indeed the Blindness of one Part of Mankind co-operating with the
Frenzy and Villainy of the other, has been the real Builder of this respectable
Fabric of political Society: And as the Blindness of Mankind has caused their
Slavery, in Return their State of Slavery is made a Pretence for continuing them
in a State of Blindness; for the Politician will tell you gravely, that their Life of
Servitude disqualifies the greater Part of the Race of Man for a Search of Truth,
and supplies them with no other than mean and insufficient Ideas. This is but
too true; and this is one of the Reasons for which I blame such Institutions.
In a Misery of this Sort, admitting some few Lenities, and those too but a few,
nine Parts in ten of the whole Race of Mankind drudge through Life. It may be
 Vindication of Natural Society (excerpt) 417

urged perhaps, in palliation of this, that, at least, the rich Few find a considerable
and real Benefit from the Wretchedness of the Many. But is this so in fact? Let
us examine the Point with a little more Attention. For this Purpose the Rich in all
Societies may be thrown into two Classes. The first is of those who are Power-
ful as well as Rich, and conduct the Operations of the vast political Machine.
The other is of those who employ their Riches wholly in the Acquisition of
Pleasure. As to the first Sort, their continual Care, and Anxiety, their toilsome
Days, and sleepless Nights, are next to proverbial. These Circumstances are
sufficient almost to level their Condition to that of the unhappy Majority; but
there are other Circumstances which place them in a far lower Condition. Not
only their Understandings labour continually, which is the severest Labour,
but their Hearts are torn by the worst, most troublesome, and insatiable of all
Passions, by Avarice, by Ambition, by Fear and Jealousy. No part of the Mind
has Rest. Power gradually extirpates from the Mind every humane and gentle
Virtue. Pity, Benevolence, Friendship are Things almost unknown in high Sta-
tions. Varæ amicitiæ rarissime inveniuntur in iis qui in honoribus reque publica
versantur, says Cicero.33 And indeed, Courts are the Schools where Cruelty,
Pride, Dissimulation, and Treachery are studied and taught in the most vicious
Perfection. This is a Point so clear and acknowledged, that if it did not make a
necessary Part of my Subject, I should pass it by entirely. And this has hindered
me from drawing at full length, and in the most striking Colours, this shocking
Picture of the Degeneracy and Wretchedness of human Nature, in that Part
which is vulgarly thought its happiest and most amiable State. You know from
what Originals I could copy such Pictures. Happy are they who know enough
of them to know the little Value of the Possessors of such Things, and of all
that they possess; and happy they who have been snatched from that Post of
Danger which they occupy, with the Remains of their Virtue; Loss of Honours,
Wealth, Titles, and even the Loss of one’s Country, is nothing in Balance with
so great an Advantage.
Let us now view the other Species of the Rich, those who devote their Time
and Fortunes to Idleness and Pleasure. How much happier are they? The Plea-
sures which are agreeable to Nature are within the reach of all, and therefore
can form no Distinction in favour of the Rich. The Pleasures which Art forces
up are seldom sincere, and never satisfying. What is worse, this constant Ap-
plication to Pleasure takes away from the Enjoyment, or rather turns it into the
Nature of a very burthensome and laborious Business. It has Consequences much
more fatal. It produces a weak valetudinary State of Body, attended by all those
horrid Disorders, and yet more horrid Methods of Cure, which are the Result
of Luxury on one hand, and the weak and ridiculous Efforts of human Art on
the other. The Pleasures of such Men are scarcely felt as Pleasures; at the same
time that they bring on Pains and Diseases, which are felt but too severely. The
Mind has its Share of the Misfortune; it grows lazy and enervate, unwilling
and unable to search for Truth, and utterly uncapable of knowing, much less
418 Anarchy and the Law

of relishing real Happiness. The Poor by their excessive Labour, and the Rich
by their enormous Luxury, are set upon a Level, and rendered equally ignorant
of any Knowledge which might conduce to their Happiness. A dismal View of
the Interior of all Civil Society. The lower Part broken and ground down by the
most cruel Oppression; and the Rich by their artificial Method of Life bringing
worse Evils on themselves, than their Tyranny could possibly inflict on those
below them. Very different is the Prospect of the Natural State. Here there are
no Wants which Nature gives, and in this State Men can be sensible of no other
Wants, which are not to be supplied by a very moderate Degree of Labour;
therefore there is no Slavery. Neither is there any Luxury, because no single
Man can supply the Materials of it. Life is simple, and therefore it is happy.
I am conscious, my Lord, that your Politician will urge in his Defence, that
this unequal State is highly useful. That without dooming some Part of Mankind
to extraordinary Toil, the Arts which cultivate Life could not be exercised. But
I demand of this Politician, how such Arts came to be necessary? He answers,
that Civil Society could not well exist without them. So that these Arts are
necessary to Civil Society, and Civil Society necessary again to these Arts.
Thus running in a Circle, without Modesty, and without End, and making one
Error and Extravagance an Excuse for the other. My Sentiments about these
Arts and their Cause, I have often discoursed with my Friends at large. Pope has
expressed them in good Verse, where he talks with so much Force of Reason
and Elegance of Language in Praise of the State of Nature:
Then was not Pride, nor Arts that Pride to aid, Man walk’d with Beast, Joint-tenant
of the Shade.34
On the whole, my Lord, if Political Society, in whatever Form, has still made
the Many the Property of the Few; if it has introduced Labours unnecessary,
Vices and Diseases unknown, and Pleasures incompatible with Nature; if in all
Countries it abridges the Lives of Millions, and renders those of Millions more
utterly abject and miserable, shall we still worship so destructive an Idol, and
daily sacrifice to it our Health, our Liberty, and our Peace? Or shall we pass
by this monstrous Heap of absurd Notions, and abominable Practices, think-
ing we have sufficiently discharged our Duty in exposing the trifling Cheats,
and ridiculous Juggles of a few mad, designing, or ambitious Priests? Alas!
my Lord, we labour under a mortal Consumption, whilst we are so anxious
about the Cure of a sore Finger. For has not this Leviathan of Civil Power 35
overflowed the Earth with a Deluge of Blood, as if he were made to disport and
play therein? We have shewn, that Political Society, on a moderate Calculation,
has been the Means of murdering several times the Number of Inhabitants now
upon the Earth, during its short Existence, not upwards of four thousand Years
in any Accounts to be depended on. But we have said nothing of the other, and
perhaps as bad Consequence of these Wars, which have spilled such Seas of
Blood, and reduced so many Millions to a merciless Slavery. But these are
only the Ceremonies performed in the Porch of the political Temple. Much
 Vindication of Natural Society (excerpt) 419

more horrid ones are seen as you enter it. The several Species of Government
vie with each other in the Absurdity of their Constitutions, and the Oppres-
sion which they make their Subjects endure. Take them under what Form you
please, they are in effect but a Despotism, and they fall, both in Effect and
Appearance too, after a very short Period, into that cruel and detestable Spe-
cies of Tyranny; which I rather call it, because we have been educated under
another Form,36 than that this is of worse Consequences to Mankind. For the
free Governments, for the Point of their Space, and the Moment of their Dura-
tion, have felt more Confusion, and committed more flagrant Acts of Tyranny,
than the most perfect despotic Governments which we have ever known. Turn
your Eye next to the Labyrinth of the Law, and the Iniquity conceived in its
intricate Recesses. Consider the Ravages committed in the Bowels of all
Commonwealths by Ambition, by Avarice, Envy, Fraud, open Injustice, and
pretended Friendship; Vices which could draw little Support from a State of
Nature, but which blossom and flourish in the Rankness of political Society.
Revolve our whole Discourse; add to it all those Reflections which your own
good Understanding shall suggest, and make a strenuous Effort beyond the
Reach of vulgar Philosophy, to confess that the Cause of Artificial Society is
more defenceless even than that of Artificial Religion; that it is as derogatory
from the Honour of the Creator, as subversive of human Reason, and productive
of infinitely more Mischief to the human Race.
If pretended Revelations have caused Wars where they were opposed, and
Slavery where they were received, the pretended wise Inventions of Politicians
have done the same. But the Slavery has been much heavier, the Wars far more
bloody, and both more universal by many Degrees. Shew me any Mischief
produced by the Madness or Wickedness of Theologians, and I will shew
you an hundred, resulting from the Ambition and Villainy of Conquerors and
Statesmen. Shew me an Absurdity in Religion, I will undertake to shew you
an hundred for one in political Laws and Institutions. If you say, that Natural
Religion is a sufficient Guide without the foreign Aid of Revelation, on what
Principle should Political Laws become necessary? Is not the same Reason
available in Theology and in Politics? If the Laws of Nature are the Laws of
God, is it consistent with the Divine Wisdom to prescribe Rules to us, and leave
the Enforcement of them to the Folly of human Institutions?37 Will you follow
Truth but to a certain Point?
We are indebted for all our Miseries to our Distrust of that Guide, which
Providence thought sufficient for our Condition, our own natural Reason, which
rejecting both in human and divine Things, we have given our Necks to the
Yoke of political and theological Slavery. We have renounced the Prerogative
of Man, and it is no Wonder that we should be treated like Beasts. But our
Misery is much greater than theirs, as the Crime we commit in rejecting the
lawful Dominion of our Reason is greater than any which they can commit. If
after all, you should confess all these Things, yet plead the Necessity of politi-
420 Anarchy and the Law

cal Institutions, weak and wicked as they are, I can argue with equal, perhaps
superior Force concerning the Necessity of artificial Religion; and every Step
you advance in your Argument, you add a Strength to mine. So that if we are
resolved to submit our Reason and our Liberty to civil Usurpation, we have
nothing to do but to conform as quietly as we can to the vulgar Notions which
are connected with this, and take up the Theology of the Vulgar as well as their
Politics. But if we think this Necessity rather imaginary than real, we should
renounce their Dreams of Society, together with their Visions of Religion, and
vindicate ourselves into perfect Liberty.38
You are, my Lord, but just entering into the World; I am going out of it.
I have played long enough to be heartily tired of the Drama. Whether I have
acted my Part in it well or ill, Posterity will judge with more Candor than I, or
than the present Age, with our present Passions, can possibly pretend to. For
my part, I quit it without a Sigh, and submit to the Sovereign Order without
murmuring. The nearer we approach to the Goal of Life, the better we begin
to understand the true Value of our Existence, and the real Weight of our
Opinions. We set out much in love with both; but we leave much behind
us as we advance. We first throw away the Tales along with the Rattles of
our Nurses; those of the Priest keep their Hold a little longer; those of our
Governors the longest of all. But the Passions which prop these Opinions are
withdrawn one after another; and the cool Light of Reason at the Setting of
our Life, shews us what a false Splendor played upon these Objects during
our more sanguine Seasons. Happy, my Lord, if instructed by my Experience,
and even by my Errors, you come early to make such an Estimate of Things,
as may give Freedom and Ease to your Life. I am happy that such an Estimate
promises me Comfort at my Death.
FINIS
Notes
1. Compare Montesquieu, The Persian Letters, letters 105 and 106.
2. Each is an ancient lawgiver. Orpheus is a mystical figure who supposedly estab-
lished the Greek orphic rites and their accompanying code. Moses is the lawgiver
of Israel, Minos of Crete, Solon of democratic Athens, Theseus the founder of
Athens, Lycurgus the lawgiver of Sparta, and Numa of Rome. The obvious contrast
is with Machiavelli. See The Prince, ch. 6; and the Discourses, Bk. 1, ch. 1; Bk. 3,
chs. 10 and 11. He stresses that the founders formed cities by good arms, that is,
by force, and not by good laws. The noble writer blames the lawgivers and hence
implies that they are more responsible for the formation of nations than the armed
founders. His list also is weighted toward men who reputedly received their laws
from a god or God.
3. This is a paraphrase of Machiavelli, Discourses, Bk. 1, ch. 3. “All those who have
written upon civil institutions demonstrate (and history is full of examples to support
them) that whoever desires to found a state and give it laws, must start with assum-
ing that all men are bad and ever ready to display their vicious nature, whenever
they may find occasion for it.” The Prince and the Discourses, trans. Christian E.
Oetmold, The Modem Library (New York: Random House, 1950), p. 117.
 Vindication of Natural Society (excerpt) 421

There are differences between the noble writer’s and Machiavelli’s perspectives.
The former accepts Machiavelli’s observation as accurate—legislators must assume
all men are wicked—but he claims that this assumption, although necessary, is false
and therefore unjust. There are good men, but laws are not made for them.
4. This may be an allusion to Nero’s ordering the suicide of his tutor, the philosopher
and poet, Seneca, for allegedly participating in a plot to disthrone the emperor.
Nero’s virtuous early reign may have been a result of Seneca’s influence.
5. This is a reference to the murder of Cleitus by Alexander the Great during one of
the king’s banquets: After considerable drinking, Alexander joined some singing
which mocked the older Macedonians. Cleitus responded by reminding Alexander
that he saved the king’s life and by criticizing Alexander’s disowning of his father
Philip and claiming descent from the God Ammon. In a drunken rage, Alexander
slew Cleitus. The king lamented the deed for days. Two philosophers were sent
for to soothe him: Callisthenes, the nephew of Aristotle, and Anaxarchus. The
noble writer neglects to mention Callisthenes who did not justify the murder and
who himself ultimately died in prison because he did not adore Alexander in the
eastern fashion. Anaxarchus admittedly justified the deed. Still, the noble writer,
whose apparent purpose is to defend philosophy, distorts the tale to philosophy’s
disadvantage. He also distorts Anaxarchus’ speech. In Plutarch it reads, “Knowest
thou not,” said he, “That Zeus has Justice and Law seated beside him, in order
that everything that is done may be lawful and just?” Bernadotte Perrin, trans.,
Plutarch’s Lives (Cambridge, Mass.: Harvard University Press, 1958), 7:376-77.
In fact the passage as quoted more resembles a statement in Hobbes’s Leviathan
than Anaxarchus’ words. “Fourthly, because every Subject is by this Institution
Author of all the Actions, and Judgments of the Soveraigne Instituted; it followes,
that whatsoever he doth, it can be no injury to any of his Subjects; nor ought he to
be by any of them accused of Injustice.” Thomas Hobbes, Leviathan (New York:
Dutton, 1965), p. 92. Bolingbroke criticized Hobbes for extending Anaxarchus’
flatteries of Alexander to all despots. See Philosophical Works, 4:17.
6. See Odyssey, Bk. 17, lines 322-23.
7. John Locke (1632-1704) was an English political philosopher and the classic pro-
ponent of liberalism. For Locke’s comparison of absolute monarchy (despotism)
and the state of nature, see The Second Treatise of Government, sect. 13.
8. This quotation is nearly an exact reproduction of a line from Of the Laws of
Ecclesiastical Polity by Richard Hooker (c. 1554-1600), an English theologian and
political philosopher. The line in Hooker is, “that to live by one man’s will became
the cause of all men’s misery.” Bk. 1, sect. 10. Locke reproduces this line, along
with the paragraph to which it belongs, in a footnote to section 94 of The Second
Treatise of Government.
9. All were Roman emperors. The first set were members of Julius Caesar’s family.
The next six (there were three Antonines) reigned intermittently from 79 to 192.
10. Solon (c.639-c.559) reformed the Athenian laws and made them more demo-
cratic.
11. Pisistratus (c.605-527) was thrice tyrant of Athens apparently at the demand of the
rural populace.
12. See n. 13.
13. “With the greeting of a hasty kiss and without conversation, he slipped away into
the obsequious mob. [Let those whose way it is to admire only what is forbidden
learn from him that great men can live even under bad rulers, etc.]” M. Hutton, rev.
R.M. Ogilivie, trans., Tacitus: Agricola, Germania, Dialogus (Cambridge, Mass:
Harvard University Press, 1970), 40 and 42. Looking at the sections following 42,
especially 45, we find that there is some doubt that an upright man can live in cor-
422 Anarchy and the Law

rupt times. It is suggested that had Agricola not died, the emperor Dominan would
eventually have killed him. Compare to n. 4 above.
14. Compare “Pericles,” The Lives of the Noble Grecians and Romans.
15. See n. 32.
16. Whereas the oppression of outstanding men by despotisms is understated (see n. 13),
these offenses are somewhat exaggerated. Themistocles (c.525-c.460), the strategic
savior of the Greeks from the second Persian invasion, was ostracized, a regular
institution used to preserve the democracy from the influence of great men, and
then he was accused, apparently unjustly, of conspiring with the Persians against
the Greeks. See Plutarch, “Themistocles,” The Lives of the Noble Grecians and
Romans. Aristides (d.c.468), called “the Just,” was an Athenian general at Marathon
and Salamis, when the Greeks twice repulsed the Persians. Athens did not starve
him. He was poor, and it did not feed him perhaps by his own choice. See Plutarch,
“Aristides,” The Lives of the Noble Grecians and Romans. Miltiades (d. 489) was
the commanding general at Marathon. He was fined and not exiled. Anaxagoras
(c. 500-428) was a Greek philosopher who fled Athens because he claimed that
the heavenly bodies were not gods. Socrates (469-399) was condemned to death
partly as a result of his unyielding defense. See Plato, The Apology of Socrates.
17. Compare Plato, Republic, 557d-e.
18. The choice of these cities, Athens, a democracy, Rome, a mixture of aristocracy
and democracy, and Carthage, according to Aristotle (Politics, 1272a-1273b), an
oligarchy with elements of aristocracy and democracy, points to the superiority of
mixed government.
19. The modern free commonwealths, like Venice, are not accused of having slavery.
Although they have economic abuses, they appear to be an improvement over their
ancient counterparts. Perhaps the modern condition has something to do with the
spread of the doctrine of “the Natural Rights of Mankind”—a remarkable phrase
to appear in Burke, and for the second time.
20. Compare Charles Montesquieu, Defense de l’Esprit des Lois (Defense of The Spirit
of the Laws) ed. Roger Caillois, 2 vols. (Paris: Librairie Gallimard, 1951), 2:1134-
36. In response to the tenth objection made to The Spirit of the Laws, Montesquieu
defends himself in terms very similar to those of the noble writer. He cannot admit to
disbelieving the doctrines of the Catholic religion, but in defending himself against
this accusation, he does defend natural religion against believers and atheists.
21. Literally, “Who will guard the guardians?” This quotation is the first of three from
Juvenal’s (first to second centuries A.D.) Satire VI, lines 346-347. It satirizes women
and the relations between the sexes. The guards referred to by Juvenal are those
guarding women, presumably in a women’s quarters. Men do not rely on the virtue
of either the women or the guards but normally employ eunuchs. Juvenal parodies
a question raised by Plato in the Republic (403e). Plato saw that even in the best
regime with the best educated guardians of the law, there is still a problem insuring
that the guardians themselves obey the law.
The introduction of Juvenal indicates that the letter has become somewhat
ironic. The Juvenalian quotations occur in the discussions of institutions related
to England. See Montesquieu’s prediction that England would give rise to many
Juvenals before one Horace (The Spirit of the Laws, Bk. 19, ch. 27).
22. Alexander Pope (1688-1744) was an English poet, friend of Bolingbroke, and sup-
posedly a major influence on Montesquieu when he wrote The Spirit of the Laws.
See n. 20 and n. 34.
23. Compare Montesquieu, The Spirit of the Laws, Bk. 7, chs. 6, 7; Bk. 8, ch. 21; Bk.
9, ch. 8; and especially Bk. 19, chs. 10, 11, 12, 19, 20. Montesquieu praises the
 Vindication of Natural Society (excerpt) 423

Chinese for lying and formulates his famous axiom “that all political vices are not
moral vices, and all moral vices are not political vices.” Bk. 19, ch. 10.
24. “Whereas nowadays a slice of a toad’s lung will do the business.” Juvenal, Satire VI
in Juuenal and Persius, trans. G.G. Ramsay (Cambridge, Mass.: Harvard University
Press, 1957), line 659. The quotation is a reference to the invention and perfection
by women of the art of poisoning.
25. Compare Machiavelli, The Prince, ch. 15, where he accuses Plato of establishing
imaginary republics. The noble writer accuses all legislators, ancient and modern,
of the same practice.
26. The whole discussion of law seems to be an attack on Locke’s solution to the in-
conveniences of the state of nature. Compare The Second Treatise of Government,
sects. 13 and 20, and ch. 9.
27. “No delay can be too long when a man’s life is at stake,” Juvenal, Satire VI in
Juvenal and Persius, trans. G.G. Ramsay, line 221. This is a husband’s reply to a
wife who wants a slave crucified for apparently no good reason.
28. “Many a generation, many an age of man rolls onward and [it] survives them all.”
Virgil, Georgie II in The Poems of Virgil, trans. James Rhoades, The Great Books
of the Western World (Chicago: Encyclopaedia Britannica, 1952), line 295. Virgil
describes a tree that is more enduring than men.
29. In Rousseau’s Second Discourse, the speech that the founder of civil society makes
to persuade others to join is essentially the same one that the noble writer here claims
politicians make to justify civil society. See The First and Second Discourses, pp.
159-62.
30. Burden.
31. Lost children.
32. Bedlam was the popular name for Bethlehem Royal Hospital, Britain’s oldest in-
stitution for the mentally ill. Newgate was a prison in London and originally part
of the gatehouse of the west gate of London. Bridewell also was a prison.
33. “True friendships are very hard to find among those whose time is spent in office
or in business of a public kind.” W. A. Falconer, trans., De amicitia in Cicero: De
senectus, De amicitia, De divinatione (Cambridge, Mass.: Harvard University Press,
1938), pp. xvii, 64. Cicero, throughout De amicitia, describes a friendship between
two political men—Caius Laelius and Scipio Africanus.
34. Alexander Pope, Essay on Man, Epistle 3, lines 151-52. In the original it reads,
“Pride then was not; nor Arts, that Pride to Aid: Man walk’d with beast, joint tenant
of the shade.”
35. Compare Thomas Hobbes, Leviathan, “The Introduction.”
36. The noble writer almost at the last questions the adequacy of the scheme of gov-
ernments used in the Vindication. It is clearly modern, that is, originating with
Machiavelli (Discourses, Bk. 1, ch. 2, Bk. 2, ch. 2, Bk. 3, ch. 6). Locke uses tyranny
to designate governments not protecting the natural rights of man. See The Second
Treatise of Government, ch. 18. Montesquieu divides the rule of one into monarchy
and despotism, calls the rule of more than one a republic, and divides republics
into aristocracies, .the rule of the few, and democracies, the rule of the many. See
The Spirit of the Laws, Bk. 2, chs. 2, 3.
37. Compare Pope, Essay on Man, Epistle 3, lines 144-50.
38. This is the only instance in the letter, apart from the title, where a form of the word,
“vindication” appears. Compare Locke, The Second Treatise of Government, sects.
4-6.
 26
The Production of Security
Gustave de Molinari
There are two ways of considering society. According to some, the develop-
ment of human associations is not subject to providential, unchangeable laws.
Rather, these associations, having originally been organized in a purely artificial
manner by primeval legislators, can later be modified or remade by other legisla-
tors, in step with the progress of social science. In this system the government
plays a preeminent role, because it is upon it, the custodian of the principle of
authority, that the daily task of modifying and remaking society devolves.
According to others, on the contrary, society is a purely natural fact. Like the
earth on which it stands, society moves in accordance with general, preexisting
laws. In this system, there is no such thing, strictly speaking, as social science;
there is only economic science, which studies the natural organism of society
and shows how this organism functions.
We propose to examine, within the latter system, the function and natural
organization of government.
The Natural Order of Society
In order to define and delimit the function of government, it is first necessary
to investigate the essence and object of society itself.
What natural impulse do men obey when they combine into society? They are
obeying the impulse, or, to speak more exactly, the instinct of sociability. The
human race is essentially sociable. Like beavers and the higher animal species
in general, men have an instinctive inclination to live in society.
Why did this instinct come into being?
Man experiences a multitude of needs, on whose satisfaction his happiness
depends, and whose non-satisfaction entails suffering. Alone and isolated, he
could only provide in an incomplete, insufficient manner for these incessant
needs. The instinct of sociability brings him together with similar persons, and
drives him into communication with them. Therefore, impelled by the self-
interest of the individuals thus brought together, a certain division of labor is
established, necessarily followed by exchanges. In brief, we see an organization
emerge, by means of which man can more completely satisfy his needs than
he could living in isolation.
This natural organization is called society.
The object of society is therefore the most complete satisfaction of man’s
needs. The division of labor and exchange are the means by which this is
accomplished.
424
 The Production of Security 425

Among the needs of man, there is one particular type which plays an immense
role in the history of humanity, namely the need for security.
What is this need?
Whether they live in isolation or in society, men are, above all, interested
in preserving their existence and the fruits of their labor. If the sense of jus-
tice were universally prevalent on earth; if, consequently, each man confined
himself to laboring and exchanging the fruits of his labor, without wishing to
take away, by violence or fraud, the fruits of other men’s labor; if everyone
had, in one word, an instinctive horror of any act harmful to another person,
it is certain that security would exist naturally on earth, and that no artificial
institution would be necessary to establish it. Unfortunately this is not the way
things are. The sense of justice seems to be the perquisite of only a few emi-
nent and exceptional temperaments. Among the inferior races, it exists only in
a rudimentary state. Hence the innumerable criminal attempts, ever since the
beginning of the world, since the days of Cain and Abel, against the lives and
property of individuals.
Hence also the creation of establishments whose object is to guarantee to
everyone the peaceful possession of his person and his goods.
These establishments were called governments.
Everywhere, even among the least enlightened tribes, one encounters a
government, so universal and urgent is the need for security provided by gov-
ernment. Everywhere, men resign themselves to the most extreme sacrifices
rather than do without government and hence security, without realizing that
in so doing, they misjudge their alternatives.
Suppose that a man found his person and his means of survival incessantly
menaced; wouldn’t his first and constant preoccupation be to protect himself
from the dangers that surround him? This preoccupation, these efforts, this
labor, would necessarily absorb the greater portion of his time, as well as the
most energetic and active faculties of his intelligence. In consequence, he could
only devote insufficient and uncertain efforts, and his divided attention, to the
satisfaction of his other needs.
Even though this man might be asked to surrender a very considerable
portion of his time and of his labor to someone who takes it upon himself to
guarantee the peaceful possession of his person and his goods, wouldn’t it be
to his advantage to conclude this bargain?
Still, it would obviously be no less in his self-interest to procure his security
at the lowest price possible.
Competition in Security
If there is one well-established truth in political economy, it is this:
That in all cases, for all commodities that serve to provide for the tangible or intan-
gible needs of the consumer, it is in the consumer’s best interest that labor and trade
remain free, because the freedom of labor and of trade have as their necessary and
permanent result the maximum reduction of price.
426 Anarchy and the Law

And this:
That the interests of the consumer of any commodity whatsoever should always
prevail over the interests of the producer.
Now in pursuing these principles, one arrives at this rigorous conclusion:
That the production of security should, in the interests of the consumers of this
intangible commodity, remain subject to the law of free competition.
Whence it follows:
That no government should have the right to prevent another government from going
into competition with it, or to require consumers of security to come exclusively to
it for this commodity.
Nevertheless, I must admit that, up until the present, one recoiled before this
rigorous implication of the principle of free competition.
One economist who has done as much as anyone to extend the application
of the principle of liberty, M. Charles Dunoyer, thinks “that the functions of
government will never be able to fall into the domain of private activity.”1
Now here is a citation of a clear and obvious exception to the principle of
free competition.
This exception is all the more remarkable for being unique.
Undoubtedly, one can find economists who establish more numerous excep-
tions to this principle; but we may emphatically affirm that these are not pure
economists. True economists are generally agreed, on the one hand, that the
government should restrict itself to guaranteeing the security of its citizens,
and on the other hand, that the freedom of labor and of trade should otherwise
be whole and absolute.
But why should there be an exception relative to security? What special reason
is there that the production of security cannot be relegated to free competition?
Why should it be subjected to a different principle and organized according to
a different system?
On this point, the masters of the science are silent, and M. Dunoyer, who
has clearly noted this exception, does not investigate the grounds on which it
is based.
Security an Exception?
We are consequently led to ask ourselves whether this exception is well
founded, in the eyes of the economist.
It offends reason to believe that a well-established natural law can admit
of exceptions. A natural law must hold everywhere and always, or be invalid.
I cannot believe, for example, that the universal law of gravitation, which
governs the physical world, is ever suspended in any instance or at any point
of the universe. Now I consider economic laws comparable to natural laws,
and I have just as much faith in the principle of the division of labor as I have
in the universal law of gravitation. I believe that while these principles can be
disturbed, they admit of no exceptions.
 The Production of Security 427

But, if this is the case, the production of security should not be removed from
the jurisdiction of free competition; and if it is removed, society as a whole
suffers a loss. Either this is logical and true, or else the principles on which
economic science is based are invalid.
The Alternatives
It thus has been demonstrated a priori, to those of us who have faith in the
principles of economic science, that the exception indicated above is not justi-
fied, and that the production of security, like anything else, should be subject
to the law of free competition.
Once we have acquired this conviction, what remains for us to do? It remains
for us to investigate how it has come about that the production of security has
not been subjected to the law of free competition, but rather has been subjected
to different principles.
What are those principles?
Those of monopoly and communism.
In the entire world, there is not a single establishment of the security industry
that is not based on monopoly or on communism.
In this connection, we add, in passing, a simple remark.
Political economy has disapproved equally of monopoly and communism
in the various branches of human activity, wherever it has found them. Is it not
then strange and unreasonable that it accepts them in the security industry?
Monopoly and Communism
Let us now examine how it is that all known governments have either been
subjected to the law of monopoly, or else organized according to the commu-
nistic principle.
First let us investigate what is understood by the words monopoly and
communism.
It is an observable truth that the more urgent and necessary are man’s needs,
the greater will be the sacrifices he will be willing to endure in order to satisfy
them. Now, there are some things that are found abundantly in nature, and whose
production does not require a great expenditure of labor, but which, since they
satisfy these urgent and necessary wants, can consequently acquire an exchange
value all out of proportion with their natural value. Take salt for example. Sup-
pose that a man or a group of men succeed in having the exclusive production
and sale of salt assigned to themselves. It is apparent that this man or group
could arise the price of this commodity well above its value, well above the
price it would have under a regime of free competition.
One will then say that this man or this group possesses a monopoly, and that
the price of salt is a monopoly price.
But it is obvious that the consumers will not consent freely to paying the
abusive monopoly surtax. It will be necessary to compel them to pay it, and in
order to compel them, the employment of force will be necessary.
428 Anarchy and the Law

Every monopoly necessarily rests on force.

When the monopolists are no longer as strong as the consumers they exploit,
what happens?
In every instance, the monopoly finally disappears either violently or as the
outcome of an amicable transaction. What is it replaced with?
If the roused and insurgent consumers secure the means of production of
the salt industry, in all probability they will confiscate this industry for their
own profit, and their first thought will be, not to relegate it to free competi-
tion, but rather to exploit it, in common, for their own account. They will then
name a director or a directive committee to operate the saltworks, to whom
they will allocate the funds necessary to defray the costs of salt production.
Then, since the experience of the past will have made them suspicious and
distrustful, since they will be afraid that the director named by them will seize
production for his own benefit, and simply reconstitute by open or hidden
means the old monopoly for his own profit, they will elect delegates, repre-
sentatives entrusted with appropriating the funds necessary for production,
with watching over their use, and with making sure that the salt produced
is equally distributed to those entitled to it. The production of salt will be
organized in this manner.
This form of the organization of production has been named communism.
When this organization is applied to a single commodity, the communism
is said to be partial.
When it is applied to all commodities, the communism is said to be
complete.
But whether communism is partial or complete, political economy is no more
tolerant of it than it is of monopoly, of which it is merely an extension.
The Monopolization and Collectivization of the Security Industry
Isn’t what has just been said about salt applicable to security? Isn’t this the
history of all monarchies and all republics?
Everywhere, the production of security began by being organized as a mo-
nopoly, and everywhere, nowadays, it tends to be organized communistically.
Here is why.
Among the tangible and intangible commodities necessary to man, none,
with the possible exception of wheat, is more indispensable, and therefore none
can support quite so large a monopoly duty.
Nor is any quite so prone to monopolization.
What, indeed, is the situation of men who need security? Weakness. What is
the situation of those who undertake to provide them with this necessary secu-
rity? Strength. If it were otherwise, if the consumers of security were stronger
than the producers, they obviously would dispense with their assistance.
Now, if the producers of security are originally stronger than the consumers,
won’t it be easy for the former to impose a monopoly on the latter?
 The Production of Security 429

Everywhere, when societies originate, we see the strongest, most warlike

races seizing the exclusive government of the society. Everywhere we see these
races seizing a monopoly on security within certain more or less extensive
boundaries, depending on their number and strength.
And, this monopoly being, by its very nature, extraordinarily profitable,
everywhere we see the races invested with the monopoly on security devoting
themselves to bitter struggles, in order to add to the extent of their market, the
number of their forced consumers, and hence the amount of their gains.
War has been the necessary and inevitable consequence of the establishment
of a monopoly on security.
Another inevitable consequence has been that this monopoly has engendered
all other monopolies.
When they saw the situation of the monopolizers of security, the producers
of other commodities could not help but notice that nothing in the world is
more advantageous than monopoly. They, in turn, were consequently tempted
to add to the gains from their own industry by the same process. But what did
they require in order to monopolize, to the detriment of the consumers, the
commodity they produced? They required force. However, they did not possess
the force necessary to constrain the consumers in question. What did they do?
They borrowed it, for a consideration, from those who had it. They petitioned
and obtained, at the price of an agreed upon fee, the exclusive privilege of car-
rying on their industry within certain determined boundaries. Since the fees for
these privileges brought the producers of security a goodly sum of money, the
world was soon covered with monopolies. Labor and trade were everywhere
shackled, enchained, and the condition of the masses remained as miserable
as possible.
Nevertheless, after long centuries of suffering, as enlightenment spread
through the world little by little, the masses who had been smothered under
this nexus of privileges began to rebel against the privileged, and to demand
liberty, that is to say, the suppression of monopolies.
This process took many forms. What happened in England, for example?
Originally, the race which governed the country and which was militarily
organized (the aristocracy), having at its head a hereditary leader (the king),
and an equally hereditary administrative council (the House of Lords), set the
price of security, which it had monopolized, at whatever rate it pleased. There
was no negotiation between the producers of security and the consumers.
This was the rule of absolutism. But as time passed, the consumers, having
become aware of their numbers and strength, arose against the purely arbitrary
regime, and they obtained the right to negotiate with the producers over the
price of the commodity. For this purpose, they sent delegates to the House of
Commons to discuss the level of taxes, the price of security. They were thus
able to improve their lot somewhat. Nevertheless, the producers of security
had a direct say in the naming of the members of the House of Commons, so
430 Anarchy and the Law

that debate was not entirely open, and the price of the commodity remained
above its natural value. One day the exploited consumers rose against the
producers and dispossessed them of their industry. They then undertook to
carry on this industry by themselves and chose for this purpose a director of
operations assisted by a Council. Thus communism replaced monopoly. But
the scheme did not work, and twenty years later, primitive monopoly was
reestablished. Only this time the monopolists were wise enough not to restore
the rule of absolutism; they accepted free debate over taxes, being careful,
all the while, incessantly to corrupt the delegates of the opposition party.
They gave these delegates control over various posts in the administration of
security, and they even went so far as to allow the most influential into the
bosom of their superior Council. Nothing could have been more clever than
this behavior. Nevertheless, the consumers of security finally became aware
of these abuses, and demanded the reform of Parliament. This long contested
reform was finally achieved, and since that time, the consumers have won a
significant lightening of their burdens.
In France, the monopoly on security, after having similarly undergone
frequent vicissitudes and various modifications, has just been overthrown for
the second time. [De Molinari was writing one year after the revolutions of
1848—Tr.] As once happened in England, monopoly for the benefit of one
caste, and then in the name of a certain class of society, was finally replaced by
communal production. The consumers as a whole, behaving like shareholders,
named a director responsible for supervising the actions of the director and of
his administration.
We will content ourselves with making one simple observation on the subject
of this new regime.
Just as the monopoly on security logically had to spawn universal monopoly,
so communistic security must logically spawn universal communism.
In reality, we have a choice of two things:
Either communistic production is superior to free production, or it is not.
If it is, then it must be for all things, not just for security.
If not, progress requires that it be replaced by free production.
Complete communism or complete liberty: that is the alternative!
Government and Society
But is it conceivable that the production of security could be organized other
than as a monopoly or communistically? Could it conceivably be relegated to
free competition? The response to this question on the part of political writers
is unanimous: No.
Why? We will tell you why.
Because these writers, who are concerned especially with governments, know
nothing about society. They regard it as an artificial fabrication, and believe that
the mission of government is to modify and remake it constantly.
 The Production of Security 431

Now in order to modify or remake society, it is necessary to be empowered

with an authority superior to that of the various individuals of which it is
composed.
Monopolistic governments claim to have obtained from God himself this
authority which gives them the right to modify or remake society according to
their fancy, and to dispose of persons and property however they please. Com-
munistic governments appeal to human reason, as manifested in the majority
of the sovereign people.
But do monopolistic governments and communistic governments truly
possess this superior, irresistible authority? Do they in reality have a higher
authority than that which a free government could have? This is what we must
investigate.
The Divine Right of Kings and Majorities
If it were true that society were not naturally organized, if it were true that
the laws which govern its motion were to be constantly modified or remade,
the legislators would necessarily have to have an immutable, sacred authority.
Being the continuators of Providence on earth, they would have to be regarded
as almost equal to God. If it were otherwise, would it not be impossible for them
to fulfill their mission? Indeed, one cannot intervene in human affairs, one can-
not attempt to direct and regulate them, without daily offending a multitude of
interests. Unless those in power are believed to have a mandate from a superior
entity, the injured interests will resist.
Whence the fiction of divine right.
This fiction was certainly the best imaginable. If you succeed in persuading
the multitude that God himself has chosen certain men or certain races to give
laws to society and to govern it, no one will dream of revolting against these
appointees of Providence, and everything the government does will be accepted.
A government based on divine right is imperishable.
On one condition only, namely that divine right is believed in.
If one takes the thought into one’s head that the leaders of the people do not
receive their inspirations directly from providence itself, that they obey purely
human impulses, the prestige that surrounds them will disappear. One will
irreverently resist their sovereign decisions, as one resists anything manmade
whose utility has not been clearly demonstrated.
It is accordingly fascinating to see the pains theoreticians of the divine
right take to establish the superhumanity of the races in possession of human
government.
Let us listen, for example, to M. Joseph de Maistre:
Man does not make sovereigns. At the very most he can serve as an instrument for
dispossessing one sovereign and handing his State over to another sovereign, himself
already a prince. Moreover, there has never existed a sovereign family traceable to
plebeian origins. If this phenomenon were to appear, it would mark a new epoch
on earth….
432 Anarchy and the Law

It is written: I am the Maker of sovereigns. This is not just a religious slogan, a

preacher’s metaphor; it is the literal truth pure and simple; it is a law of the political
world. God makes kings, word for word. He prepares royal races, nurtures them at
the center of a cloud which hides their origins. Finally they appear, crowned with
glory and honor; they take their places.2
According to this system, which embodies the will of Providence in certain
men and which invests these chosen ones, these anointed ones with a quasi-
divine authority, the subjects evidently have no rights at all. They must submit,
without question, to the decrees of the sovereign authority, as if they were the
decrees of Providence itself.
According to Plutarch, the body is the instrument of the soul, and the soul is
the instrument of God. According to the divine right school, God selects certain
souls and uses them as instruments for governing the world.
If men had faith in this theory, surely nothing could unsettle a government
based on divine right.
Unfortunately, they have completely lost faith.
Why?
Because one fine day they took it into their heads to question and to reason,
and in questioning, in reasoning, they discovered that their governors governed
them no better than they, simply mortals out of communication with Providence,
could have done themselves.
It was free inquiry that demonetized the fiction of divine right, to the point
where the subjects of monarchs or of aristocracies based on divine right obey
them only insofar as they think it in their own self-interest to obey them.
Has the communist fiction fared any better?
According to the communist theory, of which Rousseau is the high-priest,
authority does not descend from on high, but rather comes up from below. The
government no longer look to Providence for its authority, it looks to united
mankind, to the one, indivisible, and sovereign nation.
Here is what the communists, the partisans of poplar sovereignty, assume.
They assume that human reason has the power to discover the best laws and
the organization which most perfectly suits society; and that, in practice, these
laws reveal themselves at the conclusion of a free debate between conflicting
opinions. If there is no unanimity, if there is still dissension after the debate,
the majority is in the right, since it comprises the larger number of reasonable
individuals. (These individuals are, of course, assumed to be equal, otherwise
the whole structure collapses.) Consequently, they insist that the decisions of
the majority must become law, and that the minority is obliged to submit to it,
even if it is contrary to its most deeply rooted convictions and injures its most
precious interests.
That is the theory; but, in practice, does the authority of the decision of the
majority really have this irresistible, absolute character as assumed? Is it always,
in every instance, respected by the minority? Could it be?
Let us take an example.
 The Production of Security 433

Let us suppose that socialism succeeds in propagating itself among the

working classes in the countryside as it has already among the working classes
in the cities; that it consequently becomes the majority in the country and that,
profiting from this situation, it sends a socialist majority to the Legislative
Assembly and names a socialist president. Suppose that this majority and this
president, invested with sovereign authority, decrees the imposition of a tax
on the rich of three billions, in order to organize the labor of the poor, as M.
Proudhon demanded. Is it probable that the minority would submit peacefully
to his iniquitous and absurd, yet legal, yet constitutional plunder?
No, without a doubt it would not hesitate to disown the authority of the
majority and to defend its property.
Under this regime, as under the preceding, one obeys the custodians of au-
thority only insofar as one thinks it in one’s self-interest to obey them.
This leads us to affirm that the moral foundation of authority is neither as
solid nor as wide, under a regime of monopoly or of communism, as it could
be under a regime of liberty.
The Regime of Terror
Suppose nevertheless that the partisans of an artificial organization, either
the monopolists or the communists, are right: that society is not naturally
organized, and that the task of making and unmaking the laws that regulate
society continuously devolves upon men, look in what a lamentable situation
the world would find itself. The moral authority of governors rests, in reality,
on the self-interest of the governed. The latter having a natural tendency to
resist anything harmful to their self-interest, unacknowledged authority would
continually require the help of physical force.
The monopolist and the communists, furthermore, completely understand
this necessity.
If anyone, says M. de Maistre, attempts to detract from the authority of
God’s chosen ones, let him be turned over to the secular power, let the hang-
man perform his office.
If anyone does not recognize the authority of those chosen by the people, say
the theoreticians of the school of Rousseau, if he resists any decision whatsoever
of the majority, let him be punished as an enemy of the sovereign people, let
the guillotine perform justice.
These two schools, which both take artificial organization as their point of
departure, necessarily lead to the same conclusion: TERROR.
The Free Market for Security
Allow us now to formulate a simple hypothetical situation.
Let us imagine a newborn society: The men who compose it are busy work-
ing and exchanging the fruits of their labor. A natural instinct reveals to these
men that their persons, the land they occupy and cultivate, the fruits of their
labor, are their property, and that no one, except themselves, has the right to
434 Anarchy and the Law

dispose of or touch this property. This instinct is not hypothetical; it exists. But
man being an imperfect creature, this awareness of the right of everyone to his
person and his goods will not be found to the same degree in every soul, and
certain individuals will make criminal attempts, by violence or by fraud, against
the persons or the property of others.
Hence, the need for an industry that prevents or suppresses these forcible
or fraudulent aggressions.
Let us suppose that a man or a combination of men comes and says:
For a recompense, I will undertake to prevent or suppress criminal attempts
against persons and property.
Let those who wish their persons and property to be sheltered from all ag-
gression apply to me.
Before striking a bargain with this producer of security, what will the con-
sumers do? In the first place, they will check if he is really strong enough to
protect them.
In the second place, whether his character is such that they will not have to
worry about his instigating the very aggressions he is supposed to suppress.
In the third place, whether any other producer of security, offering equal
guarantees, is disposed to offer them this commodity on better terms.
These terms are of various kinds.
In order to be able to guarantee the consumers full security of their persons
and property, and, in case of harm, to give them a compensation proportioned
to the loss suffered, it would be necessary, indeed:
1. That the producer establish certain penalties against the offenders of persons
and the violators of property, and that the consumers agree to submit to these
penalties, in case they themselves commit offenses;
2. That he impose certain inconveniences on the consumers, with the object
of facilitating the discovery of the authors of offenses;
3. That he regularly gather, in order to cover his costs of production as well
as an appropriate return for his efforts, a certain sum, variable according to
the situation of the consumers, the particular occupations they engage in,
and the extent, value, and nature of their properties.
If these terms, necessary for carrying on this industry, are agreeable to the
consumers, a bargain will be struck. Otherwise the consumers will either do
without security, or else apply to another producer.
Now if we consider the particular nature of the security industry, it is apparent
that the producers will necessarily restrict their clientele to certain territorial
boundaries. They would be unable to cover their costs if they tried to provide
police services in localities comprising only a few clients. Their clientele will
naturally be clustered around the center of their activities. They would neverthe-
less be unable to abuse this situation by dictating to the consumers. In the event
of an abusive rise in the price of security, the consumers would always have
the option of giving their patronage to a new entrepreneur, or to a neighboring
entrepreneur.
 The Production of Security 435

This option the consumer retains of being able to buy security wherever
he pleases brings about a constant emulation among all the producers, each
producer striving to maintain or augment his clientele with the attraction of
cheapness or of faster, more complete and better justice.3
If, on the contrary, the consumer is not free to buy security wherever he
pleases, you forthwith see open up a large profession dedicated to arbitrariness
and bad management. Justice becomes slow and costly, the police vexatious,
individual liberty is no longer respected, the price of security is abusively in-
flated and inequitably apportioned, according to the power and influence of this
or that class of consumers. The protectors engage in bitter struggles to wrest
customers from one another. In a word, all the abuses inherent in monopoly or
in communism crop up.
Under the rule of free competition, war between the producers of security
entirely loses its justification. Why would they make war? To conquer consum-
ers? But the consumers would not allow themselves to be conquered. They
would be careful not to allow themselves to be protected by men who would
unscrupulously attack the persons and property of their rivals. If some audacious
conqueror tried to become dictator, they would immediately call to their aid all
the free consumers menaced by this aggression, and they would treat him as
he deserved. Just as war is the natural consequence of monopoly, peace is the
natural consequence of liberty.
Under a regime of liberty, the natural organization of the security industry
would not be different from that of other industries. In small districts a single
entrepreneur could suffice. This entrepreneur might leave his business to his
son, or sell it to another entrepreneur. In larger districts, one company by itself
would bring together enough resources adequately to carry on this important
and difficult business. If it were well managed, this company could easily last,
and security would last with it. In the security industry, just as in most of the
other branches of production, the latter mode of organization will probably
replace the former, in the end.
On the one hand this would be a monarchy, and on the other hand it would
be a republic; but it would be a monarchy without monopoly and a republic
without communism.
On either hand, this authority would be accepted and respected in the name
of utility, and would not be an authority imposed by terror.
It will undoubtedly be disputed whether such a hypothetical situation is re-
alizable. But, at the risk of being considered utopian, we affirm that this is not
disputable, that a careful examination of the facts will decide the problem of
government more and more in favor of liberty, just as it does all other economic
problems. We are convinced, so far as we are concerned, that one day societ-
ies will be established to agitate for the freedom of government, as they have
already been established on behalf of the freedom of commerce.
And we do not hesitate to add that after this reform has been achieved, and
all artificial obstacles to the free action of the natural laws that govern the eco-
436 Anarchy and the Law

nomic world have disappeared, the situation of the various members of society
will become the best possible.4
Notes
1. In his remarkable book De la liberté du travail (On the Freedom of Labor), Vol.
III, p. 253. (Published by Guillaumin.)
2. Du principe générateur des constitutions politiques (On the Generating Principle
of Political Constitutions), Preface.
3. Adam Smith, whose remarkable spirit of observation extends to all subjects, remarks
that the administration of justice gained much, in England, from the competition
between the different courts of law:

The fees of court seem originally to have been the principal support of the different courts of
justice in England. Each court endeavoured to draw to itself as much business as it could, and
was, upon that account, willing to take cognizance of many suits which were not originally
intended to fall under its jurisdiction. The court of king’s bench instituted for the trial of
criminal causes only, took cognizance of civil suits; the plaintiff pretending that the defen-
dant, in not doing him justice, had been guilty of some trespass or misdemeanor. The court
of exchequer, instituted for the levying of the king’s revenue, and for enforcing the payment
of such debts only as were due to the king, took cognizance of all other contract debts; the
plaintiff alleging that he could not pay the king, because the defendant would not pay him.
In consequence of such fictions it came, in many case, to depend altogether upon the parties
before what court they would chuse to have their cause tried; and each court endeavoured, by
superior dispatch and impartiality, to draw to itself as many causes as it could. The present
admirable constitution of the courts of justice in England was, perhaps, originally in a great
measure, formed by this emulation, which anciently took place between their respective
judges; each judge endeavouring to give, in his own court, the speediest and most effectual
remedy, which the law would admit, for every sort of injustice.—The Wealth of Nations (New
York: Modern Library, 1937; originally 1776), p. 679.

4. [This essay was] originally published as “De la production de la sécurité,” in Jour-

nal des Economistes (February 1849), pp. 277-90. This translation was originally
published as Gustave de Molinari, “The Production of Security,” trans. J. Huston
McCulloch, Occasional Papers Series #2 (Richard M. Ebeling, editor) (New York:
The Center for Libertarian Studies, May 1977).
 27
Individualist Anarchism in the U.S.: Origins
Murray Rothbard
Libertarians tend to fall into two opposing errors on the American past: the
familiar “Golden Age” view of the rightwing that everything was blissful in
America until some moment of precipitous decline (often dated 1933); and the
deeply pessimistic minority view that rejects the American past root and branch,
spurning all American institutions and virtually all of its thinkers except such
late nineteenth-century individualist anarchists as Benjamin R. Tucker and
Lysander Spooner. The truth is somewhere in between: America was never the
golden “land of the free” of the conservative-libertarian legend, and yet man-
aged for a very long time to be freer, in institutions and intellectual climate,
than any other land.
Colonial America did not set out deliberately to be the land of the free. On
the contrary, it began in a tangle of tyranny, special privilege, and vast land
monopoly. Territories were carved out either as colonies subject directly to the
English Crown, or as enormous land grabs for privileged companies or feudal
proprietors. What defeated these despotic and feudal thrusts into the new ter-
ritory was, at bottom, rather simple: the vastness of the fertile and uninhabited
land that lay waiting to be settled. Not only relative freedom, but even outright
anarchist institutions grew up early in the interstices between the organized,
despotic English colonies.
Albemarle
There is a good possibility that for a couple of decades in the mid-seventeenth
century, the coastal area north of Albemarle Sound in what is now northeast-
ern North Carolina was in a quasi-anarchistic state. Technically a part of the
Virginia colony but in practice virtually independent, the Albemarle area was
a haven for persons chaffing under the despotic rule of the English Crown, the
Anglican Church and the large planter aristocracy of Virginia. Roger Green led
a Presbyterian group that left Virginia proper for Albemarle, and many Quakers
settled in the area, which specialized in growing tobacco. This semi-libertarian
condition came to an end in 1663, when the English Crown included Albemarle
in the mammoth Carolina land grant bestowed on a group of eight feudal pro-
prietors. Little is known of pre-1663 Albemarle, since historians display scant
interest in stateless societies.1

437
438 Anarchy and the Law

“Rogue’s Island”
Undoubtedly the freest colony in America, and the major source of anarchistic
thought and institutions, was little Rhode Island, which originated as a series
of more or less anarchic settlements founded by people fleeing from the brutal
politico-religious tyranny of the Puritans of Massachusetts Bay (who referred
to the new territory as “Rogue’s Land”). Unsettled and untouched by the land
grants or the Crown, the Rhode Island area provided a haven close to the Mas-
sachusetts Bay settlement.
Providence, the first refugee settlement, was founded in 1636 by the young
Reverend Roger Williams. A political and especially a religious libertarian,
Williams was close to the Levellers—that great group of English laissez-faire
individualists who constituted the “extreme leftwing” of the republican side in
the English Civil War. At first, the Williams settlement was virtually anarchistic.
As Williams described it, “the masters of families have ordinarily met once a
fortnight and consulted about our common peace, watch and plenty; and mutual
consent have finished all matters of speed and pace.” But this anarchistic idyll
began to flounder in a tragically ironic trap that Williams had laid for himself and
his followers. Williams had pioneered in scrupulously purchasing all the land
from the Indians voluntarily—a method of land acquisition in sharp contrast to
the brutal methods of extermination beloved by the Puritans of Massachusetts
Bay. But the problem was that the Indians had erroneous theories of property.
As collective tribes they laid claim to vast reaches of land on which they had
only hunted. Not having transformed the land itself, they were not entitled to all
of the land which they sold. Hence, Williams and his group, by purchasing all
of this unsettled land, willy-nilly acquired these illegitimate land titles. Think-
ing that he had been generous, voluntaristic and libertarian, Williams (and his
group) fell into the trap of becoming a feudalistic group of landowners. Instead
of automatically acquiring the land in Providence which they homesteaded,
later settlers had to purchase or rent the land from the original Williams claim-
ants. The result was that Williams and his original colleagues, who had formed
“The Fellowship,” found themselves in the position of being oligarchic rulers of
Providence as well as Providence’s land “monopolists.” Once again, as so many
times in history, land-monopoly and government went hand in hand.
While a libertarian, Williams never became an explicit anarchist, even though
he established an anarchistic community in Providence. The honor of being
the first explicit anarchist in North America belongs to Williams’ successor, a
leading religious refugee from Massachusetts, Anne Hutchinson. Anne and her
followers, who had become far more numerous a band of heretics than Williams
had amassed, emigrated to the Rhode Island area in 1638 at the suggestion
of Williams himself. There they purchased the island of Aquidneck from the
Indians and founded the settlement of Pocasset (now Portsmouth). Anne soon
became restive at Pocasset, seeing that her follower and major founder of the
 Individualist Anarchism in the U.S.: Origins 439

settlement, the wealthy merchant William Coddington, had quickly established

his own theocratic rule over the infant colony. For Coddington, as “judge” of the
settlement, based his decrees and rulings on the “word of God,” as arbitrarily
interpreted by himself.
Coddington, this time far more explicitly and consciously than Williams,
founded his dictatorial power on his deed of purchase of the island from the
Indians. Since his was the only name on the deed of purchase, Coddington
claimed for himself all the “rights” of land monopolist and feudal lord, allotting
no rights to homesteading settlers.
Anne Hutchinson, not yet an anarchist, now launched a political struggle
against Coddington in early 1639 forcing him to give the entire body of freemen
a veto over his actions. In April, Coddington was forced to agree to elections for
his post as Governor, a position which he had expected to be his permanently
by feudal right. Anne’s husband, William Hutchinson, defeated Coddington in
the elections, and Coddington and his followers left Pocasset to found a new
settlement called New Port at the southern end of the island. The victorious
Hutchinsonians adopted a new constitution, changing the name of the town
to Portsmouth, and stating that 1) all male inhabitants were equal before the
law; 2) Church and State were to be kept separate; and 3) trial by jury was to
be established for all. Immediately thereafter Coddington declared war upon
Portsmouth and at the end of a year of turmoil, the two groups agreed to unite
the two settlements. Coddington was once more chosen as governor, but with
democratic institutions and religious liberty guaranteed.
From the point of view of social philosophy, however, the important con-
sequence of this struggle with Coddington was that Anne Hutchinson began
to reflect deeply on the whole question of liberty. If, as Roger Williams had
taught, there must be absolute religious liberty for the individual, then what right
does government have to rule the individual at all? In short, Anne Hutchinson
had come to the conclusion of the “unlawfulness of magistry government.” As
Anne’s biographer Winifred Rugg put it: “She was supremely convinced that
the Christian held within his own breast the assurance of salvation…. For such
persons magistrates were obviously superfluous. As for the others, they were
to be converted, not coerced.”
Anne persuaded her husband to resign as one of Coddington’s major as-
sistants in the colony. In 1642, soon after his resignation, William Hutchinson
died. Deprived of her husband and disgusted with all government, Anne left
Rhode Island to settle at Pelham Bay, near New York City. There, in the late
summer of 1643, Anne and her family were killed by a band of Indians, who
had been set upon by the Dutch of New York.
But while Anne Hutchinson was dead, her ideas lived on. Some of her fol-
lowers, headed by Anne’s sister Mrs. Catherine Scott, headed the new Baptist
movement in Rhode Island, which, as we shall see, was later to erupt as a highly
important movement of Baptist anarchists.
440 Anarchy and the Law

One of the most interesting individualists of the American colonial period was
Samuel Gorton. An English clothier, his libertarian political and religious views
and individualistic spirit got him persecuted in every colony in New England,
including Providence and Portsmouth. An opponent of theocracy, and indeed of
all formal religious organizations, Gorton opposed all transgressions of govern-
ment against the rights guaranteed by English common law. Fleeing Anglican
England, Gorton successively had to escape from Massachusetts Bay, Plymouth,
Portsmouth, and Providence. In the Providence incident Roger Williams began
to display that totalitarian temperament, that impatience with anyone more in-
dividualistic than he, that was later to turn him sharply away from liberty and
towards statism. Williams agreed to the expulsion of Gorton from Providence,
declaring that Gorton was “bewitching and bemadding poor Providence…with
his unclear and foul censures of all the ministers of this country…”
Accused of being “anarchists,” denounced by Governor Winthrop of Massa-
chusetts Bay as a “man not fit to live upon the face of the earth,” Gorton and his
followers were forced in late 1642 to found an entirely new settlement of their
own: Shawomet (later Warwick) which he purchased from the Indians. There
the little settlement was under continued threat of aggression by their mighty
Massachusetts neighbor. While Gorton was not explicitly an anarchist, the little
town of Shawomet lived in an anarchist idyll in the years that it remained a
separate settlement. In the words of Gorton, for over five years the settlement
“lived peaceably together, desiring and endeavoring to do wrong to no man,
neither English nor Indian, ending all our differences in a neighborly and lov-
ing way of arbitration, mutually chosen amongst us.” But in 1648, Warwick
joined with the other three towns of Rhode Island to form the colony of the
“Providence Plantation.” From that time on Warwick was under a government,
even though this was a government far more democratic and libertarian than
existed anywhere else. As a respected leader of the new colony, now considered
“fit to live” in Rhode Island, Gorton managed to abolish imprisonment for debt,
lower the term of indentured service, and even to be the first to abolish slavery
in America, even though abolition turned out to be a dead letter.
After two decades of struggle against the aggressions of Massachusetts,
Roger Williams was finally able, in the mid-1650s, to win immunity for Rhode
Island, by gaining the protection of the victorious republican revolutionaries of
England. At the time of winning its protection from Massachusetts, Williams
described the colony as having “long drunk of the cup of as great liberties as
any people that we can hear of under the whole heaven.” “Sir,” Williams added,
writing to his libertarian English friend Sir Henry Vane, “we have not known
what an excise means; we have almost forgotten what tithes are, yea, or taxes
either, to church or commonwealth.”
Yet it was almost immediately after this triumph that Williams savagely
turned on the liberty of the colony he had founded. Why the shift? Several rea-
sons can be found: first, the inevitable corruptions of governmental power on
 Individualist Anarchism in the U.S.: Origins 441

even the most libertarian of rulers; and second, Williams’ impatience with those
even more libertarian than he. But a third reason has to do with the loss of liberty
in England. For two decades, Roger Williams had worked closely with the most
libertarian and individualistic groups in the revolutionary movement in England;
but now, just as the laissez-faire, individualist “left” seemed to have triumphed,
England suddenly moved precipitously rightward and stateward under the new
dictatorship of the Independent Oliver Cromwell. The shift away from liberty
in England was embodied in Cromwell’s brutal suppression of the Levellers,
the leaders of libertarianism in the Revolution. With the mother country sliding
away from liberty and into dictatorship, the aging Williams undoubtedly lost
much of his previously firm grip on libertarian principle.
Williams’ shift from liberty was first revealed in 1655, when he suddenly
imposed a system of compulsory military service on the people of Rhode Is-
land. It was in reaction to this violation of all the libertarian traditions of Rhode
Island that a vigorous opposition developed in the colony—an opposition that
eventually polarized into outright individualistic anarchism. Heading this move
toward anarchism was the bulk of the Baptists of Rhode Island. Led by the
Reverend Thomas Olney, former Baptist minister of Providence, and includ-
ing also John Field, John Throckmorton, the redoubtable William Harris, and
Williams’ own brother Robert. This group circulated a petition charging that
“it was blood guiltiness, and against the rule of the gospel to execute judgment
upon transgressors, against the private or pubic weal.” In short, any punishment
of transgressors and/or any bearing of arms was anti-Christian!
Williams’ response was to denounce the petition as causing “tumult and
disturbance.” The anarchists thereupon rose in rebellion against Williams’
government, but were put down by force of arms. Despite the failure of the
revolt, the 1655 elections of a few months later elected Thomas Olney as an
assistant to the inevitably reelected Williams, even though Olney himself had
led the uprising.
Williams proceeded to aggrandize statism still further. The central govern-
ment of the colony decided to bypass the home rule right of the individual
towns to finance the colony, and appointed central officials to levy general taxes
directly upon the people. Laws against “immorality” were also strengthened,
with corporal punishment to be levied for such crimes as “loose living.” The
anti-immorality laws were probably a part of an attempt by Williams to curry
favor with the puritanical Oliver Cromwell. Most ominously, after Cromwell
had ordered Rhode Island to punish “intestinal commotions,” the colony swiftly
passed a law against “ringleaders of factions” who were thereafter to be sent
to England for trial.
Baptist anarchism, however, continued to intensify in Rhode Island. One
of the new adherents was none other than Catherine Scott, a leading Baptist
preacher and the sister of Anne Hutchinson. In this way, Anne’s lone pioneering
in philosophical anarchism before her death had planted a seed that burst forth a
442 Anarchy and the Law

decade and a half later. Also adopting anarchism were Rebecca Throckmorton,
Robert West, and Ann Williams, wife of Robert. Finally, in March 1657, the
crackdown on freedom of speech and dissent arrived. Williams hauled these four
anarchist opponents into court, charging them with being “common opposers
of all authority.” After this act of intimidation, however, Williams relented and
withdrew the charges. But Williams had accomplished the singular purpose of
his repression: the frightened anarchist leaders lapsed into silence.
The formidable William Harris, however, could not be frightened so readily.
Harris circulated a manuscript to all the towns of Rhode Island, denouncing
all taxation and “all civil governments.” He called upon the people to “cry out,
No lords, No masters.” Harris predicted that the State, which he called “the
House of Saul,” would inevitably grow weaker and weaker, while the “House
of David” (namely Harris and his followers) would grow stronger and stronger.
Harris also condemned all punishments and prisons, all officials and legislative
assemblies.
William Harris was now hauled into court by the Williams administration.
He was charged with “open defiance under his hand against our Charter, all
our laws…Parliament, the Lord Protector [Cromwell] and all governments.”
Instead of quieting under repression as had Mrs. Scott and the others, Harris
swore that he would continue to maintain his anarchism “with his blood.”
Persistently refusing to recant, Harris reiterated his interpretation of Scripture,
namely that “he that can say it is his conscience ought not to yield subjection
to any human order amongst men.” The General Court found Harris guilty of
being “contemptuous and seditious,” and the evidence against Harris and his
son was sent to England in preparation for a trial for treason.
The treason trial never materialized, because by good fortune the ship carry-
ing the evidence to England was lost at sea. But Harris was finally sufficiently
cowed to abandon his anarchism. He turned instead to a life-long harassment
of the hated Roger Williams through endless litigation of land claims.2
Pennsylvania: The Holy Experiment
The third great example of anarchism in colonial America took place in
Pennsylvania. This was William Penn’s experiment for a Quaker colony that
would provide “an example [that] may be set up to the nations.” While reli-
gious liberty was guaranteed, and institutions were relatively libertarian, Penn
never meant his new colony, founded in1681 to be anarchistic or anything of
the like.3 Curiously, Pennsylvania fell into living and functioning anarchism
by happy accident. Lured by religious liberty and by cheap and abundant land,
settlers, largely Quaker, poured into Pennsylvania in large numbers. At the end
of eight years 12,000 people had settled in the new colony. The first touch of
anarchy came in the area of taxation. While low excise and export duties had
been levied by the Pennsylvania Assembly in 1683, Governor Penn set aside
all taxes for a year to encourage rapid settlement. The next year, when Penn
 Individualist Anarchism in the U.S.: Origins 443

wanted to levy taxes for his own personal income, a group of leaders of the
colony persuaded Penn to drop the tax, in return for them personally raising a
voluntary gift for his own use.
William Penn returned to England in the fall of 1684, convinced that he
had founded a stable and profitable colony. One of his major expectations was
the collection of “quitrents” from every settler. This was to be in continuing
payment for Penn’s claim as feudal landlord of the entire colony, as had been
granted by the Crown. But Penn, like the proprietors and feudal overlords in
the other colonies, found it almost impossible to collect these quitrents. He had
granted the populace a moratorium on quitrents until 1685, but the people insisted
on further postponements, and Penn’s threatened legal proceedings were without
success. Furthermore, the people of Pennsylvania continued to refuse to vote to
levy taxes. They even infringed upon the monopoly of lime production which
Penn had granted to himself, by stubbornly opening their own lime quarries. Wil-
liam Penn found that deprived of feudal or tax income, his deficits from ruling
Pennsylvania were large and his fortune was dissipating steadily. Freedom and a
taxless society had contaminated the colonists. As Penn complained, “the great
fault is, that those who are there, lose their authority one way or other in the
spirits of the people and then they can do little with their outward powers.”
When Penn returned to England, the governing of the colony fell on the
Council of Pennsylvania. Although Penn had appointed Thomas Lloyd, a Welsh
Quaker, to be president of the Council, the president had virtually no power,
and could not make any decisions of his own. The Council itself met very
infrequently, and no officials had the interim power to act. During these great
intervals, Pennsylvania had no government at all—as indicated by the fact that
neither quitrents nor taxes were being levied in the colony.
Why did the Council rarely meet? For one thing because the Councilors,
having little to do in that libertarian society and being unpaid, had their own
private business to attend to. The Councilors, according to the laws of the
colony, were supposed to receive a small stipend, but as was typical of this
anarchistic colony, it proved almost impossible to extract these funds from the
Pennsylvanian populace.
If the colonial government ceased to exist except for the infrequent days of
Council meetings, what of local governments? Did they provide a permanent
bureaucracy, a visible evidence of the continuing existence of the State appa-
ratus? The answer is no; for the local courts met only a few days a year, and
the county officials, too, were private citizens who devoted almost no time to
upholding the law. To cap the situation the Assembly passed no laws after 1686,
being in a continuing wrangle over the extent of its powers.
The colony of Pennsylvania continued in this de facto state of individual-
ist anarchism from the fall of 1684 to the end of 1688: four glorious years in
which no outcry arose from the happy citizens about “anarchy” or “chaos.” No
Pennsylvanian seemed to believe himself any the worse for wear.4
444 Anarchy and the Law

A bit of government came to Pennsylvania in 1685, in the person of Wil-

liam Dyer who was the appointed Collector of the King’s Customs. Despite
frantic appeals from William Penn to cooperate with Dyer, the Pennsylvanians
persisted in their anarchism by blithely and consistently evading the Royal
Navigation Laws.
It is no wonder that William Penn had the distinct impression that his “Holy
Experiment” had slipped away from him, had taken a new and bewildering turn.
Penn had launched a colony which he thought would quietly follow his dictates
and yield him a handsome feudal profit. By providing a prosperous haven of
refuge for Quakers, Penn expected in return the twin reward of wealth and
power. Instead, he found himself without either. Unable to collect revenue from
the free and independent-minded Pennsylvanians, he saw the colony slipping
quietly and gracefully into outright anarchism—into a peaceful, growing and
flourishing land of no taxes and virtually no State. Thereupon, Penn frantically
tried to force Pennsylvania back into the familiar mold of the Old Order.
In February 1687 William Penn appointed five Pennsylvanians as commission-
ers of state, assigned to “act in the execution of the laws, as if I myself were there
present.” The purpose of this new appointment was “that there may be a more
constant residence of the honorary and governing part of the government, for keep-
ing all things in good order.” Penn appointed the five commissioners from among
the leading citizens of the colony, and ordered them to enforce the laws.
Evidently the colonists were quite happy about their anarchism, and shrewdly
engaged in non-violent resistance toward the commission. In the first place,
news about the commission was delayed for months. Then protests poured into
Penn about the new commission. Penn soon realized that he had received no
communication from the supposedly governing body.
Unable to delay matters any longer, the reluctant commissioners of state
took office in February 1688. Three and one-half years of substantive anarchism
were over. The State was back in its Heaven; once more all was right in William
Penn’s world. Typically, the gloating Penn urged the commissioners to conceal
any differences among themselves, so as to deceive and overawe the public
“Show your virtues but conceal your infirmities; this will make you awful and
revered with ye people.” He further urged them to enforce the King’s duties
and to levy taxes to support the government.
The commissioners confined themselves to calling the Assembly into session
in the spring of 1688, and this time the Assembly did pass some laws, for the
first time in three years. The most important bills presented to the Assembly
by the Council and the Commissioners, however, was for the reimposition of
taxes; and here the Assembly, at the last minute, heroically defied Penn and the
government, and rejected the tax bills.
After a brief flurry of State activity in early 1688, therefore, the State was
found wanting, taxes were rejected and the colony lapsed quickly back into a
state of anarchism. Somehow, the commisioners, evidently exhausted by their
 Individualist Anarchism in the U.S.: Origins 445

task, failed to meet any further, and the Council fell back into its schedule of
rare meetings.
In desperation, Penn acted to appoint a Deputy-Governor to rule Pennsylvania
in his absence. Thomas Lloyd, president of the Council, refused the appointment,
and as we saw from the reluctance of the commissioners, no one in happily
anarchic Pennsylvania wanted to rule over others. At this point, Penn reached
outside the colony to appoint a tough old non-Pennsylvanian and non-Quaker,
the veteran Puritan soldier John Blackwell, to be Deputy-Governor of the colony.
In appointing him, Penn made clear to Blackwell that his primary task was to
collect Penn’s quitrents and his secondary task to reestablish a government.
If John Blackwell had any idea that the Quakers were a meek people, he
was in for a rude surprise. Blackwell was to find out quickly that a devotion
to peace, liberty, and individualism in no sense implied an attitude of passive
resignation to tyranny—quite the contrary.
Blackwell’s initial reception as Deputy-Governor was an augur of things to
come. Sending word ahead for someone to meet him upon his arrival in New
York, Blackwell landed there only to find no one to receive him. After waiting
in vain for three days, Blackwell went alone to the colony. When he arrived in
Philadelphia on December 17, 1688, he found no escort, no parade, no recep-
tion committee. After having ordered the Council to meet him upon his arrival,
Blackwell could find no trace of the Councilor of any other governmental of-
ficials. Instead he “found the Council room deserted and covered with dust and
scattered papers. The wheels of government had nearly stopped turning.”5
Only one surly escort appeared, and he refused to speak to his new Governor.
And when Blackwell arrived at the empty Council room, his only reception was
a group of boys of the neighborhood who gathered around to hoot and jeer.
The resourceful Pennsylvanians now embarked on a shrewd and determined
campaign of non-violent resistance to the attempt to reimpose a State on a happy
and stateless people. Thomas Lloyd, as Keeper of the Great Seal, insisted that
none of Blackwell’s orders or commissions were legally valid unless stamped
with the Great Seal. And Lloyd, as Keeper, somehow stubbornly refused to do
any stamping. Furthermore, David Lloyd, the clerk of the court and a distant
relative of Thomas, absolutely refused to turn over the documents of any cases
to Blackwell, even if the judges so ordered. For this act of defiance Blackwell
declared David Lloyd unfit to serve as court clerk and dismissed him. Thomas
promptly reappointed David by virtue of his power as Keeper of the Great
Seal. Moreover, out of a dozen justices of the peace named by Blackwell, four
bluntly refused to serve.
As the revolutionary situation intensified in Pennsylvania, the timid and short-
sighted began to betray the revolutionary libertarian cause. All of the Council
except two now sided with Blackwell. Leader of the pro-Blackwell clique was
Griffith Jones, who had allowed Blackwell to live at his home in Philadelphia.
Jones warned that “it is the king’s authority that is opposed and [it] looks to
446 Anarchy and the Law

me as if it were raising a force to rebel.” On the Council, only Arthur Cook and
Samuel Richardson continued to defy the Governor.
Blackwell was of course appalled at this situation. He wrote to Penn that
the colonists were suffering from excessive liberty. They had eaten more of the
“honey of your concessions than their stomachs can bear.” Blackwell managed
to force the Council to meet every week in early 1689, but he failed to force
them to agree to a permanent and continuing Councilor from every county in
Philadelphia. Arthur Cook led the successful resistance, pointing out that the
“people were not able to bear the charge of constant attendance.”
The climax in the struggle between Blackwell and the people of Pennsylvania
came in April 1689, when the Governor introduced proceedings for the impeach-
ment of Thomas Lloyd, charging him with high crimes and misdemeanors. In
his address, Blackwell trumpeted to his stunned listeners that William Penn’s
powers over the colony were absolute. The Council, on his theory, existed not
to represent the People but to be an instrument of Penn’s will concluded his
harangue by threatening to unsheathe and wield his sword against his insolent
and unruly opponents.
Given the choice between the old anarchism or absolute rule by John Black-
well, even the trimmers and waverers rallied behind Thomas Lloyd. After Black-
well had summarily dismissed Lloyd, Richardson and others from the Council,
the Council rebelled and demanded the right to approve of their own members.
With the entire Council now arrayed against him, the disheartened Blackwell
dissolved that body and sent his resignation to Penn. The Councilors, in turn,
bitterly protested to Penn against his deputy’s attempt to deprive them of their
liberties. As for Blackwell, he considered the Quakers agents of the Devil, as
foretold in the New Testament, men “who shall despise dominion and speak
evil of dignities.” These Quakers, Blackwell charged in horror, “have not the
principles of government amongst them, nor will they be informed…”
Faced with virtually unanimous and determined opposition from the colonists
Penn decided against Blackwell. For the rest of the year, Blackwell continued
formally in office, but he now lost all interest in exerting his rule. He simply
waited out his fading term of office. Penn in effect restored the old system by
designating the Council as a whole as his “deputy governor.” Replacing vinegar
with honey Penn apologized for his mistake in appointing Blackwell, and as-
serted that “I have thought fit…to throw all into your hands, that you may all
see the confidence I have in you.”
Pennsylvania soon slipped back into anarchism. The Council, again headed by
Thomas Lloyd, met but seldom. When a rare meeting was called it did virtually
nothing and told William Penn even less. The Assembly also met but rarely. And
when Secretary of the colony William Markham (a cousin of Penn, who had
been one of the hated Blackwell clique) submitted a petition for the levying of
taxes to provide some financial help for poor William Penn the Council totally
ignored his request. Furthermore, when Markham asked for a governmental
 Individualist Anarchism in the U.S.: Origins 447

organization of militia to provide for military defense against a (non-existent)

French and Indian threat, the Council preserved the anarchistic status of the
colony by blandly replying that any people who are interested could provide
for their defense at their own expense. Anarchism had returned in triumph to
Pennsylvania. The determined non-violent resistance of the colony had won a
glorious victory.
Penn, however, refused to allow the colony to continue in this anarchistic
state. In 1691 he insisted that a continuing Deputy-Governor be appointed, al-
though he would allow the colony to select a Governor. The colony, of course,
chose their resistance hero Thomas Lloyd, who assumed his new post in April.
After seven years of de facto anarchism (with the exception of a few months
of Council meetings and several months of a Blackwellite attempt to rule),
Pennsylvania now had a continuous, permanent head of government. “Archy”
was back, but its burden was still negligible, for the Assembly and the Council
still met but rarely and, above all, there was no taxation in the colony.
But the virus of power, the canker of archy, once let loose even a trifle, feeds
upon itself. Suddenly, as a bolt from the blue, the Council in April 1692 passed a
new bill for the reestablishment of taxation and the revered Governor Lloyd concurred
in this betrayal. The question now reverted to the popularly elected Assembly, always
the political stronghold of liberty in the province. Would they too succumb? The free-
men of Philadelphia and of Chester sent the Assembly petitions strongly protesting the
proposed imposition of taxation. They urged the Assembly to keep “their country free
from bondage and slavery, and avoiding such ill methods, as may render themselves
and posterity liable thereto.” Heeding these protests, the Assembly refused to
pass a tax law. De facto anarchy was still, though barely, alive.
Anarchy, however, was by now doomed, and governmental oppression,
even without taxes, quickly returned to Pennsylvania. This new outcropping
of statism was stimulated by opposition from a split-off from Quakerism
headed by the scholarly Scottish Quaker George Keith, the outstanding Quaker
minister of the middle colonies and the schoolmaster at Philadelphia. He was
religiously more conservative than the bulk of the Quakers, leaning as he did
toward Presbyterianism, but politically he was more individualistic. Stimulated
by the anarchism he found in Pennsylvania, Keith quickly concluded logi-
cally from the Quaker creed that all participation in government ran counter
to Quaker principles.
The return of Pennsylvania to government in the spring of 1691 especially
provoked George Keith. How, he asked, could a Quaker minister like Thomas
Lloyd, professing belief in non-violence, serve as a governmental magistrate at
all, since the essence of government was the use of violence? A telling point: in
short, Keith saw that Quaker non-violence logically implied, not only refusal
to bear arms, but complete individualistic anarchism.
Finally, in the fall of 1692, the Keithian “Christian Quaker” faction was
expelled from the body of Quakers. And to their shame, the main body of Quak-
448 Anarchy and the Law

ers, after having been persecuted widely for their religious principles, reacted
to a split in their own ranks in the very same way. Keithian pamphlets were
confiscated and the printers arrested; Keith himself was ordered to stop mak-
ing speeches and publishing pamphlets “that have a tendency to sedition, and
disturbance of the peace, as also to the subversion of the present government.”
Three Keithian leaders, including Keith himself, were indicted for writing a
book denouncing the magistrates, and the jury was packed with the friends of
the Quaker rulers. Despite Keith’s pleas that Quakers are duty-bound to settle
all their disputes peacefully and voluntarily, and to never go to court, the men
were convicted and fined (though the fines were never paid), and denied the
right to appeal to the Council or to the provisional court. Government was back
in Pennsylvania—with a vengeance.
Taxation would very soon be back too. William Penn, a close friend of the
recently deposed King James II of England, was in deep political trouble at
court. Angry at Penn, peeved at the anarchism and the pacifism of the colony,
and anxious to weld the northern colonies into a fighting force for attacking
the French in Canada, King William, in late 1692, named Benjamin Fletcher
Governor of both New York and Pennsylvania. Pennsylvania, no longer under
the proprietary of William Penn, was now a royal colony.
Governor Fletcher assumed the reins of government in April 1693. As in
other royal colonies, the Council was now appointed by the Governor. Fletcher
convened the Assembly in May, and was able to drive through a tax bill because
of his and the Council’s power to judge all the existing laws of Pennsylvania,
and of a threat to annex the colony to New York. Taxes had arrived at last; archy
was back in full force, and the glorious years of anarchism were gone.6
But a flurry of anarchism remained. In its 1694 session, the Pennsylvania
Assembly decided to allocate almost half its tax revenue to the personal use of
Thomas Lloyd and of William Markham, whom Fletcher had appointed as his
Deputy-Governor. Infuriated, Fletcher dissolved the Assembly. After a year of
imposition, taxes had again disappeared from Pennsylvania.
Disgusted, Fletcher lost interest in Pennsylvania, which after all these years
was decidedly a poor place for raising tax revenue. The colony returned to its old
quasi-anarchistic state, with no taxes and with a Council that did little and met
infrequently. But, meanwhile, William Penn was campaigning energetically for
returning to his feudal fiefdom. He abjectly promised the King that Pennsylvania
would be good: that it would levy taxes, raise a militia, and obey royal orders.
He promised to keep Fletcher’s laws and to keep Markham as Governor. As a
result the King restored Pennsylvania to the ownership of Penn in the summer
of 1694, and by the spring of the following year, Markham was installed as
Deputy-Governor under the restored Penn proprietary. But in the spring 1695
session, the now elected Council again refused to consider any tax bill.
The Assembly continued to refuse to pass a tax bill for another year and a
half. With the exception of one year, Pennsylvania thus remained in a quasi-
 Individualist Anarchism in the U.S.: Origins 449

anarchist state of taxlessness from its founding in 1681 until the fall of 1696:
fourteen glorious years. Governor Markham was only able to push through a
tax bill at the end of 1696 by a naked usurpation of the powers of government,
decreeing a new constitution of his own, including an appointed Council.
Markham was able to purchase the Assembly’s support by granting it the power
to initiate legislation and also to raise the property requirement for voting in the
towns, thus permitting the Quakers to exclude the largely non-Quaker urban
poor from having the vote.
A libertarian opposition now gathered, led by Arthur Cook (Thomas Lloyd
was now deceased). It included a coalition of former Keithians like Robert
Turner and old Blackwell henchmen like Griffith Jones. The opposition gath-
ered a mass petition in March 1697, signed by over a hundred, attacking the
imposed constitution, the increase in suffrage requirements in the towns, and
particularly the establishment of taxation. When the opposition Councilors and
Assemblymen, elected as a protest under a separate set of votes under the old
constitution, were summarily rejected, Robert Turner denounced this threat to
“our ancient rights, liberties and freedom.” Turner particularly denounced the
tax bill of 1696, and urged that the tax money seized from its rightful owners
“by that unwarranted, illegal and arbitrary act, be forthwith restored.”
But all this was to no avail. Pennsylvania soon slipped into the same archic
mould as all the other colonies. The “Holy Experiment” was over.
Bibliographical Note
None of this material has ever appeared in any work on the history of indi-
vidualist anarchism in the United States. James J. Martin’s excellent Men Against
the State (DeKalb, Ill: Adrian Allen Associates, 1953) does not go back before
the nineteenth century. In any case, Martin’s methodology prevents him from
acknowledging these men and women of the seventeenth century as anarchists,
since he believes Christianity and anarchism to be incompatible. Neither Rudolf
Rocker’s Pioneers of American Freedom (Los Angeles: Rocker Publications
Committee, 1949) nor Henry J. Silverman’s (ed.) American Radical Thought:
The Libertarian Tradition (Lexington, Mass.: D.C. Heath Co., 1970) touches
on the colonial period.
The only history of individualist anarchism that deals with the colonial period
is the pioneering work by Eunice Minette Schuster, Native American Anarchism
(1932, rep. by New York: De Capo Press 1970). Schuster deals briefly with the
religious views of Anne Hutchinson and the Quakers, but deals hardly at all
with their political ideas nor with the institutions that they put into practice.
Corinne Jacker’s The Black Flag of Anarchy (New York: Charles Scribner’s
Sons, 1968) only sharply condenses Schuster.
Notes
1. The lack of record-keeping in stateless societies—since only government
officials seem to have the time, energy and resources to devote to such activi-
450 Anarchy and the Law

ties—produce a tendency toward a governmental bias in the working methods of

historians.
2. One of the original band that had helped Williams found Providence.
3. 1657 was the year that the first Quaker landed in Rhode Island from England. It is no
surprise that within a decade this new individualistic sect had converted a majority
of Rhode Islanders, including most of the former Baptists and Hutchinsonians.
4. Particularly remarkable was the treatment of the Indians by Penn and the Quakers.
In striking contrast to the general treatment of Indians by white settlers the Quakers
insisted on voluntary purchase of Indian land. They also dealt with the Indians as
human beings, deserving of respect and dignity. As a consequence peace with the
Indians was maintained for well over half a century; no drop of Quaker blood was
shed by the Indians. Voltaire wrote rapturously of the Quaker achievement; for the
Indians, he declared, “it was truly a new sight to see a sovereign William Penn to
whom everyone said ‘thou’ and to whom one spoke with one’s hat on one’s head;
a government without priests, a people without arms, citizens as the magistrates,
and neighbors without jealousy.”
5. Edwin B. Bronner, William Penn’s “Holy Experiment” (New York: Temple Uni-
versity Publications, 1962), p.10a.
6. One reason for the failure of any Pennsylvania resistance to the new regime was
that the unity of the colonists had foundered on the rock of the Keithian schism.
One beneficial result of royal rule was the freeing of Keith and his friends. Keith,
however, returned to England, and with his departure the Keithian movement soon
fell apart. The final irony came in later years when Keith, now an ardent Anglican
minister in America, his former Quakerish individualist anarchism totally forgot-
ten, helped to impose a year’s imprisonment on grounds of sedition against the
established Anglican Church of New York, upon the Reverend Samuel Bownes of
Long Island.
 28
Anarchism and American Traditions
Voltairine de Cleyre
American traditions, begotten of religious rebellion, small self-sustaining
communities, isolated conditions, and hard pioneer life, grew during the coloni-
zation period of one hundred and seventy years from the settling of Jamestown
to the outburst of the Revolution. This was in fact the great constitution making
epoch, the period of charters guaranteeing more or less of liberty, the general
tendency of which is well described by Wm. Penn in speaking of the charter
for Pennsylvania: “I want to put it out of my power, or that of my successors,
to do mischief.”
The Revolution is the sudden and unified consciousness of these traditions,
their loud assertion, the blow dealt by their indomitable will against the counter
force of tyranny, which has never entirely recovered from the blow, but which
from then till now has gone on remolding and regrappling the instruments of
governmental power, that the Revolution sought to shape and hold as defenses
of liberty.
To the average American of today, the Revolution means the series of
battles fought by the patriot army with the armies of England. The millions
of school children who attend our public schools are taught to draw maps of
the siege of Boston and the siege of Yorktown, to know the general plan of the
several campaigns, to quote the number of prisoners of war surrendered with
Burgoyne; they are required to remember the date when Washington crossed
the Delaware on the ice; they are told to “Remember Paoli,” to repeat “Molly
Stark’s a widow,” to call General Wayne “Mad Anthony Wayne,” and to execrate
Benedict Arnold; they know that the Declaration of Independence was signed
on the Fourth of July, 1776, and the Treaty of Paris in 1783; and then they think
they have learned the Revolution…blessed be George Washington! They have
no idea why it should have been called a “revolution” instead of the “English
war,” or any similar title: it’s the name of it, that’s all. And name-worship, both
in child and man, has acquired such mastery of them, that the name “American
Revolution” is held sacred, though it means to them nothing more than successful
force, while the name “Revolution” applied to a further possibility, is a spectre
detested and abhorred. In neither case have they any idea of the content of the
word, save that of armed force. That has already happened, and long happened,
which Jefferson foresaw when he wrote:

451
452 Anarchy and the Law

The spirit of the times may alter, will alter. Our rulers will become corrupt, our people
careless. A single zealot may become persecutor, and better men be his victims. It
can never be too often repeated that the time for fixing every essential right, on a
legal basis, is while our rulers are honest, ourselves united. From the conclusion of
this war we shall be going down hill. It will not then be necessary to resort every
moment to the people for support. They will be forgotten, therefore, and their rights
disregarded. They will forget themselves in the sole faculty of making money, and will
never think of uniting to effect a due respect for their rights. The shackles, therefore,
which shall not be knocked off at the conclusion of this war, will be heavier and
heavier, till our rights shall revive or expire in a convulsion.
To the men of that time, who voiced the spirit of that time, the battles that they
fought were the least of the Revolution; they were the incidents of the hour, the
things they met and faced as part of the game they were playing; but the stake
they had in view, before, during, and after the war, the real Revolution, was a
change in political institutions which should make of government not a thing
apart, a superior power to stand over the people with a whip, but a serviceable
agent, responsible, economical, and trustworthy (but never so much trusted as
not to be continually watched), for the transaction of such business as was the
common concern, and to set the limits of the common concern at the line where
one man’s liberty would encroach upon another’s.
They thus took their starting point for deriving a minimum of government
upon the same sociological ground that the modern Anarchist derives the no-
government theory; viz., that equal liberty is the political ideal. The difference
lies in the belief, on the one hand, that the closest approximation to equal liberty
might be best secured by the rule of the majority in those matters involving
united action of any kind (which rule of the majority they thought it possible to
secure by a few simple arrangements for election), and, on the other hand, the
belief that majority rule is both impossible and undesirable; that any government,
no matter what its forms, will be manipulated by a very small minority, as the
development of the State and United States governments has strikingly proved;
that candidates will loudly profess allegiance to platforms before elections,
which as officials in power they will openly disregard, to do as they please; and
that even if the majority will could be imposed, it would also be subversive of
equal liberty, which may be best secured by leaving to the voluntary association
of those interested in the management of matters of common concern, without
coercion of the uninterested or the opposed.
Among the fundamental likenesses between the Revolutionary Republicans
and the Anarchists is the recognition that the little must precede the great; that
the local must be the basis of the general; that there can be a free federation
only when there are free communities to federate; that the spirit of the latter is
carried into the councils of the former, and a local tyranny may thus become an
instrument for general enslavement. Convinced of the supreme importance of
ridding the municipalities of the institutions of tyranny, the most strenuous ad-
vocates of independence, instead of spending their efforts mainly in the general
Congress, devoted themselves to their home localities, endeavoring to work out
 Anarchism and American Traditions 453

of the minds of their neighbors and fellow-colonists the institutions of entailed

property, of a State-Church, of a class-divided people, even the institution of
African slavery itself. Though largely unsuccessful, it is to the measure of suc-
cess they did achieve that we are indebted for such liberties as we do retain,
and not to the general government. They tried to inculcate local initiative and
independent action. The author of the Declaration of Independence, who in the
fall of ’76 declined a re-election to Congress in order to return to Virginia and
do his work in his own local assembly, in arranging there for public education
which he justly considered a matter of “common concern,” said his advocacy
of public schools was not with any “view to take its ordinary branches out of
the hands of private enterprise, which manages so much better the concerns
to which it is equal”; and in endeavoring to make clear the restrictions of the
Constitution upon the functions of the general government, he likewise said:
“Let the general government be reduced to foreign concerns only, and let our
affairs be disentangled from those of all other nations, except as to commerce,
which the merchants will manage the better the more they are left free to manage
for themselves, and the general government may be reduced to a very simple
organization, and a very inexpensive one; a few plain duties to be performed
by a few servants.” This then was the American tradition, that private enterprise
manages better all that to which it is equal. Anarchism declares that private
enterprise, whether individual or co-operative, is equal to all the undertakings
of society. And it quotes the particular two instances, Education and Commerce,
which the governments of the States and of the United States have undertaken
to manage and regulate, as the very two which in operation have done more to
destroy American freedom and equality, to warp and distort American tradition,
to make of government a mighty engine of tyranny, than any other cause save
the unforeseen developments of Manufacture.
It was the intention of the Revolutionists to establish a system of common
education, which should make the teaching of history one of its principal
branches; not with the intent of burdening the memories of our youth with the
dates of battles or the speeches of generals, nor to make of the Boston Tea Party
Indians the one sacrosanct mob in all history, to be revered but never on any ac-
count to be imitated, but with the intent that every American should know to what
conditions the masses of people had been brought by the operation of certain
institutions, by what means they had wrung out their liberties, and how those
liberties had again and again been filched from them by the use of governmental
force, fraud, and privilege. Not to breed security, laudation, complacent indo-
lence, passive acquiescence in the acts of a government protected by the label
“home-made,” but to beget a wakeful jealousy, a never-ending watchfulness of
rulers, a determination to squelch every attempt of those entrusted with power
to encroach upon the sphere of individual action—this was the prime motive of
the revolutionists in endeavoring to provide for common education.
“Confidence,” said the Revolutionists who adopted the Kentucky Resolu-
tions, “is everywhere the parent of despotism; free government is founded in
454 Anarchy and the Law

jealousy, not in confidence; it is jealousy, not confidence, which prescribes lim-

ited constitutions to bind down those whom we are obliged to trust with power;
our Constitution has accordingly fixed the limits to which, and no further, our
confidence may go…. In questions of power, let no more be heard of confidence
in man, but bind him down from mischief by the chains of the Constitution.”
These resolutions were especially applied to the passage of the Alien laws by
the monarchist party during John Adams’ administration, and were an indignant
call from the State of Kentucky to repudiate the right of the general govern-
ment to assume undelegated powers, for, said they, to accept these laws would
be “to be bound by laws made, not with our consent, but by others against our
consent—that is, to surrender the form of government we have chosen, and to
live under one deriving its powers from its own will, and not from our author-
ity.” Resolutions identical in spirit were also passed by Virginia, the following
month; in those days the States still considered themselves supreme, the general
government subordinate.
To inculcate this proud spirit of the supremacy of the people over their
governors was to be the purpose of public education! Pick up today any com-
mon school history, and see how much of this spirit you will find therein. On
the contrary, from cover to cover you will find nothing but the cheapest sort of
patriotism, the inculcation of the most unquestioning acquiescence in the deeds
of government, a lullaby of rest, security, confidence—the doctrine that the
Law can do no wrong, a Te Deum in praise of the continuous encroachments
of the powers of the general government upon the reserved rights of the States,
shameless falsification of all acts of rebellion, to put the government in the
right and the rebels in the wrong, pyrotechnic glorifications of union, power,
and force, and a complete ignoring of the essential liberties to maintain which
was the purpose of the Revolutionists. The anti-Anarchist law of post-McKinley
passage, a much worse law than the Alien and Sedition acts which roused the
wrath of Kentucky and Virginia to the point of threatened rebellion, is exalted
as a wise provision of our All-Seeing Father in Washington.
Such is the spirit of government-provided schools. Ask any child what he
knows about Shays’s rebellion, and he will answer, “Oh, some of the farmers
couldn’t pay their taxes, and Shays led a rebellion against the court-house at
Worcester, so they could burn up the deeds; and when Washington heard of it he
sent over an army quick and taught them a good lesson”—“And what was the
result of it?” “The result? Why—why—the result was—Oh yes, I remember—the
result was they saw the need of a strong federal government to collect the taxes
and pay the debts.” Ask if he knows what was said on the other side of the story,
ask if he knows that the men who had given their goods and their health and their
strength for the freeing of the country now found themselves cast into prison for
debt, sick, disabled, and poor, facing a new tyranny for the old; that their demand
was that the land should become the free communal possession of those who
wished to work it, not subject to tribute, and the child will answer “No.” Ask him
if he ever read Jefferson’s letter to Madison about it, in which he says
 Anarchism and American Traditions 455

Societies exist under three forms, sufficiently distinguishable. 1. Without govern-

ment, as among our Indians. 2. Under government wherein the will of every one has
a just influence; as is the case in England in a slight degree, and in our States in a
great one. 3. Under government of force, as is the case in all other monarchies, and
in most of the other republics. To have an idea of the curse of existence in these last,
they must be seen. It is a government of wolves over sheep. It is a problem not clear
in my mind that the first condition is not the best. But I believe it to be inconsistent
with any great degree of population. The second state has a great deal of good in it….
It has its evils, too, the principal of which is the turbulence to which it is subject….
But even this evil is productive of good. It prevents the degeneracy of government,
and nourishes a general attention to public affairs. I hold that a little rebellion now
and then is a good thing.
Or to another correspondent: “God forbid that we should ever be twenty
years without such a rebellion!… What country can preserve its liberties if its
rulers are not warned from time to time that the people preserve the spirit of
resistance? Let them take up arms…. The tree of liberty must be refreshed from
time to time with the blood of patriots and tyrants. It is its natural manure.”
Ask any school child if he was ever taught that the author of the Declaration
of Independence, one of the great founders of the common school, said these
things, and he will look at you with open mouth and unbelieving eyes. Ask him
if he ever heard that the man who sounded the bugle note in the darkest hour
of the Crisis, who roused the courage of the soldiers when Washington saw
only mutiny and despair ahead, ask him if he knows that this man also wrote,
“Government at best is a necessary evil, at worst an intolerable one,” and if he
is a little better informed than the average he will answer, “Oh well, he was
an infidel!” Catechize him about the merits of the Constitution which he has
learned to repeat like a poll-parrot, and you will find his chief conception is not
of the powers withheld from Congress, but of the powers granted.
Such are the fruits of government schools. We, the Anarchists, point to them
and say: If the believers in liberty wish the principles of liberty taught, let them
never intrust that instruction to any government; for the nature of government is
to become a thing apart, an institution existing for its own sake, preying upon
the people, and teaching whatever will tend to keep it secure in its seat. As the
fathers said of the governments of Europe, so say we of this government also after
a century and a quarter of independence: “The blood of the people has become
its inheritance, and those who fatten on it will not relinquish it easily.”
Public education, having to do with the intellect and spirit of a people, is
probably the most subtle and far-reaching engine for molding the course of a
nation; but commerce, dealing as it does with material things and producing
immediate effects, was the force that bore down soonest upon the paper barri-
ers of constitutional restriction, and shaped the government to its requirements.
Here, indeed, we arrive at the point where we, looking over the hundred and
twenty-five years of independence can see that the simple government conceived
by the Revolutionary Republicans was a foredoomed failure. It was so because
of (1) the essence of government itself; (2) the essence of human nature; (3)
the essence of Commerce and Manufacture.
456 Anarchy and the Law

Of the essence of government, I have already said, it is a thing apart, devel-

oping its own interests at the expense of what opposes it; all attempts to make
it anything else fail. In this Anarchists agree with the traditional enemies of
the Revolution, the monarchists, federalists, strong government believers, the
Roosevelts of to-day, the Jays, Marshalls, and Hamiltons of then—that Ham-
ilton, who, as Secretary of the Treasury, devised a financial system of which
we are the unlucky heritors, and whose objects were twofold: To puzzle the
people and make public finance obscure to those that paid for it; to serve as a
machine for corrupting the legislatures; “for he avowed the opinion that man
could be governed by two motives only, force or interest;” force being then
out of the question, he laid hold of interest, the greed of the legislators, to set
going an association of persons having an entirely separate welfare from the
welfare of their electors, bound together by mutual corruption and mutual desire
for plunder. The Anarchist agrees that Hamilton was logical, and understood
the core of government; the difference is, that while strong governmentalists
believe this is necessary and desirable, we choose the opposite conclusion, NO
GOVERNMENT WHATEVER.
As to the essence of human nature, what our national experience has made
plain is this, that to remain in a continually exalted moral condition is not hu-
man nature. That has happened which was prophesied: we have gone down
hill from the Revolution until now; we are absorbed in “mere money getting.”
The desire for material ease long ago vanquished the spirit of ’76. What was
that spirit? The spirit that animated the people of Virginia, of the Carolinas, of
Massachusetts, of New York, when they refused to import goods from England;
when they preferred (and stood by it) to wear coarse homespun cloth, to drink
the brew of their own growths, to fit their appetites to the home supply, rather
than submit to the taxation of the imperial ministry. Even within the lifetime of
the Revolutionists the spirit decayed. The love of material ease has been, in the
mass of men and permanently speaking, always greater than the love of liberty.
Nine hundred and ninety-nine women out of a thousand are more interested in
the cut of a dress than in the independence of their sex; nine hundred and ninety-
nine men out of a thousand are more interested in drinking a glass of beer than
in questioning the tax that is laid on it; how many children are not willing to
trade the liberty to play for the promise of a new cap or a new dress? This it is
which begets the complicated mechanism of society; this it is which, by multi-
plying the concerns of government, multiplies the strength of government and
the corresponding weakness of the people; this it is which begets indifference
to public concern, thus making the corruption of government easy.
As to the essence of Commerce and Manufacture, it is this: to establish bonds
between every corner of the earth’s surface and every other corner, to multiply
the needs of mankind, and the desire for material possession and enjoyment.
The American tradition was the isolation of the States as far as possible. Said
they: We have won our liberties by hard sacrifice and struggle unto death. We
wish now to be let alone and to let others alone, that our principles may have
 Anarchism and American Traditions 457

time for trial; that we may become accustomed to the exercise of our rights;
that we may be kept free from the contaminating influence of European gauds,
pagents, distinctions. So richly did they esteem the absence of these that they
could in all fervor write: “We shall see multiplied instances of Europeans coming
to America, but no man living will ever see an instance of an American removing
to settle in Europe, and continuing there.” Alas! In less than a hundred years
the highest aim of a “Daughter of the Revolution” was, and is, to buy a castle,
a title, and a rotten lord, with the money wrung from American servitude! And
the commercial interests of America are seeking a world-empire!
In the earlier days of the revolt and subsequent independence, it appeared
that the “manifest destiny” of America was to be an agricultural people, ex-
changing food stuffs and raw materials for manufactured articles. And in those
days it was written: “We shall be virtuous as long as agriculture is our principal
object, which will be the case as long as there remain vacant lands in any part of
America. When we get piled upon one another in large cities, as in Europe, we
shall become corrupt as in Europe, and go to eating one another as they do there.”
Which we are doing, because of the inevitable development of Commerce and
Manufacture, and the concomitant development of strong government. And the
parallel prophecy is likewise fulfilled: “If ever this vast country is brought under
a single government, it will be one of the most extensive corruption, indifferent
and incapable of a wholesome care over so wide a spread of surface.” There is
not upon the face of the earth to-day a government so utterly and shamelessly
corrupt as that of the United States of America. There are others more cruel,
more tyrannical, more devastating; there is none so utterly venal.
And yet even in the very days of the prophets, even with their own consent,
the first concession to this later tyranny was made. It was made when the
Constitution was made; and the Constitution was made chiefly because of the
demands of Commerce. Thus it was at the outset a merchant’s machine, which
the other interests of the country, the land and labor interests, even then fore-
boded would destroy their liberties. In vain their jealousy of its central power
made them enact the first twelve amendments. In vain they endeavored to set
bounds over which the federal power dare not trench. In vain they enacted into
general law the freedom of speech, of the press, of assemblage and petition.
All of these things we see ridden rough-shod upon every day, and have so seen
with more or less intermission since the beginning of the nineteenth century.
At this day, every police lieutenant considers himself, and rightly so, as more
powerful than the General Law of the Union; and that one who told Robert
Hunter that he held in his fist something stronger than the Constitution, was
perfectly correct. The right of assemblage is an American tradition which has
gone out of fashion; the police club is now the mode. And it is so in virtue of
the people’s indifference to liberty, and the steady progress of constitutional
interpretation towards the substance of imperial government.
It is an American tradition that a standing army is a standing menace to
liberty; in Jefferson’s presidency the army was reduced to 3,000 men. It is
458 Anarchy and the Law

American tradition that we keep out of the affairs of other nations. It is Ameri-
can practice that we meddle with the affairs of everybody else from the West
to the East Indies, from Russia to Japan; and to do it we have a standing army
of 83,251 men.
It is American tradition that the financial affairs of a nation should be trans-
acted on the same principles of simple honesty that an individual conducts his
own business; viz., that debt is a bad thing, and a man’s first surplus earnings
should be applied to his debts; that offices and office-holders should be few. It
is American practice that the general government should always have millions
of debt, even if a panic or a war has to be forced to prevent its being paid off;
and as to the application of its income, office-holders come first. And within
the last administration it is reported that 99,000 offices have been created at an
annual expense of $63,000,000. Shades of Jefferson! “How are vacancies to be
obtained? Those by deaths are few; by resignation none.” Roosevelt cuts the
knot by making 99,000 new ones! And few will die—and none resign. They
will beget sons and daughters, and Taft will have to create 99,000 more! Verily,
a simple and a serviceable thing is our general government.
It is American tradition that the judiciary shall act as a check upon the
impetuosity of Legislatures, should these attempt to pass the bounds of con-
stitutional limitation. It is American practice that the Judiciary justifies every
law which trenches on the liberties of the people and nullifies every act of the
Legislature by which the people seek to regain some measure of their freedom.
Again, in the words of Jefferson: “The Constitution is a mere thing of wax in
the hands of the Judiciary, which they may twist and shape in any form they
please.” Truly, if the men who fought the good fight for the triumph of simple,
honest, free life in that day, were now to look upon the scene of their labors,
they would cry out together with him who said: “I regret that I am now to die
in the belief that the useless sacrifice of themselves by the generation of ’76 to
acquire self-government and happiness to their country, is to be thrown away by
the unwise and unworthy passions of their sons, and that my only consolation
is to be that I shall not live to see it.”
And now, what has Anarchism to say to all this, this bankruptcy of re-
publicanism, this modern empire that has grown up on the ruins of our early
freedom? We say this, that the sin our fathers sinned was that they did not trust
liberty wholly. They thought it possible to compromise between liberty and
government, believing the latter to be “a necessary evil,” and the moment the
compromise was made, the whole misbegotten monster of our present tyranny
began to grow. Instruments which are set up to safeguard rights become the
very whip with which the free are struck.
Anarchism says, Make no laws whatever concerning speech, and speech will
be free; so soon as you make a declaration on paper that speech shall be free,
you will have a hundred lawyers proving that “freedom does not mean abuse,
nor liberty license”; and they will define and define freedom out of existence.
Let the guarantee of free speech be in every man’s determination to use it, and
 Anarchism and American Traditions 459

we shall have no need of paper declarations. On the other hand, so long as

the people do not care to exercise their freedom, those who wish to tyrannize
will do so; for tyrants are active and ardent, and will devote themselves in the
name of any number of gods, religious and otherwise, to put shackles upon
sleeping men.
The problem then becomes, Is it possible to stir men from their indiffer-
ence? We have said that the spirit of liberty was nurtured by colonial life; that
the elements of colonial life were the desire for sectarian independence, and
the jealous watchfulness incident thereto; the isolation of pioneer communities
which threw each individual strongly on his own resources, and thus developed
all-around men, yet at the same time made very strong such social bonds as did
exist—and, lastly, the comparative simplicity of small communities.
All this has mostly disappeared. As to sectarianism, it is only by dint of an
occasional idiotic persecution that a sect becomes interesting; in the absence of
this, outlandish sects play the fool’s role, are anything but heroic, and have little
to do with either the name or the substance of liberty. The old colonial religious
parties have gradually become the “pillars of society,” their animosities have
died out, their offensive peculiarities have been effaced, they are as like one
another as beans in a pod, they build churches and—sleep in them.
As to our communities, they are hopelessly and helplessly interdependent,
as we ourselves are, save that continuously diminishing proportion engaged
in all around farming; and even these are slaves to mortgages. For our cities,
probably there is not one that is provisioned to last a week, and certainly there
is none which would not be bankrupt with despair at the proposition that it
produce its own food. In response to this condition and its correlative political
tyranny, Anarchism affirms the economy of self-sustenance, the disintegration
of the great communities, the use of the earth.
I am not ready to say that I see clearly that this will take place; but I see clearly
that this must take place if ever again men are to be free. I am so well satisfied
that the mass of mankind prefer material possessions to liberty, that I have no
hope that they will ever, by means of intellectual or moral stirrings merely,
throw off the yoke of oppression fastened on them by the present economic
system, to institute free societies. My only hope is in the blind development of
the economic system and political oppression itself. The great characteristic
looming factor in this gigantic power is Manufacture. The tendency of each
nation is to become more and more a manufacturing one, an exporter of fabrics,
not an importer. If this tendency follows its own logic, it must eventually circle
round to each community producing for itself. What then will become of the
surplus product when the manufacturer shall have no foreign market? Why,
then mankind must face the dilemma of sitting down and dying in the midst of
it, or confiscating the goods.
Indeed, we are partially facing this problem even now; and so far we are
sitting down and dying. I opine, however, that men will not do it forever; and
when once by an act of general expropriation they have overcome the rever-
460 Anarchy and the Law

ence and fear of property, and their awe of government, they may waken to the
consciousness that things are to be used, and therefore men are greater than
things. This may rouse the spirit of liberty.
If, on the other hand, the tendency of invention to simplify, enabling the
advantages of machinery to be combined with smaller aggregations of work-
ers, shall also follow its own logic, the great manufacturing plants will break
up, population will go after the fragments, and there will be seen not indeed
the hard, self-sustaining, isolated pioneer communities of early America, but
thousands of small communities stretching along the lines of transportation,
each producing very largely for its own needs, able to rely upon itself, and
therefore able to be independent. For the same rule holds good for societies as
for individuals—those may be free who are able to make their own living.
In regard to the breaking up of that vilest creation of tyranny, the standing
army and navy, it is clear that so long as men desire to fight, they will have armed
force in one form or another. Our fathers thought they had guarded against a
standing army by providing for the voluntary militia. In our day we have lived
to see this militia declared part of the regular military force of the United States,
and subject to the same demands as the regulars. Within another generation we
shall probably see its members in the regular pay of the general government.
Since any embodiment of the fighting spirit, any military organization, inevitably
follows the same line of centralization, the logic of Anarchism is that the least
objectionable form of armed force is that which springs up voluntarily, like
the minute-men of Massachusetts, and disbands as soon as the occasion which
called it into existence is past: that the really desirable thing is that all men—not
Americans only—should be at peace; and that to reach this, all peaceful persons
should withdraw their support from the army, and require that all who make
war shall do so at their own cost and risk; that neither pay nor pensions are to
be provided for those who choose to make man-killing a trade.
As to the American tradition of non-meddling, Anarchism asks that it be car-
ried down to the individual himself. It demands no jealous barrier of isolation;
it knows that such isolation is undesirable and impossible; but it teaches that
by all men’s strictly minding their own business, a fluid society, freely adapting
itself to mutual needs, wherein all the world shall belong to all men, as much
as each has need or desire, will result.
And when Modern Revolution has thus been carried to the heart of the
whole world—if it ever shall be, as I hope it will—then may we hope to see a
resurrection of that proud spirit of our fathers which put the simple dignity of
Man above the gauds of wealth and class, and held that to be an American was
greater than to be a king.
In that day there shall be neither kings nor Americans—only Men; over the
whole earth, MEN.
 29
Civil Government: Its Origin, Mission, and
Destiny, and the Christian’s Relation to It
(excerpt)
David Lipscomb
The civil power is founded on force, lives by it and it is its only weapon
of offence or defence. Christians enter civil government, drink into its spirit,
and carry that spirit with them into the church. All force in religious affairs
is persecution. This spirit of force is antagonistic to the spirit of Christ. They
cannot harmonize. They cannot dwell in the same bosom. “No man can serve
two masters,” or cherish two antagonistic spirits. The result of it is, that the
spirit of Christ, the spirit of self-denial, of self-sacrifice, the forbearance and
long suffering, the doing good for evil, so fully manifested in the life of and
so fully taught by Jesus Christ and the apostles, are almost unknown to the
Christian profession of this day. The sermon on the Mount, embraced in the
fifth, sixth and seventh chapters of Matthew, certainly contain the living and
essential principles of the religion the Savior came to establish, those which
must pervade and control the hearts and lives of men, without which no man
can be a Christian. They are enforced by such expressions as these.
Love your enemies, bless them that curse you, do good to them that hate you, and
pray for them that despitefully use you, and persecute you; that ye may be the children
of your Father which is in Heaven.
And again,
Whosoever heareth these sayings of mine, and doeth them, I will liken him unto a
wise man, which built his house upon a rock… Whoever heareth these sayings of
mine, and doeth them not shall be likened unto a foolish man etc., which built his
house upon the sand.
These sayings of mine, refer to the sayings presented in this sermon of Jesus,
which constitute the laws that must control the lives of his subjects, and must
rule in his kingdom. They are given as principles to be practices, without which
we are not and cannot be children of our Father which is in heaven. Yet the
religious world of to-day both Protestant and Romish, believes these principles
not applicable at the present day. The laws and the spirit of civil government are
more looked to, to guide the church and regulate the lives of its members, than
the teaching of the Bible. Indeed it is usually regarded that the church member

461
462 Anarchy and the Law

may do any thing the civil law allows and what it allows is not to be prohibited
in the church. This comes from the members of the church going into the civil
governments, imbibing their spirit, adopting their morality and bringing them
both into the church of Christ. A man cannot cherish in his heart two spirits,
one to rule his religious life, the other to rule his civil life. He cannot adopt two
standards of morality, one for his church life, the other for his political life.
A man cannot serve two masters, he will love the one, and hate the other, or he will
cleave to one and despise the other.
That the political affairs, and the standard of general morality may be elevated
by the affiliation, is possible, but the true spiritual life is destroyed by the
affiliation. The antagonism between the principles laid down by Christ and
those of civil government is so marked that in history, the statement, that they
regulate their conduct by the sermon on the Mount, is equal to saying they take
no part in civil affairs. The only people who claim to make the “sermon upon
the Mount” their rule of life, are the small religious bodies, who take no part in
civil affairs. Some bodies of Quakers, Mennonites, Nazarenes and Dunkards,
and individuals among the larger brotherhoods.
But who can study the New Testament, the life of Christ, his teaching through
his mission, the admonitions of the Holy Spirit speaking through the apostles
and for a moment doubt, that Christ specially gave this sermon to regulate the
hearts and lives of his followers. He gave it at the beginning of his ministry that
all might understand the life, to which they were specifically called. The apostle
Paul Romans xii: 19, reiterated the principles of this sermon on the Mount.
Dearly beloved avenge not yourselves, but rather give place unto wrath: for it is writ-
ten, Vengeance is mine, I will repay saith the Lord. Therefore if thine enemy hunger,
feed him; if he thirst give him drink, for in so doing thou shalt heap coals of fire
on his head. Be not overcome of evil, but overcome evil with good.” 1 Peter ii: 19,
“For this is thankworthy, if a man for conscience toward God endure grief, suffering
wrongfully. For what glory is it, if, when ye be buffeted for your faults ye shall take
it patiently? But if when ye do well, and suffer for it, ye take it patiently, this is ac-
ceptable with God. For even hereunto were called: because Christ also suffered for
us, leaving us an example that ye should follow his steps: Who did no sin, neither
was guile found in his mouth: Who, when he was reviled, reviled not again; when he
suffered, he threatened not; but committed himself to him that judgeth righteously:
Who his own self bare our sins in his own body on the tree, that we, being dead to
sins, should live unto righteousness: by whose stripes we were healed.
The spirit of Christ is driven out of the church and the spirit of the world takes
its abode in it by this affiliation.
So long as the idea prevails that it is allowable for Christians to enjoy the
honors and emoluments, and engage in the contests for worldly glory and honor
by managing the affairs of the civil or worldly governments, and yet enjoy the
blessings of God, in this world and in that which is to come, so long will the
young seek the service of the human rather than that of the Divine. While they
are taught they can satisfy the flesh and still enjoy the blessings of spiritual life,
 Civil Government (excerpt) 463

they will follow the way of the flesh. Along with displacing the spirit of Christ,
in the church, with the spirit of the world, the world absorbs the talent, the time
the means that belong to the church, and leaves the church devoid of the spirit
of Christ, stripped of its strength and talent and left without means.
Various difficulties are presented to the position here taken. Such as, “If
Christian give the government up to sinners and those rejecting God, what will
become of the world? What will become of Christians? If all were converted
to the Christian religion, we would still need civil government. How would the
mails be carried? How could the affairs of Railroads, Manufactures, and the
many large corporations needful to the well-being of society be managed?”
To this last difficulty, it is responded, when all are converted to Christ, all
dominion and power and rule on earth will be put down and destroyed, and
the rule and the dominion and the kingdom under the whole heavens will be
delivered up to God, the Father, that he may be all and in all. To the wisdom,
and power and management, of him who created and rules the heavens we will
cheerfully commit the adjustment and management of all things pertaining to
the world, to man, and his well-being here or hereafter. And no true believer
in God can have any apprehension of failure in ought that pertains to man’s
well-being here or hereafter.
God was an immediate and ever present ruler to man as he was first created
and placed in Eden. Man refused to obey God, chose the devil as his ruler, and
with himself carried the world into a state of rebellion against God. God ceased
to be an immediate and present guide to man. “The voice of the Lord God”
ceased to walk with, and guide him in his paths. The spirit of God forsook man
and ceased to inspire his heart. Man’s sin and rebellion separated between man
and his God. But when man shall cease to sin—when man shall lay down the
arms of his rebellion, when man shall come out of the earthly government of
God, when “all rule and all authority and all power shall have been put down,”
then the kingdom shall be delivered up to God the Father, and he will be our
God, the God of the human family, and of this earth—and shall again dwell
there and they will be his children and walk under his guidance and direction.
He will be all and in all.
As to the other objections, while God does not rule in, as a present guide to
man in this world while in rebellion against him, he does overrule the affairs
of earth so as that no evil shall come to him that trusts in the Lord, so that “all
things shall work together for good to them that love the Lord,” so that he “will
keep him in perfect peace whose heart is stayed on the Lord, because he trusted
in him.” Isa. xxvi: 3, so that “when a man pleases the Lord, he maketh even his
enemies to be at peace with him.” Prov. xvi: 7. So that “He maketh the wrath
of man praise him, and the remainder of wrath he will restrain.” Ps. lxxvi: 10.
Then again Christian men, as has been heretofore presented, cannot be governed
by Christian principles in civil government. Civil government rests on force
as its foundation. The weapons of the Christian are not carnal, but spiritual. A
464 Anarchy and the Law

ruler or an officer in civil government cannot carry into the execution of these
laws, the principles of the religion of Christ. To forgive his brother seventy
times seven, on repentance, would destroy all authority in civil affairs. It is
certainly true no Christian should go where he cannot carry the practice of the
principles of the religion of Christ. The Savior presents the essential antagonism
when he says, “ye know that the princes of the Gentiles exercise dominion over
them (their subjects) and they that are great exercise authority upon them. But
it shall not be so among you, but whosoever will be great among you, let him
be your minister and whosoever would be chief let him be your servant: even
as the son of man came not to be ministered unto, but to minister and to give
his life a ransom for many.”
A man cannot be a follower of Christ and a ruler in the governments of
earth. Again, Christian men out of place are as liable to do wrong as others. The
protection and security of the Christian, is, that while he is doing his duty as a
Christian, in the walks God has appointed him, “God will not permit him to be
tempted above that he is able to bear.” But when he steps outside of the paths
God has marked out for him, he loses this protection. Hence we find religious
men often falling victims to the snares and temptations of the world as others.
It is because they step outside of the limits of the Christian walk, and so forfeit
the protection of God.
Again, the Christian spirit is a frank, open, unsuspecting one. A man that
is suspicious of all, looking for evil in every one, is a poor Christian. An un-
suspecting nature in political affairs will be imposed upon, taken advantage of
and will be frequently used to carry out the aims and purposes of designing and
corrupt partizans. There is but little doubt that Garfield’s frank, confiding and
unsuspecting nature, led him without evil intent, into connection with the Credit
Mobilier, which was a reproach to him. The very nature that was an ornament
to the Christian so laid him open to the designs of the designing and corrupt,
that some of his nearest friends think it was to the credit of his administration
that he died early. While we have Garfield up as an example, it is well-known
that in early life he was a preacher. In later life he turned aside to politics, and
war, both essential to the conduct of civil government.
After his experience through the war, it is said that he always refused to
preach or to preside at the Lord’s table. The reason was, his hands were stained
in the blood of his fellowmen, and inasmuch as David was prohibited building
in the material earthly temple on account of his hands being stained in blood,
he could not take an active part in leading the hosts, or building up the spiritual
temple of God. This shows a commendably sensitive conscience. But every
man who voted to bring on or perpetuate that war, was just as guilty before
God as the men who actively participated in it. Their souls were just as much
stained in blood.1 He heard that God’s agent heard God. He that gave a cup of
cold water to the least disciple of Christ in the name of Christ did it to Christ
himself. This establishes fully what we do through another or cause another to
do, we ourselves do and are responsible for.
 Civil Government (excerpt) 465

Then again, he who maintains and supports an institution is responsible for

the general results of that institution. The general and necessary results of human
government are war and the use of carnal weapons to maintain the government.
Every one then that actively supports human government, is just as responsible
for the wars and bloodshed that grow out of its existence and maintenance as
are the men who actively wage and carry on the war. Then every one who voted
to bring about and carry on the war was just as much unfitted for service in the
kingdom of God as was Gen. Garfield or any other soldier in the army. The same
is true of every man that supports and maintains human government.
But religious men fail to make the best and fairest rulers in human government
from other causes. The religious sentiment in man is the strongest, deepest, most
permanent element of his nature. When this element is developed and cultivated
and fully aroused it is uncompromising and unyielding. God never intended it
should be aroused to use carnal weapons. Aroused and guided by the principles
of love—and directed by the word of God, it is unyielding in self-sacrificing
devotion to benefit and save man. But warped and perverted by the principles that
control in civil governments and using the sword—it is implacable, unmerciful.
In other words men with their religious natures developed, then perverted by
personal ambition, as politicians, rulers and warriors, are the most intolerant,
implacable and cruel of rulers.
The worst despots of earth have been those that have commingled religious
fervor with the ambitions and strifes of political rulers. The bloodiest paths, the
most cruel desolation made in our country during the late war, were made by
preacher-warriors. The most intolerant of rulers—those slowest to end the bit-
terness and strifes of the war—are the religious bodies. The religious element in
man is the permanent uncompromising enduring element of his nature. And the
very qualities that make him a cruel and unrelenting despot with carnal weapons
in his hand, make him the self-sacrificing, devoted servant of God, willing to
endure all things to save his enemies when clothed with spiritual weapons. Saul
the vindictive persecutor, haling men and women to prison, and giving his voice
for their death, with carnal weapons in his hand, and the Apostle Paul dying
daily and willing himself to be accursed to save his brethren the Jews, shows
how differently the same person under the differing conditions, acts. This shows
that religion and devotion are only good in the path and for the ends for which
God has fitted them. They are not in place ruling with the sword.
Religious influence exerts a moralizing influence in society that benefits it
and helps even civil government, but religion exerts its most benign effects as
it influences persons and communities to adopt in their lives the precepts and
principles of the religion of Christ Jesus and so leads the world to a higher
standard of morality and virtue.
Officers and Employees
There are requirements sometimes made of persons by the government that
they have difficulty in determining whether they violate the law of God in do-
466 Anarchy and the Law

ing them. Among them is jury service. The rule determined in the preceding
pages, is, the Christian should take no part in the administration or support of
the government. Jury service is a part of its administration, and frequently lays
on the juryman the duty of determining the life or death of his fellowman, and
leads into affiliation with the agencies of government. Some anxious for office
say, a postmaster is not a political office. Hence he may hold it, that clerkship
in the executive offices are not political—but they are part of the essential
elements of the civil administration, and make the holder a supporter of the
government. Yet there are employments sometimes given in carrying on govern-
ment operations that a Christian it seems to me might perform. The government
builds a house. House building is no part of the administration of government.
A mason or carpenter might do work on this building without other relation
to the government than that of employee to the government. The government
wishes a school taught. Teaching school is no part of the administration of the
government. It seems to me a Christian might teach a government school as
an employe without compromising his position. As a rule he may work as an
employe of the government but may not be an officer or supporter. As a rule the
government exacts an oath of its officers, to support the government but it does
not of its employees. Its employes in building, in school teaching, in survey-
ing, are frequently foreigners who do not owe allegiance to the government, in
these a Christian it seems to me might work. This work constitutes no part of
the government administration and requires no affiliation with or obligation to
support the government.…
All which means that the Christians came into the church with their whole
hearts, and tolerated no divided fealty and service in its members. The service
of God, the conforming their lives to the teachings of God’s word, the building
up of his church, the spread of his kingdom, the teachings of his holy word
to the world, were the leading purposes and business of all Christians. To this
one end, all who came into the church devoted their talents, their time, their
means. Nothing counteracting this main work was tolerated. The man whose
calling was not in harmony with this great work of the church, must give up
that calling, or he could not be recognized as a member of the church of God.
The consecration of all the powers of mind, body and soul, to the service of
God on the part of every man, woman and child, was the rule of the church. A
sedulous guarding against dividing the fealty and service with other institutions,
and against the members remaining where they would imbibe a different spirit
to bring into the church, is manifest. They sought first and only the kingdom
of God and his righteousness. They were willing to sacrifice worldly honor,
riches and glory, to the advancement of this work. Their children were trained
for the service of God in the church.
When Christians thus consecrated themselves to the service of God and
rendered to him an undivided fealty, the word of the Lord multiplied greatly.
It ran and was glorified among men. Multitudes at home and abroad were
converted to Christ.
 Civil Government (excerpt) 467

The great weakness of the church to-day, is, when men are brought into the
church they are not consecrated to the service of God and the upbuilding of his
kingdom. The children of God devote more time, more talent to the service of
earthly kingdoms and institutions than they do to the church of God. What they
serve most they love best. They drink into the spirit of the earthly institutions and
bring that spirit into the church of God. They bring the habits of thought—the
reliance upon human wisdom, and devices and inventions of men—into the
church of God. They drive out the spirit of God, substitute human wisdom and
ways for the wisdom and power of God and in every way defile the church of
God and work its ruin and the shame of our holy religion.
Questions of Practical Morality Considered
Questions come up in the workings of society and before the voters of a
country that involve moral good to the community. Such are the questions re-
garding the restriction of the sale of intoxicants, the licensing of race courses
and gambling houses and places of licentiousness. It is strongly denied in such
cases that the government that restricts and prohibits sin can be of the devil, and
hence it is claimed a Christian should vote on all such questions of morality.
To the first, it is replied, the devil has always been quite willing to compromise
with Christians if he can induce them to divide their allegiance and to give the
greater service to the upbuilding of his kingdom. He offered this compromise
to the Savior when here on earth. He was quite willing the Savior should rule,
and doubtless in his own way, and make things as moral and respectable as he
desired them, if it only promoted the growth of his kingdom and extended and
supported his rule and dominion. This very proffer that the Master rejected, his
disciples accept and act upon in supporting human government.
The Holy Spirit warned Christians, that, false prophets would transform themselves
into prophets of God and the devil himself into an angel of light (2 Cor. xi: 13.)
There is no doubt the devil is willing to turn moral reformer and make the world
moral and respectable, if thereby his rule and authority are established and
extended. And it may be set down as a truth that all reformations that propose
to stop short of a full surrender of the soul, mind, and body up to God, are of
the devil.
To the claim that a Christian is bound to vote, when he has the privilege, for
that which promotes morality, and to fail to vote for the restriction and suppres-
sion of evil is to vote for it, we have determined that, to vote or use the civil
power is to use force and carnal weapons. Christians cannot use these. To do
so is to do evil that good may come. This is specially forbidden to Christians.
To do so is to fight God’s battles with the weapons of the evil one. To do so is
to distrust God. The effective way for Christians to promote morality in a com-
munity, is, to stand aloof from the political strifes and conflicts, and maintain
a pure and true faith in God, which is the only basis of true morality, and is as
a leaven in society, to keep alive an active sense of right. To go into political
strife is to admit the leaven of evil into the church. For the church to remain
468 Anarchy and the Law

in the world and yet keep itself free from the spirit of the world, is to keep
alive an active leaven of morality in the world. If that leaven loses its leaven,
wherewith shall the world be leavened? or if the salt lose its savor wherewith
shall the earth be salted or saved? God has told his children to use the spiritual
weapons, has warned them against appealing to the sword or force to maintain
his kingdom or to promote the honor of God and the good of man. When they
do as he directs them, and use his appointments, he is with them to fight their
battles for them and to give them the victory. When they turn from his appoint-
ments to the human kingdoms and their weapons, they turn from God, reject
his help, drive him out of the conflict and fight the battles for man’s deliverance
with their own strength and by their own wisdom.
Note
1. This statement was published in the WATCHMAN, Boston, Mass., soon after
Garfield’s death, after it was in type we learn through Elder F. D. Power, the preacher
in Washington city, that Garfield did after the war preside at the Lord’s table and
exhort his brethren, though he never entered the pulpit.
 30
No Treason: The Constitution of
No Authority (excerpt)
Lysander Spooner
I.
The Constitution has no inherent authority or obligation. It has no authority
or obligation at all, unless as a contract between man and man. And it does
not so much as even purport to be a contract between persons now existing.
It purports, at most, to be only a contract between persons living eighty years
ago. And it can be supposed to have been a contract then only between persons
who had already come to years of discretion, so as to be competent to make
reasonable and obligatory contracts. Furthermore, we know, historically, that
only a small portion even of the people then existing were consulted on the
subject, or asked, or permitted to express either their consent or dissent in any
formal manner. Those persons, if any, who did give their consent formally,
are all dead now. Most of them have been dead forty, fifty, sixty, or seventy
years. And the constitution, so far as it was their contract, died with them.
They had no natural power or right to make it obligatory upon their children.
It is not only plainly impossible, in the nature of things, that they could bind
their posterity, but they did not even attempt to bind them. That is to say, the
instrument does not purport to be an agreement between any body but “the
people” then existing; nor does it, either expressly or impliedly, assert any
right, power, or disposition, on their part, to bind anybody but themselves.
Let us see. Its language is:
We, the people of the United States [that is, the people then existing in the United
States], in order to form a more perfect union, insure domestic tranquillity, provide
for the common defense, promote the general welfare, and secure the blessings of
liberty to ourselves and our posterity, do ordain and establish this Constitution for
the United States of America.
It is plain, in the first place, that this language, as an agreement, purports
to be only what it at most really was, viz., a contract between the people then
existing; and, of necessity, binding, as a contract, only upon those then existing.
In the second place, the language neither expresses nor implies that they had
any right or power, to bind their “posterity” to live under it. It does not say that
their “posterity” will, shall, or must live under it. It only says, in effect, that
their hopes and motives in adopting it were that it might prove useful to their

469
470 Anarchy and the Law

posterity, as well as to themselves, by promoting their union, safety, tranquil-

lity, liberty, etc.
Suppose an agreement were entered into, in this form:
We, the people of Boston, agree to maintain a fort on Governor’s Island, to protect
ourselves and our posterity against invasion.
This agreement, as an agreement, would clearly bind nobody but the people
then existing. Secondly, it would assert no right, power, or disposition, on their
part, to compel their “posterity” to maintain such a fort. It would only indicate
that the supposed welfare of their posterity was one of the motives that induced
the original parties to enter into the agreement.
When a man says he is building a house for himself and his posterity, he does
not mean to be understood as saying that he has any thought of binding them,
nor is it to be inferred that he is so foolish as to imagine that he has any right or
power to bind them, to live in it. So far as they are concerned, he only means to
be understood as saying that his hopes and motives, in building it, are that they,
or at least some of them, may find it for their happiness to live in it.
So when a man says he is planting a tree for himself and his posterity, he
does not mean to be understood as saying that he has any thought of compel-
ling them, nor is it to be inferred that he is such a simpleton as to imagine that
he has any right or power to compel them, to eat the fruit. So far as they are
concerned, he only means to say that his hopes and motives, in planting the
tree, are that its fruit may be agreeable to them.
So it was with those who originally adopted the Constitution. Whatever may
have been their personal intentions, the legal meaning of their language, so far
as their “posterity” was concerned, simply was, that their hopes and motives,
in entering into the agreement, were that it might prove useful and acceptable
to their posterity; that it might promote their union, safety, tranquillity, and
welfare; and that it might tend “to secure to them the blessings of liberty.” The
language does not assert nor at all imply, any right, power, or disposition, on
the part of the original parties to the agreement, to compel their “posterity” to
live under it. If they had intended to bind their posterity to live under it, they
should have said that their objective was, not “to secure to them the blessings
of liberty,” but to make slaves of them; for if their “posterity” are bound to live
under it, they are nothing less than the slaves of their foolish, tyrannical, and
dead grandfathers.
It cannot be said that the Constitution formed “the people of the United
States,” for all time, into a corporation. It does not speak of “the people” as a
corporation, but as individuals. A corporation does not describe itself as “we,”
nor as “people,” nor as “ourselves.” Nor does a corporation, in legal language,
have any “posterity.” It supposes itself to have, and speaks of itself as having,
perpetual existence, as a single individuality.
Moreover, no body of men, existing at any one time, have the power to create
a perpetual corporation. A corporation can become practically perpetual only
 No Treason: The Constitution of No Authority (excerpt) 471

by the voluntary accession of new members, as the old ones die off. But for this
voluntary accession of new members, the corporation necessarily dies with the
death of those who originally composed it.
Legally speaking, therefore, there is, in the Constitution, nothing that pro-
fesses or attempts to bind the “posterity” of those who established it.
If, then, those who established the Constitution, had no power to bind, and
did not attempt to bind, their posterity, the question arises, whether their poster-
ity have bound themselves. If they have done so, they can have done so in only
one or both of these two ways, viz., by voting, and paying taxes.
II.
Let us consider these two matters, voting and tax paying, separately. And
first of voting.
All the voting that has ever taken place under the Constitution, has been
of such a kind that it not only did not pledge the whole people to support the
Constitution, but it did not even pledge any one of them to do so, as the fol-
lowing considerations show.
1. In the very nature of things, the act of voting could bind nobody but the
actual voters. But owing to the property qualifications required, it is probable
that, during the first twenty or thirty years under the Constitution, not more than
one-tenth, fifteenth, or perhaps twentieth of the whole population (black and
white, men, women, and minors) were permitted to vote. Consequently, so far as
voting was concerned, not more than one-tenth, fifteenth, or twentieth of those
then existing, could have incurred any obligation to support the Constitution.
At the present time, it is probable that not more than one-sixth of the whole
population are permitted to vote. Consequently, so far as voting is concerned,
the other five-sixths can have given no pledge that they will support the Con-
stitution.
2. Of the one-sixth that are permitted to vote, probably not more than two-
thirds (about one-ninth of the whole population) have usually voted. Many never
vote at all. Many vote only once in two, three, five, or ten years, in periods of
great excitement.
No one, by voting, can be said to pledge himself for any longer period than
that for which he votes. If, for example, I vote for an officer who is to hold his
office for only a year, I cannot be said to have thereby pledged myself to support
the government beyond that term. Therefore, on the ground of actual voting, it
probably cannot be said that more than one-ninth or one-eighth, of the whole
population are usually under any pledge to support the Constitution.
3. It cannot be said that, by voting, a man pledges himself to support the
Constitution, unless the act of voting be a perfectly voluntary one on his part.
Yet the act of voting cannot properly be called a voluntary one on the part of
any very large number of those who do vote. It is rather a measure of necessity
imposed upon them by others, than one of their own choice. On this point I
repeat what was said in a former number,1 viz.:
472 Anarchy and the Law

In truth, in the case of individuals, their actual voting is not to be taken as proof of
consent, even for the time being. On the contrary, it is to be considered that, without
his consent having even been asked a man finds himself environed by a government
that he cannot resist; a government that forces him to pay money, render service,
and forego the exercise of many of his natural rights, under peril of weighty punish-
ments. He sees, too, that other men practice this tyranny over him by the use of the
ballot. He sees further, that, if he will but use the ballot himself, he has some chance
of relieving himself from this tyranny of others, by subjecting them to his own. In
short, he finds himself, without his consent, so situated that, if he use the ballot, he
may become a master; if he does not use it, he must become a slave. And he has no
other alternative than these two. In self-defense, he attempts the former. His case is
analogous to that of a man who has been forced into battle, where he must either kill
others, or be killed himself. Because, to save his own life in battle, a man takes the
lives of his opponents, it is not to be inferred that the battle is one of his own choosing.
Neither in contests with the ballot—which is a mere substitute for a bullet—because,
as his only chance of self-preservation, a man uses a ballot, is it to be inferred that
the contest is one into which he voluntarily entered; that he voluntarily set up all his
own natural rights, as a stake against those of others, to be lost or won by the mere
power of numbers. On the contrary, it is to be considered that, in an exigency into
which he had been forced by others, and in which no other means of self-defense
offered, he, as a matter of necessity, used the only one that was left to him.
Doubtless the most miserable of men, under the most oppressive government in
the world, if allowed the ballot, would use it, if they could see any chance of thereby
meliorating their condition. But it would not, therefore, be a legitimate inference
that the government itself, that crushes them, was one which they had voluntarily
set up, or even consented to.
Therefore, a man’s voting under the Constitution of the United States, is not to be
taken as evidence that he ever freely assented to the Constitution, even for the time
being. Consequently we have no proof that any very large portion, even of the actual
voters of the United States, ever really and voluntarily consented to the Constitution,
even for the time being. Nor can we ever have such proof, until every man is left
perfectly free to consent, or not, without thereby subjecting himself or his property
to be disturbed or injured by others.
As we can have no legal knowledge as to who votes from choice, and who
from the necessity thus forced upon him, we can have no legal knowledge,
as to any particular individual, that he voted from choice; or, consequently,
that by voting, he consented, or pledged himself, to support the government.
Legally speaking, therefore, the act of voting utterly fails to pledge any one to
support the government. It utterly fails to prove that the government rests upon
the voluntary support of anybody. On general principles of law and reason, it
cannot be said that the government has any voluntary supporters at all, until it
can be distinctly shown who its voluntary supporters are.
4. As taxation is made compulsory on all, whether they vote or not, a large
proportion of those who vote, no doubt do so to prevent their own money be-
ing used against themselves; when, in fact, they would have gladly abstained
from voting, if they could thereby have saved themselves from taxation alone,
to say nothing of being saved from all the other usurpations and tyrannies of
the government. To take a man’s property without his consent, and then to infer
 No Treason: The Constitution of No Authority (excerpt) 473

his consent because he attempts, by voting, to prevent that property from being
used to his injury, is a very insufficient proof of his consent to support the Con-
stitution. It is, in fact, no proof at all. And as we can have no legal knowledge
as to who the particular individuals are, if there are any, who are willing to be
taxed for the sake of voting, we can have no legal knowledge that any particular
individual consents to be taxed for the sake of voting; or, consequently, consents
to support the Constitution.
5. At nearly all elections, votes are given for various candidates for the same
office. Those who vote for the unsuccessful candidates cannot properly be said
to have voted to sustain the Constitution. They may, with more reason, be sup-
posed to have voted, not to support the Constitution, but specially to prevent
the tyranny which they anticipate the successful candidate intends to practice
upon them under color of the Constitution; and therefore may reasonably be
supposed to have voted against the Constitution itself. This supposition is the
more reasonable, inasmuch as such voting is the only mode allowed to them
of expressing their dissent to the Constitution.
6. Many votes are usually given for candidates who have no prospect of suc-
cess. Those who give such votes may reasonably be supposed to have voted as
they did, with a special intention, not to support, but to obstruct the execution
of, the Constitution; and, therefore, against the Constitution itself.
7. As all the different votes are given secretly (by secret ballot), there is no
legal means of knowing, from the votes themselves, who votes for, and who
votes against, the Constitution. Therefore, voting affords no legal evidence
that any particular individual supports the Constitution. And where there can
be no legal evidence that any particular individual supports the Constitution, it
cannot legally be said that anybody supports it. It is clearly impossible to have
any legal proof of the intentions of large numbers of men, where there can be
no legal proof of the intentions of any particular one of them.
8. There being no legal proof of any man’s intentions, in voting, we can only
conjecture them. As a conjecture, it is probable, that a very large proportion of
those who vote, do so on this principle, viz., that if, by voting, they could but
get the government into their own hands (or that of their friends), and use its
powers against their opponents, they would then willingly support the Constitu-
tion; but if their opponents are to have the power, and use it against them, then
they would not willingly support the Constitution.
In short, men’s voluntary support of the Constitution is doubtless, in most
cases, wholly contingent upon the question whether, by means of the Constitu-
tion, they can make themselves masters, or are to be made slaves.
Such contingent consent as that is, in law and reason, no consent at all.
9. As everybody who supports the Constitution by voting (if there are any
such) does so secretly (by secret ballot), and in a way to avoid all personal
responsibility for the acts of his agents or representatives, it cannot legally or
reasonably be said that anybody at all supports the Constitution by voting. No
474 Anarchy and the Law

man can reasonably or legally be said to do such a thing as assent to, or sup-
port, the Constitution, unless he does it openly, and in a way to make himself
personally responsible for the acts of his agents, so long as they act within the
limits of the power he delegates to them.
10. As all voting is secret (by secret ballot), and as all secret governments
are necessarily only secret bands of robbers, tyrants, and murderers, the general
fact that our government is practically carried on by means of such voting, only
proves that there is among us a secret band of robbers, tyrants, and murderers,
whose purpose is to rob, enslave, and, so far as necessary to accomplish their
purposes, murder, the rest of the people. The simple fact of the existence of such
a band does nothing towards proving that “the people of the United States,” or
any one of them, voluntarily supports the Constitution.
For all the reasons that have now been given, voting furnishes no legal evi-
dence as to who the particular individuals are (if there are any), who voluntarily
support the Constitution. It therefore furnishes no legal evidence that anybody
supports it voluntarily.
So far, therefore, as voting is concerned, the Constitution, legally speaking,
has no supporters at all.
And, as a matter of fact, there is not the slightest probability that the Con-
stitution has a single bona fide supporter in the country. That is to say, there
is not the slightest probability that there is a single man in the country, who
both understands what the Constitution really is, and sincerely supports it for
what it really is.
The ostensible supporters of the Constitution, like the ostensible support-
ers of most other governments, are made up of three classes, viz.: 1. Knaves,
a numerous and active class, who see in the government an instrument which
they can use for their own aggrandizement or wealth. 2. Dupes—a large class,
no doubt—each of whom, because he is allowed one voice out of millions in
deciding what he may do with his own person and his own property, and because
he is permitted to have the same voice in robbing, enslaving, and murdering
others, that others have in robbing, enslaving, and murdering himself, is stupid
enough to imagine that he is a “free man,” a “sovereign”; that this is “a free
government”; “a government of equal rights,” “the best government on earth,”2
and such like absurdities. 3. A class who have some appreciation of the evils of
government, but either do not see how to get rid of them, or do not choose to so
far sacrifice their private interests as to give themselves seriously and earnestly
to the work of making a change.
III.
The payment of taxes, being compulsory, of course furnishes no evidence
that any one voluntarily supports the Constitution.
1. It is true that the theory of our Constitution is, that all taxes are paid
voluntarily; that our government is a mutual insurance company, voluntarily
 No Treason: The Constitution of No Authority (excerpt) 475

entered into by the people with each other; that each man makes a free and
purely voluntary contract with all others who are parties to the Constitution,
to pay so much money for so much protection, the same as he does with any
other insurance company; and that he is just as free not to be protected, and not
to pay tax, as he is to pay a tax, and be protected.
But this theory of our government is wholly different from the practical
fact. The fact is that the government, like a highwayman, says to a man: “Your
money, or your life.” And many, if not most, taxes are paid under the compul-
sion of that threat.
The government does not, indeed, waylay a man in a lonely place, spring
upon him from the roadside, and, holding a pistol to his head, proceed to rifle
his pockets. But the robbery is none the less a robbery on that account; and it
is far more dastardly and shameful.
The highwayman takes solely upon himself the responsibility, danger, and
crime of his own act. He does not pretend that he has any rightful claim to your
money, or that he intends to use it for your own benefit. He does not pretend
to be anything but a robber. He has not acquired impudence enough to profess
to be merely a “protector,” and that he takes men’s money against their will,
merely to enable him to “protect” those infatuated travelers, who feel perfectly
able to protect themselves, or do not appreciate his peculiar system of protec-
tion. He is too sensible a man to make such professions as these. Furthermore,
having taken your money, he leaves you, as you wish him to do. He does not
persist in following you on the road, against your will; assuming to be your
rightful “sovereign,” on account of the “protection” he affords you. He does
not keep “protecting” you, by commanding you to bow down and serve him;
by requiring you to do this, and forbidding you to do that; by robbing you of
more money as often as he finds it for his interest or pleasure to do so; and by
branding you as a rebel, a traitor, and an enemy to your country, and shooting
you down without mercy, if you dispute his authority, or resist his demands.
He is too much of a gentleman to be guilty of such impostures, and insults, and
villainies as these. In short, he does not, in addition to robbing you, attempt to
make you either his dupe or his slave.
The proceedings of those robbers and murderers, who call themselves “the
government,” are directly the opposite of these of the single highwayman.
In the first place, they do not, like him, make themselves individually known;
or, consequently, take upon themselves personally the responsibility of their
acts. On the contrary, they secretly (by secret ballot) designate some one of
their number to commit the robbery in their behalf, while they keep themselves
practically concealed. They say to the person thus designated:
Go to A_____ B_____, and say to him that “the government” has need of
money to meet the expenses of protecting him and his property. If he presumes
to say that he has never contracted with us to protect him, and that he wants
none of our protection, say to him that that is our business, and not his; that
476 Anarchy and the Law

we choose to protect him, whether he desires us to do so or not; and that we

demand pay, too, for protecting him. If he dares to inquire who the individuals
are, who have thus taken upon themselves the title of “the government,” and
who assume to protect him, and demand payment of him, without his having
ever made any contract with them, say to him that that, too, is our business, and
not his; that we do not choose to make ourselves individually known to him;
that we have secretly (by secret ballot) appointed you our agent to give him
notice of our demands, and, if he complies with them, to give him, in our name,
a receipt that will protect him against any similar demand for the present year.
If he refuses to comply, seize and sell enough of his property to pay not only
our demands, but all your own expenses and trouble beside. If he resists the
seizure of his property, call upon the bystanders to help you (doubtless some of
them will prove to be members of our band.) If, in defending his property, he
should kill any of our band who are assisting you, capture him at all hazards;
charge him (in one of our courts) with murder; convict him, and hang him. If he
should call upon his neighbors, or any others who, like him, may be disposed
to resist our demands, and they should come in large numbers to his assistance,
cry out that they are all rebels and traitors; that “our country” is in danger; call
upon the commander of our hired murderers; tell him to quell the rebellion and
“save the country,” cost what it may. Tell him to kill all who resist, though they
should be hundreds of thousands; and thus strike terror into all others similarly
disposed. See that the work of murder is thoroughly done; that we may have no
further trouble of this kind hereafter. When these traitors shall have thus been
taught our strength and our determination, they will be good loyal citizens for
many years, and pay their taxes without a why or a wherefore.
It is under such compulsion as this that taxes, so called, are paid. And how
much proof the payment of taxes affords, that the people consent to “support
the government,” it needs no further argument to show.
2. Still another reason why the payment of taxes implies no consent, or
pledge, to support the government, is that the taxpayer does not know, and has
no means of knowing, who the particular individuals are who compose “the
government.” To him “the government” is a myth, an abstraction, an incor-
poreality, with which he can make no contract, and to which he can give no
consent, and make no pledge. He knows it only through its pretended agents.
“The government” itself he never sees. He knows indeed, by common report,
that certain persons, of a certain age, are permitted to vote; and thus to make
themselves parts of, or (if they choose) opponents of, the government, for the
time being. But who of them do thus vote, and especially how each one votes
(whether so as to aid or oppose the government), he does not know; the voting
being all done secretly (by secret ballot). Who, therefore, practically compose
“the government,” for the time being, he has no means of knowing. Of course
he can make no contract with them, give them no consent, and make them no
pledge. Of necessity, therefore, his paying taxes to them implies, on his part, no
 No Treason: The Constitution of No Authority (excerpt) 477

contract, consent, or pledge to support them—that is, to support “the govern-

ment,” or the Constitution.
3. Not knowing who the particular individuals are, who call themselves “the
government,” the taxpayer does not know whom he pays his taxes to. All he
knows is that a man comes to him, representing himself to be the agent of “the
government”—that is, the agent of a secret band of robbers and murderers, who
have taken to themselves the title of “the government,” and have determined to
kill everybody who refuses to give them whatever money they demand. To save
his life, he gives up his money to this agent. But as this agent does not make
his principals individually known to the taxpayer, the latter, after he has given
up his money, knows no more who are “the government”—that is, who were
the robbers—than he did before. To say, therefore, that by giving up his money
to their agent, he entered into a voluntary contract with them, that he pledges
himself to obey them, to support them, and to give them whatever money they
should demand of him in the future, is simply ridiculous.
4. All political power, so called, rests practically upon this matter of money.
Any number of scoundrels, having money enough to start with, can establish
themselves as a “government”; because, with money, they can hire soldiers,
and with soldiers extort more money; and also compel general obedience to
their will. It is with government, as Caesar said it was in war, that money and
soldiers mutually supported each other; that with money he could hire soldiers,
and with soldiers extort money. So these villains, who call themselves govern-
ments, well understand that their power rests primarily upon money. With
money they can hire soldiers, and with soldiers extort money. And, when their
authority is denied, the first use they always make of money, is to hire soldiers
to kill or subdue all who refuse them more money.
For this reason, whoever desires liberty, should understand these vital facts,
viz.: 1. That every man who puts money into the hands of a “government” (so
called), puts into its hands a sword which will be used against him, to extort
more money from him, and also to keep him in subjection to its arbitrary will.
2. That those who will take his money, without his consent, in the first place,
will use it for his further robbery and enslavement, if he presumes to resist their
demands in the future. 3. That it is a perfect absurdity to suppose that any body
of men would ever take a man’s money without his consent, for any such object
as they profess to take it for, viz., that of protecting him; for why should they
wish to protect him, if he does not wish them to do so? To suppose that they
would do so, is just as absurd as it would be to suppose that they would take
his money without his consent, for the purpose of buying food or clothing for
him, when he did not want it. 4. If a man wants “protection,” he is competent
to make his own bargains for it; and nobody has any occasion to rob him, in
order to “protect” him against his will. 5. That the only security men can have
for their political liberty, consists in their keeping their money in their own
pockets, until they have assurances, perfectly satisfactory to themselves, that it
478 Anarchy and the Law

will be used as they wish it to be used, for their benefit, and not for their injury.
6. That no government, so called, can reasonably be trusted for a moment, or
reasonably be supposed to have honest purposes in view, any longer than it
depends wholly upon voluntary support.
These facts are all so vital and so self-evident, that it cannot reasonably be
supposed that any one will voluntarily pay money to a “government,” for the
purpose of securing its protection, unless he first make an explicit and purely
voluntary contract with it for that purpose.
It is perfectly evident, therefore, that neither such voting, nor such payment of
taxes, as actually takes place, proves anybody’s consent, or obligation, to support
the Constitution. Consequently we have no evidence at all that the Constitution
is binding upon anybody, or that anybody is under any contract or obligation
whatever to support it. And nobody is under any obligation to support it.
IV.
The constitution not only binds nobody now, but it never did bind anybody. It
never bound anybody, because it was never agreed to by anybody in such a man-
ner as to make it, on general principles of law and reason, binding upon him.
It is a general principle of law and reason, that a written instrument binds no
one until he has signed it. This principle is so inflexible a one, that even though
a man is unable to write his name, he must still “make his mark,” before he is
bound by a written contract. This custom was established ages ago, when few
men could write their names; when a clerk—that is, a man who could write—was
so rare and valuable a person, that even if he were guilty of high crimes, he was
entitled to pardon, on the ground that the public could not afford to lose his ser-
vices. Even at that time, a written contract must be signed; and men who could
not write, either “made their mark,” or signed their contracts by stamping their
seals upon wax affixed to the parchment on which their contracts were written.
Hence the custom of affixing seals, that has continued to this time.
The laws holds, and reason declares, that if a written instrument is not signed,
the presumption must be that the party to be bound by it, did not choose to sign
it, or to bind himself by it. And law and reason both give him until the last mo-
ment, in which to decide whether he will sign it, or not. Neither law nor reason
requires or expects a man to agree to an instrument, until it is written; for until it
is written, he cannot know its precise legal meaning. And when it is written, and
he has had the opportunity to satisfy himself of its precise legal meaning, he is
then expected to decide, and not before, whether he will agree to it or not. And
if he do not then sign it, his reason is supposed to be, that he does not choose
to enter into such a contract. The fact that the instrument was written for him
to sign, or with the hope that he would sign it, goes for nothing.
Where would be the end of fraud and litigation, if one party could bring into
court a written instrument, without any signature, and claim to have it enforced,
upon the ground that it was written for another man to sign? that this other man
 No Treason: The Constitution of No Authority (excerpt) 479

had promised to sign it? that he ought to have signed it? that he had had the
opportunity to sign it, if he would? but that he had refused or neglected to do
so? Yet that is the most that could ever be said of the Constitution.3 The very
judges, who profess to derive all their authority from the Constitution—from
an instrument that nobody ever signed—would spurn any other instrument, not
signed, that should be brought before them for adjudication.
Moreover, a written instrument must, in law and reason, not only be signed,
but must also be delivered to the party (or to some one for him), in whose favor
it is made, before it can bind the party making it. The signing is of no effect,
unless the instrument be also delivered. And a party is at perfect liberty to
refuse to deliver a written instrument, after he has signed it. The Constitution
was not only never signed by anybody, but it was never delivered by anybody,
or to anybody’s agent or attorney. It can therefore be of no more validity as a
contract, than can any other instrument that was never signed or delivered.
V.
As further evidence of the general sense of mankind, as to the practical neces-
sity there is that all men’s important contracts, especially those of a permanent
nature, should be both written and signed, the following facts are pertinent.
For nearly two hundred years—that is, since 1677—there has been on the
statute book of England, and the same, in substance, if not precisely in letter,
has been reenacted, and is now in force, in nearly or quite all the States of this
Union, a statute, the general object of which is to declare that no action shall
be brought to enforce contracts of the more important class, unless they are put
in writing, and signed by the parties to be held chargeable upon them.4
The principle of the statute, be it observed, is, not merely that written
contracts shall be signed, but also that all contracts, except for those specially
exempted—generally those that are for small amounts, and are to remain in
force for but a short time—shall be both written and signed.
The reason of the statute, on this point, is, that it is now so easy a thing for
men to put their contracts in writing, and sign them, and their failure to do so
opens the door to so much doubt, fraud, and litigation, that men who neglect
to have their contracts—of any considerable importance—written and signed,
ought not to have the benefit of courts of justice to enforce them. And this reason
is a wise one; and that experience has confirmed its wisdom and necessity, is
demonstrated by the fact that it has been acted upon in England for nearly two
hundred years, and has been so nearly universally adopted in this country, and
that nobody thinks of repealing it.
We all know, too, how careful most men are to have their contracts written
and signed, even when this statute does not require it. For example, most men,
if they have money due them, of no larger amount than five or ten dollars, are
careful to take a note for it. If they buy even a small bill of goods, paying for
it at the time of delivery, they take a receipted bill for it. If they pay a small
480 Anarchy and the Law

balance of a book account, or any other small debt previously contracted, they
take a written receipt for it.
Furthermore, the law everywhere (probably) in our country, as well as in
England, requires that a large class of contracts, such as wills, deeds, etc., shall
not only be written and signed, but also sealed, witnessed, and acknowledged.
And in the case of married women conveying their rights in real estate, the law,
in many States, requires that the women shall be examined separate and apart
from their husbands, and declare that they sign their contracts free of any fear
or compulsion of their husbands.
Such are some of the precautions which the laws require, and which in-
dividuals—from motives of common prudence, even in cases not required
by law—take, to put their contracts in writing, and have them signed, and, to
guard against all uncertainties and controversies in regard to their meaning and
validity. And yet we have what purports, or professes, or is claimed, to be a
contract—the Constitution—made eighty years ago, by men who are now all
dead, and who never had any power to bind US, but which (it is claimed) has
nevertheless bound three generations of men, consisting of many millions, and
which (it is claimed) will be binding upon all the millions that are to come;
but which nobody ever signed, sealed, delivered, witnessed, or acknowledged;
and which few persons, compared with the whole number that are claimed to
be bound by it, have ever read, or even seen, or ever will read, or see. And of
those who ever have read it, or ever will read it, scarcely any two, perhaps no
two, have ever agreed, or ever will agree, as to what it means.
Moreover, this supposed contract, which would not be received in any court
of justice sitting under its authority, if offered to prove a debt of five dollars,
owing by one man to another, is one by which—as it is generally interpreted by
those who pretend to administer it—all men, women and children throughout
the country, and through all time, surrender not only all their property, but also
their liberties, and even lives, into the hands of men who by this supposed con-
tract, are expressly made wholly irresponsible for their disposal of them. And
we are so insane, or so wicked, as to destroy property and lives without limit, in
fighting to compel men to fulfill a supposed contract, which, inasmuch as it has
never been signed by anybody, is, on general principles of law and reason—such
principles as we are all governed by in regard to other contracts—the merest
waste of paper, binding upon nobody, fit only to be thrown into the fire; or, if
preserved, preserved only to serve as a witness and a warning of the folly and
wickedness of mankind.
VI.
It is no exaggeration, but a literal truth, to say that, by the Constitution—not
as I interpret it, but as it is interpreted by those who pretend to administer it—the
properties, liberties, and lives of the entire people of the United States are surren-
dered unreservedly into the hands of men who, it is provided by the Constitution
itself, shall never be “questioned” as to any disposal they make of them.
 No Treason: The Constitution of No Authority (excerpt) 481

Thus the Constitution (Art. I, Sec. 6) provides that, “for any speech or debate
[or vote], in either house, they [the senators and representatives] shall not be
questioned in any other place.”
The whole law-making power is given to these senators and representatives
(when acting by a two-thirds vote);5 and this provision protects them from all
responsibility for the laws they make.
The Constitution also enables them to secure the execution of all their laws,
by giving them power to withhold the salaries of, and to impeach and remove,
all judicial and executive officers, who refuse to execute them.
Thus the whole power of the government is in their hands, and they are
made utterly irresponsible for the use they make of it. What is this but absolute,
irresponsible power?
It is no answer to this view of the case to say that these men are under oath
to use their power only within certain limits; for what care they, or what should
they care, for oaths or limits, when it is expressly provided, by the Constitu-
tion itself, that they shall never be “questioned,” or held to any responsibility
whatever, for violating their oaths, or transgressing those limits?
Neither is it any answer to this view of the case to say that the men holding
this absolute, irresponsible power, must be men chosen by the people (or por-
tions of them) to hold it. A man is none the less a slave because he is allowed
to choose a new master once in a term of years. Neither are a people any the
less slaves because permitted periodically to choose new masters. What makes
them slaves is the fact that they now are, and are always hereafter to be, in the
hands of men whose power over them is, and always is to be, absolute and
irresponsible.6
The right of absolute and irresponsible dominion is the right of property, and
the right of property is the right of absolute, irresponsible dominion. The two
are identical; the one necessarily implies the other. Neither can exist without the
other. If, therefore, Congress have that absolute and irresponsible law-making
power, which the Constitution—according to their interpretation of it—gives
them, it can only be because they own us as property. If they own us as property,
they are our masters, and their will is our law. If they do not own us as property,
they are not our masters, and their will, as such, is of no authority over us.
But these men who claim and exercise this absolute and irresponsible do-
minion over us, dare not be consistent, and claim either to be our masters, or to
own us as property. They say they are only our servants, agents, attorneys, and
representatives. But this declaration involves an absurdity, a contradiction. No
man can be my servant, agent, attorney, or representative, and be, at the same
time, uncontrollable by me, and irresponsible to me for his acts. It is of no
importance that I appointed him, and put all power in his hands. If I made him
uncontrollable by me, and irresponsible to me, he is no longer my servant, agent,
attorney, or representative. If I gave him absolute, irresponsible power over my
property, I gave him the property. If I gave him absolute, irresponsible power
over myself, I made him my master, and gave myself to him as a slave. And
482 Anarchy and the Law

it is of no importance whether I called him master or servant, agent or owner.

The only question is, what power did I put in his hands? Was it an absolute and
irresponsible one? or a limited and responsible one?
For still another reason they are neither our servants, agents, attorneys, nor
representatives. And that reason is, that we do not make ourselves responsible for
their acts. If a man is my servant, agent, or attorney, I necessarily make myself
responsible for all his acts done within the limits of the power I have entrusted
to him. If I have entrusted him, as my agent, with either absolute power, or any
power at all, over the persons or properties of other men than myself, I thereby
necessarily make myself responsible to those other persons for any injuries he
may do them, so long as he acts within the limits of the power I have granted
him. But no individual who may be injured in his person or property, by acts
of Congress, can come to the individual electors, and hold them responsible for
these acts of their so-called agents or representatives. This fact proves that these
pretended agents of the people, of everybody, are really the agents of nobody.
If, then, nobody is individually responsible for the acts of Congress, the
members of Congress are nobody’s agents. And if they are nobody’s agents, they
are themselves individually responsible for their own acts, and for the acts of all
whom they employ. And the authority they are exercising is simply their own
individual authority; and, by the law of nature—the highest of all laws—anybody
injured by their acts, anybody who is deprived by them of his property or his
liberty, has the same right to hold them individually responsible, that he has
to hold any other trespasser individually responsible. He has the same right to
resist them, and their agents, that he has to resist any other trespassers.
Notes
1. See No Treason, No. 2, pages 5 and 6.
2. Suppose it be “the best government on earth,” does that prove its own goodness,
or only the badness of all other governments?
3. The very men who drafted it, never signed it in any way to bind themselves by it,
as a contract. And not one of them probably ever would have signed it in any way
to bind himself by it, as a contract.
4. I have personally examined the statute books of the following States, viz.: Maine,
New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York,
New Jersey, Pennsylvania, Delaware, Virginia, North Carolina, South Carolina,
Georgia, Florida, Alabama, Mississippi, Tennessee, Kentucky, Ohio, Michigan,
Indiana, Illinois, Wisconsin, Texas, Arkansas, Missouri, Iowa, Minnesota, Nebraska,
Kansas, Nevada, California, and Oregon, and find that in all these States the English
statute has been reenacted, sometimes with modifications, but generally enlarging
its operations, and is now in force.
The following are some of the provisions of the Massachusetts statute:
“No action shall be brought in any of the following cases, that is to say:…
“To charge a person upon a special promise to answer for the debt, default, or
misdoings of another:…
“Upon a contract for the sale of lands, tenements, hereditaments, or of any interest
in, or concerning them; or
 No Treason: The Constitution of No Authority (excerpt) 483

“Upon an agreement that is not to be performed within one year from the writing
thereof:
“Unless the promise, contract, or agreement, upon which such action is brought,
or some memorandum or note thereof, is in writing, and signed by the party to be
charged therewith, or by some person thereunto by him lawfully authorized.”
“No contract for the sale of goods, wares, or merchandise, for the price of fifty
dollars or more, shall be good or valid, unless the purchaser accepts and receives
part of the goods so sold, or gives something in earnest to bind the bargain, or in
part payment; or unless some note or memorandum in writing of the bargain is
made and signed by the party to be charged thereby, or by some person thereunto
by him lawfully authorized.”
5. And this two-thirds vote may be but two-thirds of a quorum—that is two-thirds of
a majority—instead of two-thirds of the whole.
6. Of what appreciable value is it to any man, as an individual, that he is allowed a
voice in choosing these public masters? His voice is only one of several millions.
 31
Trial by Jury (excerpt)
Lysander Spooner
The Right of Juries to Judge the Justice of the Laws
Section I
For more than six hundred years—that is, since Magna Carta, in 1215—there
has been no clearer principle of English or American constitutional law, than
that, in criminal cases, it is not only the right and duty of juries to judge what
are the facts, what is the law, and what was the moral intent of the accused;
but that it is also their right, and their primary and paramount duty, to judge
of the justice of the law, and to hold all laws invalid, that are, in their opinion,
unjust or oppressive, and all persons guiltless in violating, or resisting the
execution of, such laws.
Unless such be the right and duty of jurors, it is plain that, instead of juries
being a “palladium of liberty”—a barrier against the tyranny and oppression
of the government—they are really mere tools in its hands, for carrying into
execution any injustice and oppression it may desire to have executed.
But for their right to judge of the law, and the justice of the law, juries would
be no protection to an accused person, even as to matters of fact; for, if the gov-
ernment can dictate to a jury any law whatever, in a criminal case, it can certainly
dictate to them the laws of evidence. That is, it can dictate what evidence is ad-
missible, and what inadmissible, and also what force or weight is to be given to
the evidence admitted. And if the government can thus dictate to a jury the laws
of evidence, it can not only make it necessary for them to convict on a partial
exhibition of the evidence rightfully pertaining to the case, but it can even require
them to convict on any evidence whatever that it pleases to offer them.
That the rights and duties of jurors must necessarily be such as are here
claimed for them, will be evident when it is considered what the trial by jury
is, and what is its object.
“The trial by jury,” then, is a “trial by the country”—that is by the people
as distinguished from a trial by the government.
It was anciently called “trial per pais” that is, “trial by the country.” And
now, in every criminal trial, the jury are told that the accused “has, for trial, put
himself upon the country; which country you (the jury) are.”
The object of this trial “by the country,” or by the people, in preference to a
trial by the government, is to guard against every species of oppression by the

484
 Trial by Jury (excerpt) 485

government. In order to effect this end, it is indispensable that the people, or

“the country,” judge of and determine their own liberties against the govern-
ment; instead of the government’s judging of and determining its own powers
over the people. How is it possible that juries can do anything to protect the
liberties of the people against the government, if they are not allowed to deter-
mine what those liberties are?
Any government, that is its own judge of, and determines authoritatively for
the people, what are its own powers over the people, is an absolute government
of course. It has all the powers that it chooses to exercise. There is no other—or
at least no more accurate—definition of a despotism than this.
On the other hand, any people, that judge of, and determine authoritatively
for the government, what are their own liberties against the government, of
course retain all the liberties they wish to enjoy. And this is freedom. At least,
it is freedom to them; because, although it may be theoretically imperfect, it,
nevertheless, corresponds to their highest notions of freedom.
To secure this right of the people to judge of their own liberties against the
government, the jurors are taken, (or must be, to make them lawful jurors,) from
the body of the people, by lot, or by some process that precludes any previous
knowledge, choice, or selection of them, on the part of the government. This
is done to prevent the government’s constituting a jury of its own partisans or
friends; in other words, to prevent the government’s packing a jury, with a view
to maintain its own laws, and accomplish its own purposes.
It is supposed that, if twelve men be taken, by lot, from the mass of the people,
without the possibility of any previous knowledge, choice, or selection of them,
on the part of the government, the jury will be a fair epitome of “the country”
at large, and not merely of the party or faction that sustain the measures of the
government; that substantially all classes, of opinions, prevailing among the
people, will be represented in the jury; and especially that the opponents of
the government, (if the government have any opponents,) will be represented
there, as well as its friends; that the classes, who are oppressed by the laws of
the government, (if any are thus oppressed,) will have their representatives in
the jury, as well as those classes, who take sides with the oppressor—that is,
with the government.
It is fairly presumable that such a tribunal will agree to no conviction except
such as substantially the whole country would agree to, if they were present,
taking part in the trial. A trial by such a tribunal is, therefore, in effect, “a trial
by the country.” In its results it probably comes as near to a trial by the whole
country, as any trial that it is practicable to have, without too great inconvenience
and expense. And, as unanimity is required for a conviction, it follows that no
one can be convicted, except for the violation of such laws as substantially the
whole country wish to have maintained. The government can enforce none of
its laws, (by punishing offenders, through the verdicts of juries,) except such
as substantially the whole people wish to have enforced. The government,
486 Anarchy and the Law

therefore, consistently with the trial by jury, can exercise no powers over the
people, (or, what is the same thing, over the accused person, who represents
the rights of the people,) except such as substantially the whole people of the
country consent that it may exercise. In such a trial, therefore, “the country,”
or the people, judge of and determine their own liberties against the govern-
ment, instead of the government’s judging of and determining its own powers
over the people.
But all this trial “by the country” would be no trial at all “by the country,”
but only a trial by the government, if the government could either declare who
may, and who may not, be jurors, or could dictate to the jury anything whatever,
either of law or evidence, that is of the essence of the trial.
If the government may decide who may, and who may not, be jurors, it will
of course select only its partisans, and those friendly to its measures. It may not
only prescribe who may, and who may not, be eligible to be drawn as jurors;
but it may also question each person drawn as a juror, as to his sentiments in
regard to the particular law involved in each trial, before suffering him to be
sworn on the panel; and exclude him if he be found unfavorable to the main-
tenance of such a law.1
So, also, if the government may dictate to the jury what laws they are to
enforce, it is no longer a trial “by the country,” but a trial by the government;
because the jury then try the accused, not by any standard of their own—by
their own judgments of their rightful liberties—but by a standard dictated to
them by the government. And the standard, thus dictated by the government,
becomes the measure of the people’s liberties. If the government dictates the
standard of trial, it of course dictates the results of the trial. And such a trial
is no trial by the country, but only a trial by the government; and in it the
government determines what are its own powers over the people, instead of
the people’s determining what are their own liberties against the government.
In short, if the jury have no right to judge of the justice of a law of the govern-
ment, they plainly can do nothing to protect the people, against the oppressions
of the government; for there are no oppressions which the government may not
authorize by law.
The jury are also to judge whether the laws are rightly expounded to them
by the court. Unless they judge on this point, they do nothing to protect their
liberties against the oppressions that are capable of being practiced under cover
of a corrupt exposition of the laws. If the judiciary can authoritatively dictate
to a jury any exposition of the law, they can dictate to them the law itself, and
such laws as they please; because laws are, in practice, one thing or another,
according as they are expounded.
The jury must also judge whether there really be any such law, (be it good
or bad,) as the accused is charged with having transgressed. Unless they judge
on this point, the people are liable to have their liberties taken from them by
brute force, without any law at all.
 Trial by Jury (excerpt) 487

The jury must also judge of the laws of evidence. If the government can
dictate to a jury the laws of evidence, it can not only shut out any evidence it
pleases, tending to vindicate the accused, but it can require that any evidence
whatever, that it pleases to offer, be held as conclusive proof of any offence
whatever which the government chooses to allege.
It is manifest, therefore, that the jury must judge of and try the whole case,
and every part and parcel of the case, free of any dictation or authority on the
part of the government. They must judge of the existence of the law; of the true
exposition of the law; of the justice of the law; and of the admissibility and weight
of all the evidence offered; otherwise the government will have everything its
own way; the jury will be mere puppets in the hands of the government; and
the trial will be, in reality, a trial by the government, and not a “trial by the
country.” By such trials the government will determine its own powers over
the people, instead of the people’s determining their own liberties against the
government; and it will be an entire delusion to talk, as for centuries we have
done, of the trial by jury, as a “palladium of liberty,” or as any protection to the
people against the oppression and tyranny of the government.
The question, then, between trial by jury, as thus described, and trial by the
government, is simply a question between liberty and despotism. The authority
to judge what are the powers of the government, and what the liberties of the
people, must necessarily be vested in one or the other of the parties themselves
the government, or the people; because there is no third party to whom it can
be entrusted. If the authority be vested in the government, the government is
absolute, and the people have no liberties except such as the government sees
fit to indulge them with. If, on the other hand, that authority be vested in the
people, then the people have all liberties, (as against the government,) except
such as substantially the whole people (through a jury) choose to disclaim; and
the government can exercise no power except such as substantially the whole
people (through a jury) consent that it may exercise.
Section II
The force and justice of the preceding argument cannot be evaded by saying
that the government is chosen by the people; that, in theory, it represents the
people; that it is designed to do the will of the people; that its members are all
sworn to observe the fundamental or constitutional law instituted by the people;
that its acts are therefore entitled to be considered the acts of the people; and that
to allow a jury, representing the people, to invalidate the acts of the government,
would therefore be arraying the people against themselves.
There are two answers to such an argument.
One answer is, that, in a representative government, there is no absurdity
or contradiction, nor any arraying of the people against themselves, in requir-
ing that the statutes or enactments of the government shall pass the ordeal
of any number of separate tribunals, before it shall be determined that they
488 Anarchy and the Law

are to have the force of laws. Our American constitutions have provided five
of these separate tribunals, to wit, representatives, senate, executive,2 jury,
and judges; and have made it necessary that each enactment shall pass the
ordeal of all these separate tribunals, before its authority can be established
by the punishment of those who choose to transgress it. And there is no more
absurdity or inconsistency in making a jury one of these several tribunals,
than there is in making the representatives, or the senate, or the executive, or
the judges, one of them. There is no more absurdity in giving a jury a veto
upon the laws, than there is in giving a veto to each of these other tribunals.
The people are no more arrayed against themselves, when a jury puts its veto
upon a statute, which the other tribunals have sanctioned, than they are when
the same veto is exercised by the representatives, the senate, the executive,
or the judges.
But another answer to the argument that the people are arrayed against them-
selves, when a jury hold an enactment of the government invalid, is, that the
government, and all the departments of the government, are merely the servants
and agents of the people; not invested with arbitrary or absolute authority to
bind the people, but required to submit all their enactments to the judgment of
a tribunal more fairly representing the whole people, before they carry them
into execution by punishing any individual for transgressing them. If the gov-
ernment were not thus required to submit their enactments to the judgment of
“the country,” before executing them upon individuals; if, in other words, the
people had reserved to themselves no veto upon the acts of the government, the
government, instead of being a mere servant and agent of the people would be
an absolute despot over the people. It would have all power in its own hands;
because the power to punish carries all other powers with it. A power that can,
of itself, and by its own authority, punish disobedience, can compel obedience
and submission, and is above all responsibility for the character of its laws. In
short, it is a despotism.
And it is of no consequence to inquire how a government came by this power
to punish, whether by prescription, by inheritance, by usurpation, or by delega-
tion from the people. If it have now but got it, the government is absolute.
It is plain, therefore, that if the people have invested the government with
power to make laws that absolutely bind the people, and to punish the people
for transgressing those laws, the people have surrendered their liberties unre-
servedly into the hands of the government.
It is of no avail to say, in answer to this view of the case, that in surrendering
their liberties into the hands of the government, the people took an oath from
the government, that it would exercise its power within certain constitutional
limits; for when did oaths ever restrain a government that was otherwise unre-
strained? when did a government fail to determine that all its acts were within
the constitutional and authorized limits of its power, if it were permitted to
determine that question for itself?
 Trial by Jury (excerpt) 489

Neither is it of any avail to say, that, if the government abuse its power, and
enact unjust and oppressive laws, the government may be changed by the influ-
ence of discussion, and the exercise of the right of suffrage. Discussion can do
nothing to prevent the enactment, or procure the repeal, of unjust laws, unless
it be understood that the discussion is to be followed by resistance. Tyrants care
nothing for discussions that are to end only in discussion. Discussions, which
do not interfere with the enforcement of their laws, are but idle wind to them.
Suffrage is equally powerless and unreliable. It can be exercised only periodi-
cally; and the tyranny must at least be borne until the time for suffrage comes.
Besides, when the suffrage is exercised, it gives no guaranty for the repeal of
existing laws that are oppressive, and no security against the enactment of new
ones that are equally so. The second body of legislators are liable and likely to
be just as tyrannical as the first. If it be said that the second body may be chosen
for their integrity, the answer is, that the first were chosen for that very reason,
and yet proved tyrants. The second will be exposed to the same temptations as
the first, and will be just as likely to prove tyrannical. Who ever heard that suc-
ceeding legislatures were, on the whole, more honest than those that preceded
them? What is there in the nature of men or things to make them so? If it be
said that the first body were chosen from motives of injustice, that fact proves
that there is a portion of society who desire to establish injustice; and if they
were powerful or artful enough to procure the election of their instruments to
compose the first legislature, they will be likely to be powerful or artful enough
to procure the election of the same or similar instruments to compose the second.
The right of suffrage, therefore, and even a change of legislators, guarantees no
change of legislation—certainly no change for the better. Even if a change for
the better actually comes, it comes too late, because it comes only after more
or less injustice has been irreparably done.
But, at best, the right of suffrage can be exercised only periodically; and
between the periods the legislators are wholly irresponsible. No despot was
ever more entirely irresponsible than are republican legislators during the
period for which they are chosen. They can neither be removed from their of-
fice, nor called to account while in their office, nor punished after they leave
their office, be their tyranny what it may. Moreover, the judicial and executive
departments of the government are equally irresponsible to the people, and
are only responsible, (by impeachment, and dependence for their salaries), to
these irresponsible legislators. This dependence of the judiciary and executive
upon the legislature is a guaranty that they will always sanction and execute its
laws, whether just or unjust. Thus the legislators hold the whole power of the
government in their hands, and are at the same time utterly irresponsible for
the manner in which they use it.
If, now, this government, (the three branches thus really united in one), can
determine the validity of, and enforce, its own laws, it is, for the time being,
entirely absolute, and wholly irresponsible to the people.
490 Anarchy and the Law

But this is not all. These legislators, and this government, so irresponsible
while in power, can perpetuate their power at pleasure, if they can determine
what legislation is authoritative upon the people, and can enforce obedience
to it; for they can not only declare their power perpetual, but they can enforce
submission to all legislation that is necessary to secure its perpetuity. They
can, for example, prohibit all discussion of the rightfulness of their authority;
forbid the use of the suffrage; prevent the election of any successors; disarm,
plunder, imprison, and even kill all who refuse submission. If, therefore, the
government (all departments united) be absolute for a day—that is, if it can,
for a day, enforce obedience to its own law can, in that day, secure its power
for all time—like the queen, who wished to reign but for a day, but in that day
caused the king, her husband, to be slain, and usurped his throne. Nor will it
avail to say that such acts would be unconstitutional, and that unconstitutional
acts may be lawfully resisted; for everything a government pleases to do will, of
course, be determined to be constitutional, if the government itself be permitted
to determine the question of the constitutionality of its own acts. Those who
are capable of tyranny, are capable of perjury to sustain it.
The conclusion, therefore, is, that any government, that can, for a day,
enforce its own laws, without appealing to the people, (or to a tribunal fairly
representing the people,) for their consent, is, in theory, an absolute government,
irresponsible to the people, and can perpetuate its power at pleasure.
The trial by jury is based upon a recognition of this principle, and therefore
forbids the government to execute any of its laws, by punishing violators, in any
case whatever, without first getting the consent of “the country,” or the people,
through a jury. In this way, the people, at all times, hold their liberties in their
own hands, and never surrender them, even for a moment, into the hands of
the government.
The trial by jury, then, gives to any and every individual the liberty, at any
time, to disregard or resist any law whatever of the government, if he be willing
to submit to the decision of a jury, the questions, whether the law be intrinsi-
cally just and obligatory? and whether his conduct, in disregarding or resisting
it, were right in itself? And any law, which does not, in such trial, obtain the
unanimous sanction of twelve men, taken at random from the people, and
judging according to the standard of justice in their own minds, free from all
dictation and authority of the government, may be transgressed and resisted
with impunity, by whomsoever pleases to transgress or resist it.3
The trial by jury authorizes all this, or it is a sham and a hoax, utterly worth-
less for protecting the people against oppression. If it does not authorize an
individual to resist the first and least act of injustice or tyranny, on the part of
the government, it does not authorize him to resist the last and the greatest. If
it does not authorize individuals to nip tyranny in the bud, it does not authorize
them to cut it down when its branches are filled with the ripe fruits of plunder
and oppression.
 Trial by Jury (excerpt) 491

Those who deny the right of a jury to protect an individual in resisting an

unjust law of the government, deny him all legal defence whatsoever against
oppression. The right of revolution, which tyrants, in mockery, accord to man-
kind, is no legal right under a government; it is only a natural right to overturn a
government. The government itself never acknowledges this right. And the right
is practically established only when and because the government no longer exists
to call it in question. The right, therefore, can be exercised with impunity, only
when it is exercised victoriously. All unsuccessful attempts at revolution, however
justifiable in themselves, are punished as treason, if the government be permitted
to judge of the treason. The government itself never admits the injustice of its
laws, as a legal defence for those who have attempted a revolution, and failed. The
right of revolution, therefore, is a right of no practical value, except for those
who are stronger than the government. So long, therefore, as the oppressions of
a government are kept within such limits as simply not to exasperate against it
a power greater than its own, the right of revolution cannot be appealed to, and
is therefore inapplicable to the case. This affords a wide field for tyranny; and
if a jury cannot here intervene, the oppressed are utterly defenceless.
It is manifest that the only security against the tyranny of the government
lies in forcible resistance to the execution of the injustice; because the injustice
will certainly be executed, unless it be forcibly resisted. And if it be but suf-
fered to be executed, it must then be borne; for the government never makes
compensation for its own wrongs.
Since, then, this forcible resistance to the injustice of the government is the
only possible means of preserving liberty; it is indispensable to all legal liberty
that this resistance should be legalized. It is perfectly self-evident that where
there is no legal right to resist the oppression of the government, there can be
no legal liberty. And here it is all-important to notice, that, practically speak-
ing, there can be no legal right to resist the oppressions of the government,
unless there be some legal tribunal, other than the government, and wholly
independent of, and above, the government, to judge between the government
and those who resist its oppressions; in other words, to judge what laws of the
government are to be obeyed, and what may be resisted and held for nought.
The only tribunal known to our laws, for this purpose, is a jury. If a jury have
not the right to judge between the government and those who disobey its laws,
and resist its oppressions, the government is absolute, and the people, legally
speaking, are slaves. Like many other slaves they may have sufficient courage
and strength to keep their masters somewhat in check; but they are nevertheless
known to the law only as slaves.
That this right of resistance was recognized as a common law right, when
the ancient and genuine trial by jury was in force, is not only proved by the
nature of the trial itself, but is acknowledged by history.4
This right of resistance is recognized by the constitution of the United
States, as a strictly legal and constitutional right. It is so recognized, first by
492 Anarchy and the Law

the provision that “the trial of all crimes, except in cases of impeachment, shall
be by jury”—that is, by the country—and not by the government; secondly,
by the provision that “the right of the people to keep and bear arms shall not
be infringed.” This constitutional security for “the right to keep and bear arms,
implies the right to use them much as a constitutional security for the right
to buy and keep food would have implied the right to eat it. The constitution,
therefore, takes it for granted that the people will judge of the conduct of the
government, and that, as they have the right, they will also have the sense, to
use arms, whenever the necessity of the case justifies it. And it is a sufficient
and legal defence for a person accused of using arms against the government,
if he can show, to the satisfaction of a jury, or even any one of a jury, that the
law he resisted was an unjust one.
In the American State constitutions also, this right of resistance to the op-
pressions of the government is recognized, in various ways, as a natural, legal,
and constitutional right. In the first place, it is so recognized by provisions es-
tablishing the trial by jury; thus requiring that accused persons shall be tried by
“the country,” instead of the government. In the second place, it is recognized
by many of them, as, for example, those of Massachusetts, Maine, Vermont,
Connecticut, Pennsylvania, Ohio, Indiana, Michigan, Kentucky, Tennessee,
Arkansas, Mississippi, Alabama, and Florida, by provisions expressly declar-
ing that, the people shall have the right to bear arms. In many of them also,
as, for example, those of Maine, New Hampshire, Vermont, Massachusetts,
New Jersey, Pennsylvania, Delaware, Ohio, Indiana, Illinois, Florida, Iowa,
and Arkansas, by provisions, in their bills of rights, declaring that men have a
natural, inherent, and inalienable right of “defending their lives and liberties.”
This, of course, means that they have a right to defend them against any injustice
on the part of the government, and not merely on the part of private individu-
als; because the object of all bills of rights is to assert the rights of individuals
and the people, as against the government, and not as against private persons.
It would be a matter of ridiculous supererogation to assert, in a constitution of
government, the natural right of men to defend their lives and liberties against
private trespassers.
Many of these bills of rights also assert the natural right of all men to protect
their property—that is, to protect it against the government. It would be un-
necessary and silly indeed to assert, in a constitution of government, the natural
right of individuals to protect their property against thieves and robbers.
The constitutions of New Hampshire and Tennessee also declare that “The
doctrine of non-resistance against arbitrary power and oppression is absurd,
slavish, and destructive of the good and happiness of mankind.”
The legal effect of these constitutional recognitions of the right of individu-
als to defend their property, liberties, and lives, against the government, is to
legalize resistance to all injustice and oppression, of every name and nature
whatsoever, on the part of the government.
 Trial by Jury (excerpt) 493

But for this right of resistance, on the part of the people, all governments
would become tyrannical to a degree of which few people are aware. Consti-
tutions are utterly worthless to restrain the tyranny of governments, unless it
be understood that the people will, by force, compel the government to keep
within the constitutional limits. Practically speaking, no government knows
any limits to its power, except the endurance of the people. But that the people
are stronger than the government, and will resist in extreme cases, our govern-
ments would be little or nothing else than organized systems of plunder and
oppression. All, or nearly all, the advantage there is in fixing any constitutional
limits to the power of a government, is simply to give notice to the government
of the point at which it will meet with resistance. If the people are then as good
as their word, they may keep the government within the bounds they have set
for it; otherwise it will disregard them—as is proved by the example of all our
American governments, in which the constitutions have all become obsolete,
at the moment of their adoption, for nearly or quite all purposes except the ap-
pointment of officers, who at once become practically absolute, except so far
as they are restrained by the fear of popular resistance.
The bounds set to the power of the government, by the trial by jury, as will
hereafter be shown, are these—that the government shall never touch the prop-
erty, person, or natural or civil rights of an individual, against his consent, (except
for the purpose of bringing them before a jury for trial,) unless in pursuance and
execution of a judgment, or decree, rendered by a jury in each individual case,
upon such evidence, and such law, as are satisfactory to their own understand-
ings and consciences, irrespective of all legislation of the government.
The Trial by Jury, as Defined by Magna Carta
That the trial by jury is all that has been claimed for it in the preceding chapter,
is proved both by the history and the language of the Great Charter of English
Liberties, to which we are to look for a true definition of the trial by jury, and
of which the guaranty for that trial is the vital, and most memorable, part.
The History of Magna Carta
In order to judge of the object and meaning of that chapter of Magna Carta
which secures the trial by jury, it is to be borne in mind that, at the time of
Magna Carta, the king (with exceptions immaterial to this discussion, but
which will appear hereafter) was, constitutionally, the entire government; the
sole legislative, judicial, and executive power of the nation. The executive and
judicial officers were merely his servants, appointed by him, and removable at
his pleasure. In addition to this, “the king himself often sat in his court, which
always attended his person. He there heard causes, and pronounced judgment;
and though he was assisted by the advice of other members, it is not to be imag-
ined that a decision could be obtained contrary to his inclination or opinion.”5
Judges were in those days, and afterwards, such abject servants of the king, that
“we find that King Edward I (1272 to 1307) fined and imprisoned his judges,
494 Anarchy and the Law

in the same manner as Alfred the Great, among the Saxons, had done before
him, by the sole exercise of his authority.”6
Parliament, so far as there was a parliament, was a mere council of the king.7
It assembled only at the pleasure of the king; sat only during his pleasure; and
when sitting had no power, so far as general legislation was concerned, beyond
that of simply advising the king. The only legislation to which their assent was
constitutionally necessary, was demands for money and military services for
extraordinary occasions. Even Magna Carta itself makes no provisions what-
ever for any parliaments, except when the king should want means to carry on
war, or to meet some other extraordinary necessity.8 He had no need of parlia-
ments to raise taxes for the ordinary purposes of government; for his revenues
from the rents of the crown lands and other sources, were ample for all except
extraordinary occasions. Parliaments, too, when assembled, consisted only of
bishops, barons, and other great men of the kingdom, unless the king chose to
invite others.9 There was no House of Commons at that time, and the people
had no right to be heard, unless as petitioners.10
Even when laws were made at the time of a parliament, they were made in
the name of the king alone. Sometimes it was inserted in the laws, that they were
made with the consent or advice of the bishops, barons, and others assembled;
but often this was omitted. Their consent or advice was evidently a matter of no
legal importance to the enactment or validity of the laws, but only inserted, when
inserted at all, with a view of obtaining a more willing submission to them on the
part of the people. The style of enactment generally was, either “The King wills
and commands,” or some other form significant of the sole legislative authority of
the king. The king could pass laws at any time when it pleased him. The presence
of a parliament was wholly unnecessary. Hume says, “It is asserted by Sir Harry
Spelman, as an undoubted fact, that, during the reigns of the Norman princes,
every order of the king, issued with the consent of his privy council, had the full
force of law.”11 And other authorities abundantly corroborate this assertion.12
The king was, therefore, constitutionally the government; and the only legal
limitation upon his power seems to have been simply the Common Law, usually
called “the law of the land,” which he was bound by oath to maintain; (which
oath had about the same practical value as similar oaths have always had).
This “law of the land” seems not to have been regarded at all by many of the
kings, except so far as they found it convenient to do so, or were constrained to
observe it by the fear of arousing resistance. But as all people are slow in mak-
ing resistance, oppression and usurpation often reached a great height; and, in
the case of John, they had become so intolerable as to enlist the nation almost
universally against him; and he was reduced to the necessity of complying with
any terms the barons saw fit to dictate to him.
It was under these circumstances, that the Great Charter of English Liberties
was granted. The barons of England, sustained by the common people, having
their king in their power, compelled him, as the price of his throne, to pledge
 Trial by Jury (excerpt) 495

himself that he would punish no freeman for a violation of any of his laws, un-
less with the consent of the peers—that is, the equals—of the accused.
The question here arises, Whether the barons and people intended that those
peers (the jury) should be mere puppets in the hands of the king, exercising no
opinion of their own as to the intrinsic merits of the accusations they should try,
or the justice of the laws they should be called on to enforce? Whether those
haughty and victorious barons, when they had their tyrant king at their feet,
gave back to him his throne, with full power to enact any tyrannical laws he
might please, reserving only to a jury (“the country”) the contemptible and servile
privilege of ascertaining, (under the dictation of the king, or his judges, as to the
laws of evidence), the simple fact whether those laws had been transgressed? Was
this the only restraint, which, when they had all power in their hands, they placed
upon the tyranny of a king, whose oppressions they had risen in arms to resist?
Was it to obtain such a charter as that, that the whole nation had united, as it were,
like one man, against their king? Was it on such a charter that they intended to
rely, for all future time, for the security of their liberties? No. They were engaged
in no such senseless work as that. On the contrary, when they required him to
renounce forever the power to punish any freeman, unless by the consent of his
peers, they intended those peers should judge of, and try, the whole case on its
merits, independently of all arbitrary legislation, or judicial authority, on the part
of the king. In this way they took the liberties of each individual—and thus the
liberties of the whole people—entirely out of the hands of the king, and out of the
power of his laws, and placed them in the keeping of the people themselves. And
this it was that made the trial by jury the palladium of their liberties.
The trial by jury, be it observed, was the only real barrier interposed by them
against absolute despotism. Could this trial, then, have been such an entire farce
as it necessarily must have been, if the jury had had no power to judge of the
justice of the laws the people were required to obey? Did it not rather imply that
the jury were to judge independently and fearlessly as to everything involved
in the charge, and especially as to its intrinsic justice, and thereon give their
decision, (unbiased by any legislation of the king,) whether the accused might
be punished? The reason of the thing, no less than the historical celebrity of the
events, as securing the liberties of the people, and the veneration with which
the trial by jury has continued to be regarded, notwithstanding its essence and
vitality have been almost entirely extracted from it in practice, would settle the
question, if other evidences had left the matter in doubt.
Besides, if his laws were to be authoritative with the jury, why should John
indignantly refuse, as at first he did, to grant the charter, (and finally grant it
only when brought to the last extremity,) on the ground that it deprived him of
all power, and left him only the name of a king? He evidently understood that
the juries were to veto his laws, and paralyze his power, at discretion, by form-
ing their own opinions as to the true character of the offences they were to try,
and the laws they were to be called on to enforce; and that “the king wills and
496 Anarchy and the Law

commands” was to have no weight with them contrary to their own judgments
of what was intrinsically right.13
The barons and people having obtained by the charter all the liberties they
had demanded of the king, it was further provided by the charter itself that
twenty-five barons, should be appointed by the barons, out of their number, to
keep special vigilance in the kingdom to see that the charter was observed, with
authority to make war upon the king in case of its violation. The king also, by
the charter, so far absolved all the people of the kingdom from their allegiance
to him, as to authorize and require them to swear to obey the twenty-five barons,
in case they should make war upon the king for infringement of the charter. It
was then thought by the barons and people, that something substantial had been
done for the security of their liberties.
This charter, in its most essential features, and without any abatement as to the
trial by jury, has since been confirmed more than thirty times; and the people of England
have always had a traditionary idea that it was of some value as a guaranty against
oppression. Yet that idea has been an entire delusion, unless the jury have had the
right to judge of the justice of the laws they were called on to enforce.
Notes
1. To show that this supposition is not an extravagant one, it may be mentioned that
courts have repeatedly questioned jurors to ascertain whether they were prejudiced
against the government—that is, whether they were in favor of, or opposed to, such
laws of the government as were to be put in issue in the then pending trial. This was
done (in 1851) in the United States District Court for the District of Massachusetts,
by Peleg Sprague, the United States district judge, in panelling three several juries
for the trials of Scott, Hayden, and Morris, charged with having aided in the rescue
of a fugitive slave from the custody of the United States deputy marshal. This judge
caused the following question to be propounded to all the jurors separately; and
those who answered unfavorably for the purposes of the government, were excluded
from the panel.
“Do you hold any opinions upon the subject of the Fugitive Slave Law, so
called, which will induce you to refuse to convict a person indicted under it, if the
facts set forth in the indictment, and constituting the offense, are proved against
him, and the court direct you that the law is constitutional?”
The reason of this question was, that “the Fugitive Slave Law, so called,” was
so obnoxious to a large portion of the People, as to render a conviction under it
hopeless, if the jurors were taken indiscriminately from among the people.
A similar question was soon afterwards propounded to the persons drawn
as jurors in the United States Circuit Court for the District of Massachusetts, by
Benjamin R. Curtis, one of the Justices of the Supreme Court of the United States,
in empanelling a jury for the trial of the aforesaid Morris on the charge before
mentioned; and those who did not answer the question favorably for the govern-
ment were again excluded from the panel.
It has also been an habitual practice with the Supreme Court of Massachusetts,
in empanelling juries for the trial of capital offences, to inquire of the persons drawn
as jurors whether they had any conscientious scruples against finding verdicts of
guilty in such cases; that is, whether they had any conscientious scruples against
sustaining the law prescribing death as the punishment of the crime to be tried; and
to exclude from the panel all who answered in the affirmative.
 Trial by Jury (excerpt) 497

The only principle upon which these questions are asked, is this—that no man
shall be allowed to serve as juror, unless he be ready to enforce any enactment of
the government, however cruel or tyrannical it may be.
What is such a jury good for, as a protection against the tyranny of the govern-
ment? A jury like that is palpably nothing but a mere tool of oppression in the hands
of the government. A trial by such a jury is really a trial by the government itself—and
not a trial by the country—because it is a trial only by men specially selected by the
government for their readiness to enforce its own tyrannical measures.
If that be the true principle of the trial by jury, the trial is utterly worthless as
a security to liberty. The Czar might, with perfect safety to his authority, introduce
the trial by jury into Russia, if he could but be permitted to select his jurors from
those who were ready to maintain his laws, without regard to their injustice.
This example is sufficient to show that the very pith of the trial by jury, as a
safeguard to liberty, consists in the jurors being taken indiscriminately from the
whole people, and in their right to hold invalid all laws which they think unjust.
2. The executive has a qualified veto upon the passage of laws, in most of our govern-
ments, and an absolute veto, in all of them, upon the execution of any laws which
he deems unconstitutional; because his oath to support the constitution (as he
understands it) forbids him to execute any law that he deems unconstitutional.
3. And if there be so much as a reasonable doubt of the justice of the laws, the benefit
of that doubt must be given to the defendant, and not to the government. So that
the government must keep its laws clearly within the limits of justice, if it would
ask a jury to enforce them.
4. Hallam says, “The relation established between a lord and his vassal by the feudal
tenure, far from containing principles of any servile and implicit obedience, permit-
ted the compact to be dissolved in case of its violation by either party. This extended
as much to the sovereign as to inferior lords. * * If a vassal was aggrieved, and if
justice was denied him, he sent a defiance, that is, a renunciation of fealty to the
king, and was entitled to enforce redress at the point of his sword. It then became
a contest of strength as between two independent potentates, and was terminated
by treaty, advantageous or otherwise, according to the fortune of war. * * There
remained the original principle, that allegiance depended conditionally upon good
treatment, and that an appeal might be lawfully made to arms against an oppressive
government. Nor was this, we may be sure, left for extreme necessity, or thought
to require a long-enduring forbearance. In modern times, a king, compelled by his
subjects’ swords to abandon any pretension, would be supposed to have ceased to
reign; and the express recognition of such a right as that of insurrection has been
justly deemed inconsistent with the majesty of law. But ruder ages had ruder senti-
ments. Force was necessary to repel force; and men accustomed to see the king’s
authority defied by a private riot, were not much shocked when it was resisted in
defence of public freedom.”—3 Middle Ages 240-2.
5. Hume, Appendix 2.
6. Crabbe’s History of the English Law, 236.
7. Coke says, “The king of England is armed with divers councils, one whereof is called
commune concilium, (the common council,) and that it the court of parliament, and
so it is legally called in writs and judicial proceedings commune concilium regni
Angliae (the common council of the kingdom of England). And another is called
magnum concilium, (great council;) this is sometimes applied to the upper house of
parliament, and sometimes, out of parliament time, to the peers of the realm, lords
of parliament, who are called magnum concilium regis, (the great council of the
king). * * Thirdly, (as every man knoweth,) the king hath a privy council for mat-
498 Anarchy and the Law

ters of state. * * The fourth council of the king are his judges for law matters.”—1
Coke’s Institutes, 110a.
8. The Great Charter of Henry III, (1216 and 1225,) confirmed by Edward I, (1297,)
makes no provision whatever for, or mention of, a parliament, unless the provision,
(Ch. 37,) that “Escuage, (a military contribution,) from henceforth shall be taken
like as it was wont to be in the time of King Henry our grandfather,” mean that a
parliament shall be summoned for that purpose.
9. The Magna Carta of John, (Ch. 17 and 18,) defines those who were entitled to be
summoned to parliament, to wit, “The Archbishops, Bishops, Abbots, Earls, and
Great Barons of the Realm, * * and all others who hold of us in chief.” Those who
held land of the king in chief included none below the rank of knights.
10. The parliaments of that time were, doubtless, such as Carlyle describes them, when
he says, “The parliament was at first a most simple assemblage, quite cognate to
the situation; that Red William, or whoever had taken on him the terrible task of
being King of England, was wont to invite, oftenest about Christmas time, his
subordinate Kinglets, Barons as he called them, to give him the pleasure of their
company for a week or two; there, in earnest conference all morning in freer talk
over Christmas [*22] cheer all evening, in some big royal hall of Westminster,
Winchester, or wherever it might be, with log fires, huge rounds of roast and boiled,
not lacking malmsey and other generous liquor, they took counsel concerning the
arduous matters of the kingdom.”
11. Hume, Appendix 2.
12. This point will be more fully established hereafter.
13. It is plain that the king and all his partisans looked upon the charter as utterly pros-
trating the king’s legislative supremacy before the discretion of juries. When the
schedule of liberties demanded by the barons was shown to him, (of which the trial
by jury was the most important, because it was the only one that protected all the
rest,) “the king, falling into a violent passion, asked, Why the barons did not with
these exactations demand his kingdom? * * and with a solemn oath protested, that
he would grant such liberties as would make himself a slave.” * * But afterwards,
“seeing himself deserted, and fearing they would seize his castles, he sent the Earl
of Pembroke and other faithful messengers to them, to let them know he would
grant them the laws and liberties they desired.” * * But after the charter had been
granted, “the king’s mercenary soldiers, desiring war more than peace, were by their
leaders continually whispering in his ears, that he was now no longer king, but the
scorn of other princes; and that it was more eligible to be no king, than such a one
as he.” * * He applied “to the [*25] Pope, that he might by his apostolic authority
make void what the barons had done. * * At Rome he met with what success he
could desire, where all the transactions with the barons were fully represented to
the Pope, and the Charter of Liberties shown to him, in writing; which, when he
had carefully perused, he, with a furious look, cried out, What! Do the barons of
England endeavor to dethrone a king, who has taken upon him the Holy Cross, and
is under the protection of the Apostolic See; and would they force him to transfer
the dominions of the Roman Church to others? By St. Peter, this injury must not
pass unpunished. Then debating the matter with the cardinals, he, by a definitive
sentence, damned and cassated forever the Charter of Liberties, and sent the king a
bull containing that sentence at large.”—Echard’s History of England, pp. 106-7.
These things show that the nature and effect of the charter were well understood
by the king and his friends; that they all agreed that he was effectually stripped of
power. Yet the legislative power had not been taken from him; but only the power to
enforce his laws, unless furies should freely consent to their enforcement.
 32
Relation of the State to the Individual
Benjamin Tucker
Ladies and Gentlemen: Presumably the honor which you have done me
in inviting me to address you today upon “The Relation of the State to the
Individual” is due principally to the fact that circumstances have combined
to make me somewhat conspicuous as an exponent of the theory of Modern
Anarchism—a theory which is coming to be more and more regarded as one of
the few that are tenable as a basis of political and social life. In its name, then, I
shall speak to you in discussing this question, which either underlies or closely
touches almost every practical problem that confronts this generation. The future
of the tariff, of taxation, of finance, of property, of woman, of marriage, of the
family, of the suffrage, of education, of invention, of literature, of science, of
the arts, of personal habits, of private character, of ethics, of religion, will be
determined by the conclusion at which mankind shall arrive as to whether and
how far the individual owes allegiance to the State.
Anarchism, in dealing with this subject, has found it necessary, first of all, to
define its terms. Popular conceptions of the terminology of politics are incom-
patible with the rigorous exactness required in scientific investigation. To be
sure, a departure from the popular use of language is accompanied by the risk
of misconception by the multitude, who persistently ignore the new definitions;
but, on the other hand, conformity thereto is attended by the still more deplorable
alternative of confusion in the eyes of the competent, who would be justified
in attributing inexactness of thought where there is inexactness of expression.
Take the term “State,” for instance, with which we are especially concerned
today. It is a word that is on every lip. But how many of those who use it have
any idea of what they mean by it? And, of the few who have, how various are
their conceptions! We designate by the term “State” institutions that embody
absolutism in its extreme form and institutions that temper it with more or less
liberality. We apply the word alike to institutions that do nothing but aggress
and to institutions that, besides aggressing, to some extent protect and defend.
But which is the State’s essential function, aggression or defence, few seem to
know or care. Some champions of the State evidently consider aggression its
principle, although they disguise it alike from themselves and from the people
under the term “administration,” which they wish to extend in every possible
direction. Others, on the contrary, consider defence its principle, and wish to
limit it accordingly to the performance of police duties. Still others seem to think

499
500 Anarchy and the Law

that it exists for both aggression and defence, combined in varying proportions
according to the momentary interests, or maybe only whims, of those happen-
ing to control it. Brought face to face with these diverse views, the Anarchists,
whose mission in the world is the abolition of aggression and all the evils that
result therefrom, perceived that, to be understood, they must attach some definite
and avowed significance to the terms which they are obliged to employ, and
especially to the words “State” and “government.” Seeking, then, the elements
common to all the institutions to which the name “State” has been applied,
they have found them two in number: first, aggression; second, the assumption
of sole authority over a given area and all within it, exercised generally for the
double purpose of more complete oppression of its subjects and extension of its
boundaries. That this second element is common to all States, I think, will not
be denied—at least, I am not aware that any State has ever tolerated a rival State
within its borders; and it seems plain that any State which should do so would
thereby cease to be a State and to be considered as such by any. The exercise
of authority over the same area by two States is a contradiction. That the first
element, aggression, has been and is common to all States will probably be less
generally admitted. Nevertheless, I shall not attempt to re-enforce here the con-
clusion of Spencer, which is gaining wider acceptance daily; that the State had
its origin in aggression, and has continued as an aggressive institution from its
birth. Defence was an afterthought, prompted by necessity; and its introduction
as a State function, though effected doubtless with a view to the strengthening
of the State, was really and in principle the initiation of the State’s destruction.
Its growth in importance is but an evidence of the tendency of progress toward
the abolition of the State. Taking this view of the matter, the Anarchists contend
that defence is not an essential of the State, but that aggression is. Now what is
aggression? Aggression is simply another name for government. Aggression,
invasion, government, are interconvertible terms. The essence of government
is control, or the attempt to control. He who attempts to control another is
a governor, an aggressor, an invader; and the nature of such invasion is not
changed, whether it is made by one man upon another man, after the manner
of the ordinary criminal, or by one man upon all other men, after the manner
of an absolute monarch, or by all other men upon one man, after the manner
of a modern democracy. On the other hand, he who resists another’s attempt
to control is not an aggressor, an invader, a governor, but simply a defender, a
protector; and the nature of such resistance is not changed whether it be offered
by one man to another man, as when one repels a criminal’s onslaught, or by
one man to all other men, as when one declines to obey an oppressive law, or
by all men to one man, as when a subject people rises against a despot, or as
when the members of a community voluntarily unite to restrain a criminal.
This distinction between invasion and resistance, between government and
defence, is vital. Without it there can be no valid philosophy of politics. Upon
this distinction and the other considerations just outlined, the Anarchists frame
 Relation of the State to the Individual 501

the desired definitions. This, then, is the Anarchistic definition of government:

the subjection of the non-invasive individual to an external will. And this is the
Anarchistic definition of the State: the embodiment of the principle of invasion
in an individual, or a band of individuals, assuming to act as representatives or
masters of the entire people within a given area. As to the meaning of the remain-
ing term in the subject under discussion, the word “individual,” I think there
is little difficulty. Putting aside the subtleties in which certain metaphysicians
have indulged, one may use this word without danger of being misunderstood.
Whether the definitions thus arrived at prove generally acceptable or not is a
matter of minor consequence. I submit that they are reached scientifically, and
serve the purpose of a clear conveyance of thought. The Anarchists, having
by their adoption taken due care to be explicit, are entitled to have their ideas
judged in the light of these definitions.
Now comes the question proper: What relations should exist between the
State and the Individual? The general method of determining these is to apply
some theory of ethics involving a basis of moral obligation. In this method the
Anarchists have no confidence. The idea of moral obligation, of inherent rights
and duties, they totally discard. They look upon all obligations, not as moral,
but as social, and even then not really as obligations except as these have been
consciously and voluntarily assumed. If a man makes an agreement with men,
the latter may combine to hold him to his agreement; but, in the absence of such
agreement, no man, so far as the Anarchists are aware, has made any agreement
with God or with any other power of any order whatsoever. The Anarchists
are not only utilitarians, but egoists in the farthest and fullest sense. So far as
inherent right is concerned, might is its only measure. Any man, be his name
Bill Sykes or Alexander Romanoff, and any set of men, whether the Chinese
highbinders or the Congress of the United States, have the right, if they have
the power, to kill or coerce other men and to make the entire World subservi-
ent to their ends. Society’s right to enslave the individual and the individual’s
right to enslave society are unequal only because their powers are unequal. This
position being subversive of all systems of religion and morality, of course I
cannot expect to win immediate assent thereto from the audience which I am
addressing today; nor does the time at my disposal allow me to sustain it by an
elaborate, or even a summary, examination of the foundations of ethics. Those
who desire a greater familiarity with this particular phase of the subject should
read a profound German work, “Der Einzige und sein Eigenthum,” written
years ago by a comparatively unknown author, Dr. Caspar Schmidt, whose nom
de plume was Max Stirner. Read only by a few scholars, the book is buried in
obscurity, but is destined to a resurrection that perhaps will mark an epoch.
If this, then, were a question of right, it would be, according to the Anar-
chists, purely a question of strength. But, fortunately, it is not a question of
right: it is a question of expediency, of knowledge, of science; the science
of living together, the science of society. The history of humanity has been
502 Anarchy and the Law

largely one long and gradual discovery of the fact that the individual is the
gainer by society exactly in proportion as society is free, and of the law that
the condition of a permanent and harmonious society is the greatest amount
of individual liberty compatible with equality of liberty. The average man of
each new generation has said to himself more clearly and consciously than
his predecessor: “My neighbor is not my enemy, but my friend, and I am his,
if we would but mutually recognize the fact. We help each other to a better,
fuller, happier living; and this service might be greatly increased if we would
cease to restrict, hamper, and oppress each other. Why can we not agree to let
each live his own life, neither of us transgressing the limit that separates our
individualities?” It is by this reasoning that mankind is approaching the real
social contract, which is not, as Rousseau thought, the origin of society, but
rather the outcome of a long social experience, the fruit of its follies and disas-
ters. It is obvious that this contract, this social law, developed to its perfection,
excludes all aggression, all violation of equality of liberty, all invasion of every
kind. Considering this contract in connection with the Anarchistic definition
of the State as the embodiment of the principle of invasion, we see that the
State is antagonistic to society; and, society being essential to individual life
and development, the conclusion leaps to the eyes that the relation of the State
to the individual and of the individual to the State must be one of hostility,
enduring till the State shall perish.
“But,” it will be asked of the Anarchists at this point in the argument, “what
shall be done with those individuals who undoubtedly will persist in violating
the social law by invading their neighbors?” The Anarchists answer that the
abolition of the State will leave in existence a defensive association, resting no
longer on a compulsory but on a voluntary basis, which will restrain invaders
by any means that may prove necessary. “But that is what we have now,” is the
rejoinder. “You really want, then, only a change of name?” Not so fast, please.
Can it be soberly pretended for a moment that the State, even as it exists here
in America, is purely a defensive institution? Surely not, save by those who see
of the State only its most palpable manifestation: the policeman on the street-
corner. And one would not have to watch him very closely to see the error of
this claim. Why, the very first act of the State, the compulsory assessment and
collection of taxes, is itself an aggression, a violation of equal liberty, and, as
such, initiates every subsequent act, even those acts which would be purely
defensive if paid out of a treasury filled by voluntary contributions. How is it
possible to sanction, under the law of equal liberty, the confiscation of a man’s
earnings to pay for protection which he has not sought and does not desire?
And, if this is an outrage, what name shall we give to such confiscation when
the victim is given, instead of bread, a stone, instead of protection, oppres-
sion? To force a man to pay for the violation of his own liberty is indeed an
addition of insult to injury. But that is exactly what the State is doing. Read
the “Congressional Record”; follow the proceedings of the State legislatures;
 Relation of the State to the Individual 503

examine our statute-books; test each act separately by the law of equal liberty,
you will find that a good nine-tenths of existing legislation serves, not to
enforce that fundamental social law, but either to prescribe the individual’s
personal habits, or, worse still, to create and sustain commercial, industrial,
financial, and proprietary monopolies which deprive labor of a large part of
the reward that it would receive in a perfectly free market. “To be governed,”
says Proudhon, “is to be watched, inspected, spied, directed, law-ridden,
regulated, penned up, indoctrinated, preached at, checked, appraised, sized,
censured, commanded; by beings who have neither title nor knowledge nor
virtue. To be governed is to have every operation, every transaction every
movement noted, registered, counted, rated, stamped, measured, numbered,
assessed, licensed, refused, authorized, indorsed, admonished, prevented,
reformed, redressed, corrected. To be governed is, under pretext of public
utility and in the name of the general interest, to be laid under contribution,
drilled, fleeced, exploited, monopolized, extorted from, exhausted, hoaxed,
robbed; then, upon the slightest resistance, at the first word of complaint, to
be repressed, fined, vilified, annoyed, hunted down, pulled about, beaten,
disarmed, bound, imprisoned, shot, mitrailleused, judged, condemned,
banished, sacrificed, sold, betrayed, and, to crown all, ridiculed, derided,
outraged, dishonored.” And I am sure I do not need to point out to you the
existing laws that correspond to and justify nearly every count in Proudhon’s
long indictment. How thoughtless, then, to assert that the existing political
order is of a purely defensive character instead of the aggressive State which
the Anarchists aim to abolish!
This leads to another consideration that bears powerfully upon the problem
of the invasive individual, who is such a bugbear to the opponents of Anarchism.
Is it not such treatment as has just been described that is largely responsible for
his existence? I have heard or read somewhere of an inscription written for a
certain charitable institution:
“This hospital a pious person built,
But first he made the poor wherewith to fill it”
And so, it seems to me, it is with our prisons. They are filled with criminals
which our virtuous State has made what they are by its iniquitous laws, its
grinding monopolies, and the horrible social conditions that result from them.
We enact many laws that manufacture criminals, and then a few that punish
them. Is it too much to expect that the new social conditions which must follow
the abolition of all interference with the production and distribution of wealth
will in the end so change the habits and propensities of men that our jails and
prisons, our policemen and our soldiers, in a word, our whole machinery and
outfit of defence, will be superfluous? That, at least, is the Anarchists’ belief.
 33
Freedom, Society, and the State:
An Investigation Into the Possibility of
Society without Government (excerpt)
David Osterfeld
A Political and Economic Overview
Libertarianism is a politico-economic philosophy of individualism. It is
premised on the belief that every individual has an unalienable right to live his
own life as he sees fit, provided he does not aggress against the equal rights of
others. There are two distinct strains of libertarian thought: minarchism and
anarchism. While this study focuses on the anarchist branch of libertarianism,
the sole, although crucial, difference between the two factions resides in their
views regarding government provision of police and proper function of court
services. The minarchist believes that the only proper function of government
is to protect individuals from aggression. Consequently, they argue for a “night-
watchman” state1 to operate solely in this area and believe that all of the other
services currently supplied by government can be handled on the market. The
anarchists, however, go even further and believe that government can be dispensed
with entirely and that even police and court functions can be supplied better and at
less risk of tyranny on the market. Because the anarchists propose that a definite
economic institution, the market, replace the political institution of government,
they have been referred to as “free market anarchists,” “anarcho-capitalists,” and
“individualist anarchists.” Since libertarianism is compatible with any voluntary,
non-coercive, institutional arrangement of which the market is only one—albeit
the most significant—of such arrangements, terms such as “free market anar-
chism” or “anarcho-capitalism” are overly restrictive. The term “individualist
anarchists” will therefore be the term normally used to refer to those who oppose
government entirely and advocate the market as the primary—in fact indispens-
able—mechanism for the voluntary coordination of social activity.
It should be pointed out in this context that a synthesis of anarchism and
capitalism was regarded as impossible by traditional proponents of both doc-
trines. While the defenders of capitalism such as the classical liberals of the
nineteenth century believed that government should be kept strictly limited
and as much as possible handled by the market, it should not be thought that
they allied themselves with anarchism. On the contrary, it would not be too
strong to describe classical liberalism’s attitude toward anarchism as one of

504
 Freedom, Society, and the State (excerpt) 505

both contempt as well as fear. It was contemptuous because, as one classical

liberal philosopher wrote, anarchism “would be practicable only in a world of
angels” and the “liberal understands quite clearly” that one must be in a position
to compel the person who will not respect lives, health, personal feelings, or
private property of others to acquiesce in the rules of society.”2 And classical
liberalism had feared anarchism because, while encompassing a broad spectrum
of thought ranging from the rampant individualism of Max Stirner to the com-
munism of Peter Kropotkin, the dominant strain of anarchism ostensibly placed
it squarely within the socialist camp. Daniel Guerin put the matter succinctly.
Anarchism, he says, “is really a synonym for socialism.”3 And, while acknowl-
edging “Stirner’s complete rejection of all political, moral, and traditional ties
of the individual,” Max Adler goes so far as to argue that Stirner cannot even
be considered an anarchist since anarchism is only “a definite political trend
within the socialist labor movement,” and Stirner was not a socialist.4
Hence, not just the state but the capitalist economic system were the principal
evils for the majority of anarchist thinkers of the nineteenth century. It was not
accidental that in Kropotkin’s delineation of the three cardinal aims of anarchist
communism the first was an injunction against capitalism: “Emancipation from
the yoke of capital; production in common and free consumption of all the
products of common labor.” Only after his exhortation to abolish capitalism
does one find a call for “emancipation from government” and “emancipation
from religion.”5 The views of the Italian anarchist, Errico Malatesta,6 and the
Britisher, William Morris,7 were similar. Both equated anarchism with com-
munism and called for the free distribution of all goods. Bakunin, while a
collectivist rather than a communist, also advocated the liberation from capi-
talism.8 Even in the writings of the more individualist-oriented anarchists one
finds condemnations of capitalism coupled with panegyrics to socialism. In a
striking phrase, Proudhon not only declared that “Property is theft,” but also
exclaimed “What is the capitalist? Everything! What should he be? Nothing!”9
Similarly, the English anarchist, William Godwin, asserted that “it follows upon
the principles of equal and impartial justice, that the good things of the world
are a common stock, upon which one man has as valid a title as another to draw
for what he wants.”10 And the American anarchist, Benjamin Tucker, contended
that there were “two schools of Socialistic thought,” the State Socialism of Karl
Marx and the Anarchism of Proudhon and the American Josiah Warren. Tucker
placed himself in the anarcho-socialist camp.11 Thus, it is not surprising that
anarchism was abhorrent to the classical liberals. “Liberalism,” wrote Ludwig
von Mises, “is not anarchism, nor has it anything to do with anarchism,”12 and
the twentieth-century followers of classical liberalism, the minarchists, have
followed their mentors in rejecting anarchism.13
But while a quick glance at the major anarchist thinkers of Europe, England,
and America would ostensibly indicate that all were firmly anti-capitalistic, a
closer look will show that this is incorrect, for the term “capitalism” has been
506 Anarchy and the Law

used in socialist literature in two contradictory manners. On the one hand, the
term is used to denote production according to the dictates of the market, or
in socialist terminology, “commodity production.” On the other, capitalism is
defined in terms of class relations, i.e., the ownership of the means of production
by the “bourgeois,” or ruling, class. The former may be termed the economic
definition and the latter the sociological definition. If the economic definition
is used, it follows that the more things are handled by the market, the more
capitalistic the society. This means that price controls, tariffs, licensing restric-
tions, state unemployment compensation, state poor relief, etc., whether they
are considered beneficial or not, must be classified as anti-capitalistic institu-
tions since they constitute modifications or restrictions of the market. Since the
state does not sell its services on the market, “state capitalism,” according to
the economic definition, is a contradiction in terms.
But if the sociological definition is used, the state becomes compatible with
capitalism, for whatever serves to entrench the bourgeois class, the owners
of the means of production, in power is, ipso facto, “capitalistic.” Since both
proponents and critics of capitalism were in general agreement that market
competition would force the “rate of profit” to fall, the two definitions lead to
mutually exclusive consequences. Since the economic or market definition posits
pure laissez faire, any government intervention to protect the interests of the
bourgeoisie is anathema. But that is precisely what is entailed in the sociological
definition: state intervention to protect profits and institutionalize the position
of the property-owning class. When the sociological definition is used, capital-
ism becomes incomprehensible without control of the state by the bourgeoisie.
For with the power of the state behind them, the bourgeoisie are able to protect
their privileged positions from the threat of competition by the establishment
of tariff barriers, licensing restrictions, and other statist measures.
The proponents of capitalism, however, had only the economic definition
in mind when they defended capitalism.14 Far from intending to defend state
intervention to preserve artificially high profits, it was, in fact, such pro-capi-
talist writers as Adam Smith who vehemently condemned such “mercantilist”
arrangements and urged their replacement by free trade capitalism.15 Since
comparison can only be made when definitions tap the same domain, confusion
occurred because of these definitional differences, and critics and opponents
of capitalism talked past each other when many were in basic agreement. But
if the economic spectrum is analyzed from the point of view of the economic
definition only, then comparison can be made on the following basis: capitalism
would be equated with the market, communism with the absence of the market,
and mercantilism with a mixed or restricted market.

communism mercantilism capitalism

0: ----------------------------------------------:-------------------------------------- :100
non-market restricted market market
 Freedom, Society, and the State (excerpt) 507

We are now in a position to reassess the anti-capitalism of the anarchists. What

is evident in such a taxonomy is that while certain anarchists such as Kropotkin
and Bakunin must certainly be classified as socialist or communist, others like
Proudhon, Godwin and especially the native American anarchists such as Josiah
Warren, Benjamin Tucker, and Victor Yarros, despite their characterization of
themselves as socialists, must be placed within the capitalist camp. A closer
look at the anarchists themselves will make this clear.
1. The Economic Spectrum of Anarchist Communism to Capitalism
a. Anarcho-communism. At one end of the anarchist spectrum we find those
who, like Kropotkin and his followers, blend anarchism and communism. The
anarcho-communists oppose exchange, money, the division of labor, private
property, and the wage system. Capitalism, they argue is just as “barbarous”
as feudalism; only the forms have changed. “The worker is forced, under the
name of free contract,” says Kropotkin, “to accept feudal obligations. For turn
where he will he can find no better conditions. Everything has becomes private
property and he must accept, or die of hunger.” Since the capitalist owns the
means of production he can dictate wage rates. This puts the worker at a distinct
disadvantage. The wage system therefore reduces the worker to poverty.
On the other hand, despite the advance in technology which has made a
life of abundance possible for all, “the owners of capital constantly reduce the
output by restricting production,” thereby keeping prices high. Labor is further
squandered—by the production of luxuries for the capitalist class, as well as by
the money spent on armaments, salaries for judges, prison guards, policemen,
etc. All money spent by government is useless, says Kropotkin, since there is a
definite relationship between crime and poverty. Hence, if one eliminates capi-
talism poverty and thus crime would nearly disappear, and government would
become unnecessary. Social behavior would be regulated by voluntary compli-
ance to “unwritten customs.” As Kropotkin’s biographer, Martin Miller, put it,
“the tradition of authority was to be replaced by the authority of tradition.”16
As for the “few anti-social acts that may still take place,” says Kropotkin, “the
best remedy will consist in loving treatment, moral influence, and liberty.”
And if that doesn’t work then the aggressor can “of course be expelled from
fellowship.”17
Private property, whether that of capitalism or mercantilism, is likewise
condemned. Since everything material as well as mental is a product of the
contributions of countless individuals, past as well as present, it is impossible
to determine the actual contributions of each. Consequently, argues Kropotkin,
property cannot rightfully be private, but only common; all have a right to an
equal share of all that is produced. Not only the means of production but also
the product of production including houses, clothing and food, is to be com-
munalized. The first principle of anarcho-communism, says Kropotkin, is that
“the means of production being the collective work of humanity, the product
508 Anarchy and the Law

should be the collective property of the race.”18 Since collectivism only wishes
to collectivize the means of production while retaining individual ownership
of its product, Kropotkin condemns it as simply a modification rather than the
“negation of wage slavery.”19
In the absence of the state, the cities will automatically transform them-
selves into “communistic communes.” These communes will be large enough
to be nearly or completely self-sufficient and at one point Kropotkin says that
each commune would be populated by “a few millions of inhabitants.”20 Man,
he further argues, is not naturally lazy. It is the private ownership system that
“places a premium on idleness.” But since under communism everyone would
know that their subsistence is secured for them “they would ask nothing better
than to work at their old trades.” In fact, he says, the voluntary work of the new
society “will be infinitely superior and yield far more than work has produced
up to now under the goal of slavery, serfdom and wagedom.” Kropotkin envi-
sions the anarcho-communist society to be so productive, in fact, that he claims
that each individual would only have to work five hours per day, and that only
between the ages of twenty or twenty-two to forty-five or fifty.21
In short, for the anarcho-communist, not only private property, whether
capitalist or mercantilist, but the entire market as well, has all to be abolished.
The capitalist system is to be replaced by “fee communism” which “places the
production reaped or manufactured in common at the disposal of all, leaving
to each the liberty to consume as he pleases.”22
b. Anarcho-collectivism. Slightly less communal-oriented than anarcho-com-
munism is the collectivism of the Bakunist and capitalistic private property and
exchange both begin to appear even if only in an extremely rudimentary way.
After the revolution, says Bakunin in his “On the Morrow of the Social Revolu-
tion,” the bourgeoisie will be expropriated: “The city proletariat will become
the owner of capital and of implements of labor, and the rural proletariat of
the land which it cultivates with its own hands.”23 The peasants, according to
the prominent Bakuninist James Guillaume, will then have the option of either
owning and working their plots individually or associating into collectives.
Because of the advantages of the collective in creating “a communal agency
to sell or exchange their products,” it is expected that the collective will be the
dominant form of organization, but no coercion will be used to compel indi-
vidual peasants to join the collectives.24 A similar arrangement is envisioned for
industry. Large-scale production, of course, would entail collective ownership,
but handicrafts and other small industry may well be individually owned. As
for remuneration, whereas anarcho-communism intends to follow the formula
“From each according to his ability to each according to his needs,” the col-
lectivists, at least initially, adhere to the much different maxim of “From each
according to his means to each according to his deeds.”25
To meet their needs it will be quite natural for the collectives to organize
themselves into federations of collectives.26 Then, as Guillaume describes the
 Freedom, Society, and the State (excerpt) 509

operation of the anarcho-collectivist society, “the workers’ associations as well

as the individual producers…will deposit their unconsumed commodities in the
facilities provided by the Bank of Exchange, the value of the commodities having
been established in advance by a contractual agreement between the regional
cooperative federations and the various communes… The Bank of Exchange
will remit to the producers negotiable vouchers representing the value of the
products; these vouchers will be accepted throughout the territory included in
the federation of communes.”27
The important difference between anarcho-communism and anarcho-col-
lectivism is that while for the former the wage-system and all other market
phenomena will be abolished the collectivists retain not only a modified wage
system but other exchange relationships as well. Guillaume, for example, ac-
knowledges that so long as any products are in short supply they would have to be
treated as commodities with their prices set by the Bank of Exchange according
to the dictates of supply and demand. It should be pointed out, however, that the
collectivists believe that collective labor will be so productive that all shortages
will eventually disappear and with it the need of any type of price mechanism.28
Once this plateau of plenty is reached, the structures of anarcho-communism
and anarcho-collectivism will become practically indistinguishable.
c. Anarcho-syndicalism. Syndicalism is both an organizational structure
and a method of overthrowing the capitalist system. As a method, syndical-
ism, as popularized by Georges Sorel,29 is a movement premised on the “myth
of the general strike” and the use of force. Violence, it is held, is necessary to
overthrow both capitalism and the capitalist state. But to galvanize the workers
into action, they must believe in the inexorable triumph of their cause. It is this
function that the “myth” fulfills. For by believing that the general strike will
produce the triumph of their cause, it brings into relief the class antagonisms
of the capitalist system. In doing so it unites the proletariat, producing an “epic
state of mind” which rouses the proletariat to acts of “heroism.”30 This triumph
of the proletarian will eventually culminate in the overthrow of capitalism.
Belief in the myth of their inevitable victory, in other words, produces a will
to action that does, indeed, make their victory inevitable.31 Such, briefly, is the
method of syndicalism.
We are most interested, however, in the organizational framework that
will prevail once syndicalism has triumphed. There is an important differ-
ence between syndicalism and communism on the question of the ownership
of the means of production. While both aim to expropriate these from the
capitalist, under communism, as envisioned by Kropotkin, all workers would
collectively own all capital. Under syndicalism, however, only those work-
ers in a particular industry would own the means of production within that
industry. This bears an obvious resemblance to the collectivism of Bakunin,
and Bakuninism may actually be seen as a variant of syndicalism, as can the
mutualism of Proudhon.
510 Anarchy and the Law

The essential aspect of syndicalism is workers’ control according to indus-

try. While these syndicates or industrial organizations are to be autonomous,
they are nevertheless to be loosely confederated, both geographically as well
as functionally. The workers in each locality, according to Rudolph Rocker, will
join the unions of their respective trades. All the unions in a given region will then
be combined into Labor Chambers. It would be the responsibility of the Labor
Chambers “to determine the needs of the inhabitants of their districts and organize
local consumption.” On the other hand, every trade union is to be “federatively
allied with all the organizations of the same industry and then in turn with all
related trades, so that all are combined in general industrial and agricultural
alliances.” It would “be the task of the Industrial and Agricultural Alliances to
take control of all instruments of production, transportation, etc. and provide
the separate producing groups with what they need.” In short, workers are to be
organized functionally through the Federation of Industrial Alliances, which would
coordinate production, and geographically through the Federation of Labor Cham-
bers, which would handle the problems of distribution and consumption.32
Anarcho-syndicates maintain that syndicalism would accomplish “the com-
plete overthrow of the wage system.”33 But since the income of each worker-
owner is directly tied not only to the physical output of his own industry but
to the demand for that output, it would be more accurate to view syndicalism
as a modification rather than the abolition of the wage system.34 In fact, while
it may be too strong to call it “workers’ capitalism,” it should be pointed out
that its very structure forces the workers to be not only workers and owners but
capitalists and entrepreneurs as well. But this means that each syndicate would
have to decide such questions as whether to expand or curtail production in
any given period, how much of its gross revenue to reinvest and how much to
divide between the members of the syndicate, whether to cease operations in
one area or begin them in another, whether to use more labor and less machinery
or vice versa, etc. These are entrepreneurial decisions and are invariably made
within an environment of uncertainty and risk. And just as some entrepreneurs
make the correct decisions and succeed while others fail, under syndicalism
some syndicates might prosper but others would surely fail, for no system can
eradicate the uncertainty of the future. Not only may tastes change, for example,
but an invention may render a particular syndicate obsolete.
Not only would syndicalism have to make entrepreneurial decisions, just as
is done under capitalism, but one must question whether “workers’ control”
is even possible. The crucial problem for syndicalism is whether or not the
individual members of the syndicates would be permitted to sell their shares to
other individuals or syndicates. Either way creates a dilemma for the concept
of workers’ control. For if they are not permitted to sell their shares then they
cannot be said to really own their portion of the industry. Since sociologically
ownership is defined as the power to dispose of property, that individual or
group within the syndicate with the power to prevent the worker from selling
 Freedom, Society, and the State (excerpt) 511

“his” share to whom he wishes is the actual owner and controller. Rather than
workers’ control, there has merely been a change in form: one set of owners has
replaced another. But if individuals within each industry really own a share of
that industry then they must be permitted to dispose of their shares as they see
fit. This means that they can sell their shares to those outside of the industry.
But such a policy would entail an end to “workers’ control” and a reemergence
of the separation of ownership and labor which it was the aim of syndicalism to
overcome. Similarly, the same dilemma presents itself if the original workers-
owners of the more prosperous syndicates decide to hire workers as simple wage
earners and not as part owners of the industry. To prevent them would be a denial
of worker control; but so too would adoption of such a policy. Again, things
would tend to return to the pre-syndicalist, i.e., capitalist, state of affairs.
Thus, while syndicalism may aim to eliminate private ownership of the
means of production, the wage system, the market, and economic inequality,
the structure of syndicalism itself forces a return to the paraphernalia of the
market, if only in a somewhat modified form.35
d. Mutualism. Despite his famous remark that “property is theft” Proudhon
was, in fact, a staunch defender of the small property owner. He distinguished
between property, in effect absentee ownership, and possession. His argument
was that, the land really belonged to those who worked it and hence “posses-
sion,” or “occupancy,” “negated property.”36 He not only defended private
ownership but the rights of barter, sale and hereditary property as well, and
felt that individual liberty could be protected only if property were subject to
no restrictions but that of size.
The three cornerstones of Proudhon’s ideal society are contract, exchange,
and property. The state is to be abolished and all relations between individuals
and collectives are to be handled by contract. “The notion of contract precludes
that of government,” writes Proudhon. And again, “Instead of laws we would
have contracts. No laws would be passed either by majority vote or unanimously.
Each citizen, each commune or corporation, would make its own laws.”37 The
corollary of contract is exchange; people contract with each other to exchange
their products. Accordingly, Proudhon defines mutualism as “service for ser-
vice, product for product…”38 Proudhon was not so much an opponent of the
capitalistic market system as of industrialism. He envisioned a society of nu-
merous small and independent producers, voluntarily contracting to exchange
their products on an equitable basis. Where the nature of production makes
such a framework impossible, Proudhon advocates a syndicalist arrangement
where the workers in each such industry would own the means of production
in that industry. Relations between the syndicates and other syndicates or
individual producers are to be handled in the same way as relations between
individual producers: exchange and contract. But for contract and exchange to
be meaningful there must be private ownership; one cannot exchange what one
does not own. Proudhon, in fact, proclaims that property “is the only power
512 Anarchy and the Law

that can act as a counter weight to the State…” Thus, property he says, “is the
basis of my system of federation.”39 It is not surprising to find, therefore, that
Proudhon was in fact a bitter opponent of communism, which he defined as
“the exploitation of the strong by the weak.” Any society failing to recognize
the right of private property, he felt, must inevitably breed a stultifying rigidity
and uniformity that is incompatible with “the free exercise of our faculties…our
noblest dreams,…our deepest feelings.”40
On the question of crime in an anarchist society, Proudhon thought that
contract was the sine qua non of justice, and that a fully contractual society
would be a fully just one. And he further believed, perhaps naively, that a just
society would alleviate much of the tendency toward and need for criminal
behavior. The occasional antisocial individual, Proudhon thought, could be
handled through the method of voluntary reparation. The criminal would be
asked to make reparation to his victim, and the threat of being the target of public
disapprobation if he refused would all but insure compliance. And since repara-
tion accords the criminal “as much respect as he lost through his crime…[h]is
reparation is also a rehabilitation.” Finally, anyone regularly violating the
norms of the society, and refusing to make reparation, what Proudhon terms
the “hopelessly obdurate scoundrel,” can legitimately be subjected to physical
suffering and even death.41
In short, despite Proudhon’s famous statement on property and his regular
condemnations of “capitalism,” the essential components of mutualism are pri-
vate property, exchange, and contract. With the one significant exception of his
stricture concerning the size of property, mutualism is, in most other respects,
not incompatible with capitalism.42
e. Godwinism. H. N. Brailsford says of Godwin that, “intensely equalitarian,
he permits property only that it may be given away.”43 A close look at William
Godwin, however, reveals that despite his repeated condemnations of “accu-
mulated property” he was probably an even more vigorous defender of private
ownership than Proudhon. The idea of property, says Godwin, “is a deduction
from the right of private judgment.” Thus, he continues, property is, “in the
last resort, the palladium of all that ought to be dear to us, and must never be
approached but with awe and veneration.”44 In fact, while otherwise eschew-
ing violence, Godwin even goes so far as to remark that the “right of property,
with all its inequalities…should be defended if need be by coercion…” Godwin
views property according to “three degrees.” The first and most fundamental is
that a person may own property provided “a greater sum of benefit or pleasure
will result, than could have arisen from their being otherwise appropriated.”
From this he believes it follows “that no man may, in ordinary cases, make use
of my apartment, furniture or garments, or of my food,…without first having
obtained my consent.” The crucial function of the “first degree of property” is
that if everyone is granted a certain sphere of property, no one would be subject
to the whims of another. Hence property will provide everyone with a sphere of
action where he can exercise his judgment free from the influence of others.
 Freedom, Society, and the State (excerpt) 513

The second degree of property is the right of every man “over the produce
of his own labor.” While this is less fundamental than the first degree, the latter
does not automatically take precedence. Instead, the first degree can only be
attained by persuasion and the force of public opinion.
The third degree is any system “by which one man enters into the faculty of
disposing of the produce of the labor or another man’s industry.” Accumulated
property, of which inheritance is one form, enables one to exercise power over
another man’s labor and is in “direct contradiction to the second.” But even though
Godwin terms this degree of property “wrong,” it is significant that he opposes
any active measures to abolish the system: “If by positive institutions the property
of every man were equalized today…it would become unequal tomorrow. The
same evils would spring up with a rapid growth….” In fact, the cure, he says,
since it would be effected by coercion, would be worse than the evil.
The only effective way Godwin sees to alter the prevailing structure of
property is through the same method that he envisions antisocial behavior being
handled: “a revolution on opinions.” Mankind is not naturally vicious, but has
been corrupted by the unnecessarily complex institutions of political authority.
“Simplify the social structure,” he argues. And the resulting freedom will stimu-
late the gradual development of individual responsibility which, in turn, means
that “we may expect the whole species to become reasonable and virtuous.” It
would then be sufficient for local juries, operating in Platonic fashion by judging
each case on its own merits, simply to make public recommendations. Godwin
is confident that no physical enforcement would be necessary, for “where the
empire of reason was so universally acknowledged,” any offender resisting
the public reprimand of the jury “would feel so uneasy, under the unequivocal
disapprobation, and the observant eye of public judgment,” as either to finally
comply or “to remove to a society more congenial to his errors.”45 And just as
public opinion would be sufficient to regulate antisocial behavior, so, Godwin
believes, it would be equally capable of regulating the abuses of property. If in
any society “accumulation and monopoly be regarded as the seals of mischief,
injustice and dishonor, instead of being treated as titles to attention and differ-
ence, in that society the accommodations of human life will tend to their level,
and inequality of conditions will be destroyed.”46
Since Godwin, like Proudhon, calls for the abolition of the state, it is not the
property of mercantilism but of capitalism that he defends. Despite the fact that
Godwin heaps moral condemnation upon the process of capital accumulation,
it is most significant that he flatly rejects attempts to prevent it and clearly sees
inequality of property as a lesser evil than the resort to coercion. Thus his views
on property are, in fact, largely compatible with the capitalist system.
f. Egoism. The essence of Max Stirner’s anarchism was each individual’s
uniqueness. “Ownness,” he wrote, “is my whole being and existence, it is I
myself. I am free from what I am rid of, owner of what I have in my power or
what I control.”
514 Anarchy and the Law

Since egoism opposes the subjection of the individual to any external author-
ity, Stirner flatly rejects not only the state, but all moral codes as well.47 However,
it does not follow that egoism entails either the isolation of the individual, as
some have implied,48 or a war of all against all, producing a Hobbesian world
where life is “nasty brutish and short.” On the contrary, Stirner claims that con-
temporary society is not a genuinely human society, for only when the human
being acts qua human being, i.e., unencumbered by external social restraints,
can his actions be considered truly human. And since contemporary society is
maintained in part through the compulsions of State and Church, it follows that
it is not a genuine society.49 It is unfortunate that Stirner, in propounding what
may be termed the “philosophy of the pure individual,” was not more specific
in outlining his alternative socio-political order. But his scattered remarks on
the subject make it quite clear that he did not believe that a stateless and amoral
society would be either chaotic or brutish.
Since every individual is dependent upon others in varying degrees for the
satisfaction of his physical needs for food, shelter and clothing, as well as his
psychological needs for love and companionship, individuals, acting purely
out of a regard for their own self-interests, would be motivated to cooperate
with one another. Groups of like-minded egoists, says James Martin, “would be
drawn together voluntarily by the attraction of their mutual interests” to form a
truly human association, i.e., what Stirner terms a “Union of Egoists.”50 Since
insecurity is a most unpleasant sensation, the members of nearly every Union
would agree to forego the use of force, and any member failing to abide by this
rule could presumably be physically punished or expelled from the Union. And
further, while there are neither rights nor duties, and power is the be all and
end all, so that one owns only what he has to power to control, it is clear that
Stirner believes that the utility of a secure property structure would encourage
the Unions to protect that institution. “Unions will,” he writes, “multiply the,
individual’s means and secure his assailed property.”51
As in other types of anarchism, the egoistic writings of Stirner contain a
sustained condemnation of capitalism and “legal property.” A closer view,
however, makes it evident that what Stirner opposes is actually the mercantilist,
or state capitalist, system.
Thus he writes that “the State is a commoner’s [merchant’s] State…” “Un-
der the regime of the commonality,” he says, “the laborers always fall into the
hands of the possessors—i.e., of those who have at their disposal some bit of
the State domains,…especially money and land; of the capitalist therefore.”
And again: “The commoner is what he is through the protection of the State,
through the State’s grace.”52 These statements, in themselves, are compatible
with free-market capitalism. Further, Stirner was such a bitter opponent of any
type of communism that Karl Marx wrote that Stirner’s “egoistical property…is
nothing more than ordinary or bourgeois property sanctified.”53 So while he was
vague concerning what role the market and private property would play in a
 Freedom, Society, and the State (excerpt) 515

Stirnerite society, Charles Madison accurately captures the thrust of Stirnerism

when he remarks that “ironically enough, the hard selfishness of this individual-
ist anarchism was admirably adapted to the ‘rugged individualism’ of modern
capitalism.”54 It might also be pointed out that such prominent exponents of
egoism as John Babcock and John Henry Mackay considered private property
sacrosanct and reserved a central role for voluntary contract and exchange for
mutual benefit. But both, it should be noted, were also heavily influenced by the
prominent individualist or “philosophical” anarchist, Benjamin Tucker.55
g. Philosophical Anarchism. What is usually termed the philosophical
anarchist tradition received its fullest expression in the writings of the nine-
teenth-century American anarchists, and in particular Benjamin Tucker and
Victor Yarros. Tucker, like other anarchists, couched his arguments in socialist
terminology. Yet an examination of his ideas, as well as those of his followers,
place them squarely within the capitalist framework. He was an ardent opponent
of communism, and a staunch defender of the free market, private property, and
the wage system, and advocated what may be termed “laissez-faire socialism.”
As in the case of Stirner and Proudhon, what Tucker condemned was not free
market capitalism but State capitalism or mercantilism. “The only reason why
the banker, the stockholder, the manufacturer, and the merchant are able to ex-
tract usury from labor,” he argued, “lies in the fact that they are backed by legal
privilege, or monopoly.” The way to eliminate these monopolies is “by subjecting
capital to the natural law of competition, thus bringing the price of its use down
to cost.” He would apply freedom of competition to “the money monopoly, the
land monopoly, the tariff monopoly and the patent and copyright monopoly.”
The first, felt Tucker, would eliminate interest, the second rent, the third and
fourth profits. The elimination of these monopolies by means of total laissez
faire would insure that the laborer would get the full value of his labor.56
A fundamental difference between the philosophical anarchists and all of the
other types discussed thus far is their great faith in the ability of the market to
control spontaneously the problem of power in society. This is clearly illustrated
in Tucker’s position on the proper handling of trusts. Since every individual
has the right to dispose of his property as he sees fit, and since, Tucker argued,
trusts are simply groups of individuals, they have the same rights as isolated
individuals. Hence, the trust, “endeavoring to do collectively nothing but what
each member of the combination rightfully may endeavor to do individually, is,
per se, an unimpeachable institution.” So long as the trust is not supported by
legal privileges it can only remain in operation by selling more cheaply than any
actual or potential competitor, which, of course, makes it a beneficial institution.
If it is not beneficial, it will succumb to the challenge of competition, and fall
apart.57 According to the Tuckerites, everything, including police protection,
should be handled on the market and be subject to the rigors of competition.
Despite the fact that Tucker couches his position in socialist terminology, his
“laissez faire socialism” falls squarely with the capitalist system.
516 Anarchy and the Law

h. Individualist Anarchism. The contemporary individualist anarchists such

as Murray Rothbard agree with the overall structure of the Tuckerites: the state
is to be abolished and everything is to be handled by, or at least open to the
possibility of, competition on the free market. There is one significant differ-
ence, however. While Tucker, adhering to the labor theory of value, felt that
competition would reduce price to cost, thereby eliminating profits, rents and
interest, the individualist anarchists reject the labor theory of value and adopt,
in its place, the subjective value-marginal utility approach. Free competition
would indeed tend to reduce prices and raise wages, they say, but the Tuck-
erites are in error in believing that this means that profits and interest would
also disappear. Instead, their maintenance is seen as a requisite for economic
rationality, and even society itself.58
2. The Political Spectrum of Capitalism: Anarchism to Hyperarchism
A brief overview of the economic spectrum of anarchism revealed a wide
array of economic arrangements. Similarly, the proponents of capitalism traverse
the entire political spectrum from anarchism to what may be called “hyperar-
chism.” Only by viewing this array of groups and then comparing the political
spectrum of capitalism with the economic spectrum of anarchism can the relative
positions of the individualist, or free market, anarchists be ascertained.
a. Individualist Anarchism. The previous discussion of individualist an-
archism focused on its place in the anarchist school. Its position within the
capitalist spectrum still needs to be discerned. The sanctity of private property
and the market lie at the heart of laissez-faire capitalism. From a logical point
of view, the more things are handled by the market, the more capitalistic the
society. Consistently applied, argue the individualist anarchists, capitalism
leads to anarchism. Hence, they argue, the minarchists, or limited-govern-
ment libertarians, place themselves in a contradiction for, while believing that
property rights must be protected and the market maintained, they also believe
that these services—the police and court functions—are by their nature collec-
tive and cannot be provided by the market. Thus, they are forced to rely on an
agency outside the market, i.e., the government. The minarchists, it is argued,
are placed in the contradictory position of relying on a non-market institution
to defend the market. Further, since to meet operating expenses a government
is forced to collect taxes, which constitutes a forcible transfer of wealth from
its rightful owners to others and therefore is a violation of property rights, the
minarchists are also in the embarrassing position of relying, for the protection
of property rights, on an institution that by its very nature entails the invasion
of property rights.
The individualist anarchist then proceeds to push the anti-statist elements in
libertarianism to their logical extreme: the elimination of government and total
reliance on the market. The whole concept of “collective goods” is rejected.59 All
goods and services, including those supplied by government, can be broken down
 Freedom, Society, and the State (excerpt) 517

into marginal units and sold on the market. Thus, runs their argument, govern-
ment can be completely dispensed with and its functions performed, voluntarily,
by defense agencies, court companies, road companies, etc. Not only can these
services be supplied better, more efficiently and less expensively on the market,
they argue, but more importantly, the perennial threat of tyranny resulting from
government monopoly of the use of force would be eliminated.
The limited-government however, maintains that the libertarian anarchist has
placed himself in a dilemma. For permitting the market to operate in the choice
of such things as police protection and legal codes means that justice will be
determined by the highest bidders. But this, in turn, means that a libertarian
legal code will emerge from an anarchist society only if the society, itself, is
overwhelmingly libertarian. But if there were sufficient demand for, say, the
suppression of nude swimming or marijuana smoking, an individualist anar-
chist society would produce laws prohibiting such activities as well as defense
agencies willing to enforce them.
Thus, an individualist anarchist community contains the distinct possibility
that economic classes, such as the poor, or minorities, such as blacks, redheads,
ladies of the evening and the like, would find themselves being subjected to
restrictive measures that squarely contradict the principles of libertarianism,
In short, the dilemma of individualist anarchism, argue it’s critics, is that its
very structural framework renders it incapable of protecting the substantive
libertarian principles it purports to cherish.60, 61 Whether individualist anar-
chism is beset by such an internal contradiction will be examined in greater
depth in a later chapter. Suffice it to be said at this point that if true, this would
constitute a telling blow, indeed, for the Rothbardian, or natural rights, variant
of individualist anarchism.
b. Ultraminarchism. Remarkably close to the individualist anarchists are the
views of philosopher John Hospers. While Hospers’ outline of his ideal social
order is sketchy, certain aspects of it are clear. First of all, everyone is held to have
such “human rights” as those to life, liberty and property.62 The sole function
of government is the protection of these rights, and a government is legitimate
so long as it restricts its activities to this sphere; but as soon as it exceeds this
sphere it becomes an aggressor. Second, since an absolutely fundamental right
is that to property—Hospers denies that there can be any rights in the absence
of property rights63—and since taxation is a clear violation of property rights,
there would be no taxation by a Hosperian government.
The government, he believes, could support itself through a fee-for-service
policy. The only time anyone would pay anything to a government agency
would be when, and to the extent that, he chose to avail himself of a government
service. No one, however, would be forced to receive or pay for any service he
didn’t desire. Thus, an individual would be free to interact with others, includ-
ing signing a contract. However, if one desired to insure himself against the
possibility of contractual default he could upon signing the contract pay a fee to
518 Anarchy and the Law

the government granting him access to the courts in the event of any contractual
dispute. This fee—which Hospers reluctantly terms a “contract tax”—would
be voluntary: people would only pay the fee if they found it in their interest
to do so. However, since a Hosperian state would be so miniscule, and since
“most people would find it to their interest to pay the fee,” he is confident that
the government could be supported in this manner.64
A very similar arrangement is suggested for police protection. While Hospers
feels that statutory law, and thus a government, is necessary to insure a rule
of law, he sees no reason why the government would have to enforce its own
law. In fact, he acknowledges that private police forces are doubtless much
more efficient than those run by government.65 There is therefore an economic
advantage to permitting police protection to be handled entirely by the market.
The only restriction that would be necessary to impose upon these private police
companies—a restriction that Hospers feels would be impossible to impose
in anarchist society—is that “they should be able enforce only the law of the
land…”66 Beyond this, police companies would have complete freedom to
compete against one another just like firms in any other field. Anyone desiring
police protection could purchase from the firm of his choice. And while no one
would be compelled to purchase protection, only those paying the protection fee
would receive protection. “If you want police protection you have to pay a fee to
obtain it, but of course you are free not to want it or pay for it, in which case,”
Hospers continues, “you will not have the protection even if you need it.”67
In short, Hospers maintains that while “laws should…be enacted by the
state,…the enforcement of them might be left to private agencies.”68 The pro-
vision of both police and court services would be handled on a fee-for-service
basis, with individuals free to purchase or not to purchase these services as they
see fit, but unable to purchase the services of any maverick police agency or
court which adhered to norms at variance with those laid down by the state.
It is interesting to note that since a Hosperian state would render protection
only to those purchasing it, it does not meet the criterion of a minimal state
which, by definition, must provide protection for everyone within its territorial
boundaries regardless of payment. We may, therefore, borrow a term coined by
philosopher Robert Nozick, and refer to Hospers as “ultraminarchist.”
But it is possible that even this appellation is too strong. One of the essen-
tial criteria of a “state” is that it must be generally recognized as exercising a
legitimate monopoly on the use of force within a given area.69 But since, in a
Hosperian society, the use of force would presumably be handled not by the
“government” but entirely by private police agencies, this raises the question
of whether the Hosperian framework meets this monopoly criterion. Hospers
might, of course, argue that his entire system—the legislature plus fee-for-ser-
vice courts and the private police agencies—constitutes a “state.”
But however one may resolve such definitional problems this still leaves
open the really crucial question of how, if the use of force is to be left up to
 Freedom, Society, and the State (excerpt) 519

private police agencies, could the Hosperian proviso that these agencies must
only enforce the legislature’s statutory laws be enforced? What would happen
if one, or two or a dozen enforcement agencies started enforcing norms that
conflicted with the laws enacted by the legislature? There are, so far as I can
see, two possible scenarios. First, Hospers might contend that since these mav-
erick agencies would clearly be acting illegally either they would not receive
public patronage and so go out of business, or other police agencies, perceiv-
ing the threat of the illegals, would join forces to crush them. But since these
are exactly the same measures Rothbardian anarchists rely on to insure the
enforcement of their common law, Hospers’ ultraminarchism becomes all but
indistinguishable from Rothbardian anarchism. But Hospers might argue for
a second course: that of permitting the public legislature to diversify into the
provision of police services. The public agency might then not only enact laws
but have enough force at its disposal to punish or crush any maverick agency.
But since Hospers admits that private agencies are much more efficient than
public ones it is difficult to see why anyone would purchase protection from the
latter. Consequently, the only ways the public agency could remain in business
would be either by outlawing not just maverick, but all, private police agencies,
or by charging every police agency a fee sufficiently high to cover the public
agency’s losses. Since the public agency would now hold an effective monopoly
on the use of force it would meet the criteria for a state, although if it continued
to operate on a fee-for-service basis it would remain a less than minimal state.
But, it must be noted, neither of these options can be reconciled with libertarian
principles. The outlawing of all private agencies would constitute a restriction
on peaceful activities, while the fee charged every agency would be neither
voluntary70 nor paid in exchange for services rendered. It would therefore be a
tax in the full sense of that word.
In short, Hospers is placed in a dilemma: either he must accede in some restric-
tion on peaceful activities and/or taxation, thereby violating his libertarianism,
or he must rely for the enforcement of his “statutory law” on non-monopolistic
mechanisms, thereby abandoning his archism. Thus, Hosperian ultraminarchism
appears to contain a serious internal contradiction which would logically compel
it to move either to complete anarchism or full-fledged minarchism.
c. Minarchism. Those who do not believe that a market for protection services
would be either economically viable or morally permissible must therefore
endorse some sort of state. And those within that group who maintain that
the provision of such services is the only proper function of government must
therefore advocate a minimal, or completely laissez faire, state. The “minar-
chist” position has received its most recent and perhaps ablest—at any rate
most ingenious—expression in the “invisible hand” argument of philosopher
Robert Nozick.
Nozick begins with a discussion of a hypothetical free market anarchist
society. But protective services, he says, differ from other types of services in
520 Anarchy and the Law

that they employ the use of coercion. Therefore, in defending their respective
clients they would come into conflict with each other, the result being that one,
dominant protective agency would eliminate its competition and emerge as
the single such agency in a particular geographical region. This, says Nozick,
would constitute an “ultraminimal state,” which differs from the minimal state
of the classical liberals in that the former, by the law of supply and demand,
eliminates its competition in a particular area, hereby maintaining “a monopoly
over the use of force” but providing “protection and enforcement services only
to those who would purchase its protection and enforcement policies.”71 The
classical liberal state, on the other hand, held a legal monopoly over the use of
force and supplied protection services to all its citizens.
But, argues Nozick, the “ultraminimal state” will soon transform itself into
a minimal state, for under an “ultraminimal state” individuals would still be
free to extract “private justice.” But “the knowledge that one is living under a
system permitting this, itself, produces apprehension,” with individuals never
knowing how or when they may receive “retribution” from a private agent. Fear
will pervade the entire society.
Thus private justice constitutes “a public wrong.” To protect its clients, the domi-
nant protective agency may then “prohibit the independents from such self-help
enforcement.” This will not mean that the independents will be left defenseless
for, contends Nozick, according to the “principle of compensation” “the clients
of the protective agency must compensate the independents for the disadvantages
imposed upon them by being prohibited self-help enforcement of their own rights
against the agency’s clients.” Undoubtedly, the least expensive way to compensate
the independents would be to supply them with protective services to cover those
situations of conflict with the paying customers of the protective agency. This will
not lead to “free riders,” he insists, for “the agency protects these independents it
compensates only against its own paying clients on whom the independents are
forbidden to use self-help enforcement. The more free riders there are, the more
desirable it is to be a client always protected by the agency.”72
While believing that this argument has justified the state, Nozick then pro-
ceeds to point out that given natural rights—which he admits he merely assumes
rather than demonstrates73—anything beyond the minimal state, including taxa-
tion, entails the violation of those rights, since it means the initiation of force
against peaceful individuals. Hence, “the minimal state is the most extensive
state that can be justified.”74
While this is a most intriguing argument, it is not at all clear that Nozick
has, in fact, succeeded in justifying the minimal state. For a minimal state, he
notes, must (a) exercise, or come close to exercising, a monopoly on the use of
force within a given territory, and (b) provide everyone within its domain with
protection.75 But while the dominant protection agency would prohibit self-help
enforcement among its own clients and between independents and c1ients, its
domain, Nozick says in a significant passage, “does not extend to quarrels of
 Freedom, Society, and the State (excerpt) 521

non-clients among themselves.”76 Nozick’s dominant protection agency therefore

falls short of his own criteria for a minimal state. In fact, since independent
agencies could continue to operate so long as they didn’t confront the dominant
agency, it is not even clear that the latter would constitute an ultraminimal state,
which requires the provision of protection services by a single agency.77 Nozick,
it should be noted, is aware of this difficulty and reacts to it by simply relax-
ing his criteria. He then refers to the dominant agency as a “state-like entity”
instead of simply a “state.”78
There is, however, the potential for an additional problem. Suppose, theorizes
Roy Childs, that in the midst of an established minimal state an agency arises
which uses procedures identical to those of the state’s agents. Since, under this
condition, the incipient agency could not be any more risky than the state, a state
operating on Nozickian principles would have no grounds for prohibiting its
activities. But, continues Childs, since the state was already compensating those
who would have patronized agencies using risky procedures, the new agency
would not have to assume this burden and could therefore charge lower prices
for the same quality service. This would, in turn, create an economic incentive
for people to subscribe to the new agency, thereby forcing the minimal state to
abandon its own compensation policy. But this would mean that the minimal
state had reverted to the ultraminimal state. But, continues Childs, provided the
new agency continued to win new clients, and other entrepreneurs, seeing the
success of the new agency, entered the field themselves, the ultraminimal state
would degenerate into a mere dominant agency, and eventually that into “simply
one agency among many.” In short, Childs argues, there is no reason, on strictly
Nozickian grounds, why the invisible hand could not strike back.79
But regardless of how it is justified, the minarchist advocates a single agency
with a monopoly on the use of force in society and whose sole function is the
protection of individual rights.
d. Evolutionary Individualist Anarchism. An interesting view, which pro-
posed a minimal state for the present, while espousing an anarchist society for
the future, was that advanced by the nineteenth-century English philosopher,
Herbert Spencer, and the French economist, Frederic Bastiat. Both condemned
any extension of government beyond the minimum necessary to protect the
natural rights of every individual. Spencer argues that “every man has freedom
to do as he wills, provided he infringes not the equal freedom of every other
man.” From this it follows, he believed, that if government does anything more
than protect individual rights “it becomes an aggressor instead of a protector.”80
Thus Spencer was an ardent opponent not only of regulation of commerce,
religion, health, education, etc., but of taxation as well. Indeed, Spencer goes
even further and declares that the individual has a “right to ignore the state.”
His reasoning is instructive: “If every man has freedom to do all that he wills,
provided that he infringes not the equal freedom of any other man, then he is
free to drop connection with the state—to relinquish its protection, and to refuse
522 Anarchy and the Law

paying toward its support. It is self-evident that in so behaving he in no way

trenches upon the liberty of others…. It is equally self-evident that he cannot be
compelled to continue as one of a political corporation…seeing that citizenship
involves payment of taxes; and taking away a man’s property against his will,
is an infringement of his rights.”81 Having laid the philosophical groundwork
for anarchism, Spencer goes a step further. “The power of self-government,” he
says, “can be developed only by exercise.”82 The more man is forced to accept
responsibility for his own actions the more responsible and far-sighted he will
become. And the more he so becomes, the less he will transgress the rights of
others. Thus, “It is a mistake to assume that government must necessarily last
forever. The institution marks a certain stage of civilization—is natural to a
particular phase of human development.” But, “as civilization advances,” he
says, “does government decay.”83
Very similar to the writings of Herbert Spencer are those of Frederic Bastiat.
Each of us “has a natural right...to defend his person, his liberty, and his prop-
erty” and as soon as government exceeds this protective function it becomes an
agency of “legal plunder” and the law, “instead of checking injustice, becomes
the invincible weapon of injustice.”84 Like Spencer, Bastiat also goes a step
further. While weak and frail now, “mankind is perfectible.” Provided society is
free and government is the oppressor, and not the agent, of plunder, then natural
law will prevail and the consequences of each individual’s action will redound
upon himself. If they are pleasurable he will repeat them; if painful, he ceases.
Further, since individuals have intellects, they are capable of transmitting to
others what they have learned.85 While Bastiat refrains from clearly stating the
logical conclusions of his analysis, the components of evolutionary anarchism
are present: government’s only proper function is to suppress crime; but by the
“law of responsibility” crime will eventually disappear: thus man will one day
live in harmony and without government.
There is one fundamental difference between the individualist anarchists and
the evolutionary anarchists. While both are ardent supporters of the market, the
latter did not consider extending market analysis into the realm of police and the
courts. Anarchism, for Spencer and Bastiat, would be possible only when man
has progressed to the point of self-government, not before. The key question,
of course, is whether that state of moral perfection is an attainable one.
e. Objectivism. The objectivists, headed by Ayn Rand, may be viewed as a
variant of minarchism. Not only do they advocate a minimal state but, also like
the minarchists, oppose taxation as a form of involuntary servitude.
The starting point for the objectivists is the cognition that life in society
presupposes the repudiation of the initiatory use of violence. But, says Rand,
“if physical force is to be barred from social relationships, men need an institu-
tion charged with the task of protecting their rights under an objective code of
rules.”86 And an “objective code of rules,” she believes, precludes the possibility
of competition in this area. It is this fundamental incompatibility of force and
 Freedom, Society, and the State (excerpt) 523

production that is ignored by the anarchists. Suppose, says Rand in her critique
of what she calls the anarchist theory of “competing governments,” that
Mr. Smith, a customer of Government A, suspects that his next-door neighbor, Mr.
Jones, a customer of Government B, has robbed him; a squad of Police A proceeds
to Mr. Jones’s house and is met at the door by a squad of Police B, who declare that
they do not accept the validity of Mr. Smith’s complaint and do not recognize the
authority of Government A. What happens then? You take it from there.87
But while a government, defined as “an institution that holds exclusive
power to enforce certain rules of social conduct in a given geographical area,”
is absolutely necessary, its only proper function is the protection of individual
rights.88 Moreover, since the right to property is a most fundamental right,
taxation would be immoral, and Rand therefore opts for what she terms
“voluntary government financing.”89 The wealthy strata who would have the
most to lose if there were no agency to protect individual rights would, she
maintains, contract to contribute to the maintenance of this function. And since
she believes that police protection is a collective good, “those on the lowest
economic levels…would be virtually exempt—though they would still enjoy
the benefits of legal protection.” The great merit of this arrangement, she says,
is that it would keep government to a minimum. “Men would pay voluntarily
for insurance protecting their contracts. But they would not pay voluntarily for
insurance against the danger of aggression by Cambodia.”90
Beyond these rather vague and cursory remarks, Rand has written very
little to further clarify her concept of “proper government.” Some attention
should therefore be paid to the series of articles by the objectivist, Paul Beaird,
purporting to delineate and expand upon the Randian views on government.91
According to Beaird, the crucial distinction between the Rothbardian-anarchist
and the Randian-objectivist proposals for the rendering of police protection is
that the latter is predicated upon the concept of territorial jurisdiction, while
that notion is completely absent in the former. Because Rothbardian anarchism
“lacks the geographical definition of jurisdiction,” competing defense agencies,
offering different policies and enforcing different laws, will operate on the
same terrain. The result will be that “a person cannot be safe from the potential
interference of unchosen defense agencies, even on his own territory.”92 The
concept of jurisdiction solves this problem by establishing a single enforcement
agency with “exclusive power” to enforce rules of conduct within a clearly
demarcated territory. The extent of any government’s jurisdiction, he says,
would be determined by the individual decision of each property owner. “The
area of a proper government’s authority extends no further than the property
lines of the lands owned by its citizens. When a person subscribes to a proper
government, his land is added to its jurisdiction.” This, he claims, insures that
a government will always be based on the “consent of the governed.” For the
moment any property owner is no longer satisfied with “his government” he
can secede from it and proceed “to contract with another government, or pro-
524 Anarchy and the Law

vide his own, or provide for none.” Consequently, the application of objectivist
principles may well “result in a map of a government jurisdiction looking like
a patchwork, with the patches being separated from each other by the lands
governed by other governments.”93
This is a most curious piece indeed, for while it purports merely to propound
and clarify the Randian position on government, it clearly conflicts with that
position on three fundamental points. According to the logic of the Beaird-
ian analysis, every property owner would have the right to contract with the
government of his choice. But this can only mean that all governments would
operate on a fee-for-service basis. For any government endeavoring to provide
free protection for the poor would be forced to raise its premiums to cover the
subsidy. But this, of course, would encourage its patrons to seek protection
from other governments not providing a subsidy and therefore in a position
to offer lower rates. Thus, under the Beairdian proposal only those paying for
protection would receive it. But this is clearly at odds with Rand’s assertion that
under an objectivist government everyone, including the poor, would receive
protection.94 Thus, while Rand opts for a minarchist state, Beaird’s proposal
would be consistent with, at most, an ultraminarchist state.
Secondly, Rand’s major criticism of “free market anarchism” is its failure
to solve the problem of jurisdiction. Beaird, of course, reiterates this criti-
cism and maintains that this would not be a problem under his proposal since
“only one government” would have “authority on a plot of land at a time.”
But surely this would not be sufficient to alleviate the jurisdictional problem.
Ironically, Rand’s criticism of anarchism would apply with equal if not greater
force, to this Rand-à la-Beaird proposal. For it would certainly be possible for
a Beairdian society to be confronted with a situation in which “Mr. Smith, a
customer of Government A, suspects that his…neighbor, Mr. Jones, a customer
of Government B, has robbed him,” and neither Government recognizes the
other as legitimate. In fact, if every property owner were free to subscribe to
the government of his choice, the number of governments would be likely to
increase enormously—theoretically there could be as many governments as
property owners—thereby magnifying the potential for the type of jurisdictional
problems Rand is so anxious to avoid.
Finally, it is interesting that Rand calls the idea of “competing govern-
ments”—the idea that “every citizen” should be “free to ‘shop’ and to patron-
ize whatever government he chooses,”—a “floating abstraction” and a “weird
absurdity.” But how else could one classify the Beairdian proposal except in
terms of “competing governments” and the right of “every citizen…to ‘shop’
and to patronize the government of his choice”?
In short, while Beaird purports to be merely delineating the Randian views
on government, there are fundamental conflicts between Rand’s and Beaird’s
interpretation of Rand. Rand is a minarchist, while Beaird is, at most, an ult-
raminarchist.
 Freedom, Society, and the State (excerpt) 525

Whether this indicates a flaw in the objectivist philosophy, or simply a

misinterpretation of objectivism by Beaird, is both an interesting and difficult
question to answer. Fortunately, since we are simply trying to get a fix on the
relative positions of competing philosophies, this question need not be answered
here.
f. Classical Liberalism. While relying on the market for most things, the
classical liberals felt that there were various services that could be supplied only
by the state. What they opted for was limited government and representative
democracy. The classical liberals can be subdivided into two branches: the doc-
trinaire or uncompromising liberals who come very close to the contemporary
minarchists, and the moderate liberals who would permit state extension into
areas beyond that of police and the courts.
Probably only a few writers can be said to have been pure or doctrinaire liber-
als. Among the foremost are Wilhelm von Humboldt and Ludwig von Mises.95
The argument of the doctrinaire liberals has most clearly been stated by Mises.
“The essential teaching of liberalism,” he says, “is that social cooperation and
the division of labor can be achieved only in a system of private ownership of
the means of production, i.e., a market society of capitalism.” All of the other
principles of liberalism, including democracy, he says, “are consequences of this
basic postulate.”96 Thus, while the dogmatic liberal feels that the state should
be completely democratized, he also believes that the sphere of state activity
should be severely restricted: “As the liberal sees it, the task of the state consists
solely and exclusively in guaranteeing the protection of life, health, liberty and
private property. Everything that goes beyond this is an evil.”97 In a sense, the
doctrinaire liberal places himself in a dilemma. He is ardently in favor of both
the free market and democracy. Yet, the only way the market can remain com-
pletely unimpeded is if the scope of government is so circumscribed that its sole
function is to protect individual rights. In that case issues subject to democratic
control will be relatively meaningless. But if government expands and more
areas are subject to vote, the scope of the market becomes progressively more
restricted. Of this problem, Mises can merely hope that the majority will exercise
such self-restraint that government will remain miniscule.98
The doctrinaire liberal also faces another dilemma. On the one hand he is
passionate in defending the right of the individual to run his life as he deems
fit. Mises, as we have seen, terms the extension of government beyond the
protection of rights an “evil.” But since government is necessary, and since
it must have revenue, “taxes are necessary.”99 If it is evil to confiscate part of
the earnings of individuals for some things, however, why is it not just as evil
to confiscate them for other things such as court and police services? To this
Mises can merely say that “the expenditure caused by the apparatus of a liberal
community is so small” that it will be of little burden to the individual.100 But
the dilemma remains: taxation, whether large or small, constitutes a violation
of the principles of liberalism so cherished by men like Mises.
526 Anarchy and the Law

In short, while what government exists is to be democratic, the doctrinaire

liberal desires to restrict government activity as much as possible; he is a pro-
capitalist first and a democrat second. The positions are reversed, however, for
the moderate liberal, for he is prepared to see, and in fact often advocates, the
extension of government into areas that the dogmatic liberal would consider
anathema. The prototype of this group, which would include the bulk of the
classical liberals, is John Stuart Mill. “The purpose for which power can right-
fully be exercised over any member of a civilized community against his will,”
says Mill, “is to prevent harm to others. His own good…is not a sufficient
warrant.”101 With such a statement Mill appears to fall into the dogmatic liberal
tradition. But as George Sabine wrote of Mill, he was uncompromising in the
abstract, “but having stated the principle, he proceeded to make concessions and
restatements until in the end the original theory was explained away without
any new principle being put in its place.”102
Thus the state may if it wishes, he says, regulate trade as well as the hours
of taverns. It may even “confine the power of selling these commodities…to
persons of vouched-for respectability of conduct.” The state has the duty to
enforce “universal education” and to help to pay the school fees of the poorer
classes of children although parents should be able “to obtain the education
where and how they pleased.” Mill also sanctions the prohibition of actions
which may constitute “a violation of good manners” and “offences against
decency.” Presumably, this could entail regulation of dress in public, the selling
of “pornographic” literature, as well as a host of other activities. “Compulsory
labor” would be permitted to force parents to fulfill their obligations to their
children. The state could also forbid marriage between two consenting adults if
they cannot demonstrate “that they have the means of supporting a family.”103
And in his principles of political economy, Mill admits of “state protection of
children, lunatics, and animals; state interference with joint stock companies;
compulsion in the sphere of labor and industry; state charity; state supervision
and control of colonization; state promotion of goods such as culture, science,
research, etc.”104 As H. J. McCloskey says, Mill “allows a great deal of activ-
ity by the state towards promoting goods, and in restricting and preventing
immoralities.”105
One of the foremost contemporary exponents of moderate liberalism is F.
A. Hayek. Like Mill, Hayek argues for the market and the supremacy of the
individual. Yet he quickly modifies this by admitting a host of government
activities. He permits state control of “most sanitary and health services” and
“the construction and maintenance of roads…” He also adds that “there are
many other kinds of activities in which the government may legitimately wish
to engage…106
The distinction between the doctrinaire and moderate liberals is clear. Both
profess to favor the market on the one hand and democracy on the other. But
for the doctrinaires, so much would be handled by the market that the scope of
 Freedom, Society, and the State (excerpt) 527

issues falling under the state would be so small as to render democratic control
most feeble. On the other hand, the moderates would grant much broader state
jurisdiction. But as more and more areas are regulated by the state, the scope
of the market is restricted and democratic control assumes primary importance.
The distinction can be seen in an area like education. (The doctrinaire classical
liberals believed that education is a good to be purchased on the market like
any other good or service.) Under such a system there can be no question of
democratic control of education since it would be entirely outside of the scope
of government. Individuals would simply purchase the type, quantity and quality
of education they desired. But if education is to be handled democratically then
educational policy will be determined, not by the individual purchaser, but by the
voting majority. Quite clearly, far from democracy being the counterpart of the
market, as thought by the classical liberals, the two are incompatible. Thus the
classical liberals placed themselves in a dilemma in advocating both democracy
and the market. It is not surprising therefore to find classical liberalism divided
into two factions: the dogmatic classical liberals such as Mises who are market
proponents first and democrats second, and the moderate liberals such as Mill
who are democrats first and market proponents second.
g. Conservatism. There is one final category that falls into the capitalist or
free market spectrum: capitalist-hyperarchism. While this would entail fairly
severe government regulation, it would be limited to the social sphere, such as
press and speech, while leaving the market to function freely. Probably con-
servatism is the group that best fits into this category.
The founder of modern conservatism was Edmund Burke, and his follow-
ers today would include such figures as Russell Kirk, William F. Buckley and
James Burnham. Conservatives are most reluctant to define precisely what they
mean by conservatism, yet certain principles are discernable. They believe that
true values manifest themselves over time via the emergence of traditions, and
consequently that it is the duty of society to preserve and protect these tradi-
tions.107 As a corollary, conservatives are distrustful of human reason. This view
was eloquently expressed by Edmund Burke:
You see, Sir, that in this enlightened age I am bold enough to confess, that we are
generally men of untaught feelings; that instead of casting away all our old prejudices,
we cherish them to a very considerable degree, and, to take more shame to ourselves,
we cherish them because they are prejudices; and the longer they have lasted, the
more we cherish them. We are afraid to live and trade each on his own private stock of
reason; because we suspect that this stock in each man is small, and that the individuals
would do better to avail themselves of the general bank and capital of nations, and
of ages… Prejudice renders a man’s virtue his habit; and not a series of unconnected
acts. Through just prejudice, his duty becomes a part of his nature.108
One of the conservative traditions is the reluctance to rely on the govern-
ment to solve social evils. Hence, conservatives opt for a limited government
and a generally laissez-faire economic system. But not only do they not oppose
the use of force to protect those “true values” that are viewed as necessary to
528 Anarchy and the Law

maintain the social order; they feel it’s one’s duty to use force for such ends.
Thus, force is advocated against such things as pornography, prostitution,
labor unions, communism, and the like. Another fact of conservatism is that
it consciously eschews delineating a positive program, which it condemns
as abstract theorizing. Instead, its overriding characteristic is its resistance
to “the enemies of the permanent things.”109 The most feared enemy is com-
munism. The conservatives feel that it is man’s moral duty to oppose com-
munism by any means necessary and therefore advocate the use of government
coercion in this regard. “The communists,” argues noted conservative writer,
James Burnham, “are serious and…are irrevocably fixed on their goal of a
monopoly of world power… Because the communists are serious, they will
have to be stopped…by superior power and will. Just possibly we shall not
have to die in large numbers to stop them; but we shall certainly have to be
willing to die.”110
But, as has often been pointed out by their critics, conservatives place them-
selves in a serious dilemma. First, while they are in general opposed to govern-
ment power and endorse a market economy, their willingness to use government
force to protect “the permanent things” necessitates restrictions on the market that
are far from minimal. Further, the fear of “the worldwide communist menace,”
has meant their endorsement of a military large enough “to defend the West
against all challenges and challengers.”111 Not only is it difficult to see how the
requirements of such a large military can be reconciled with their espousal of a
minimal state, but a huge military can only be financed by massive taxation which,
itself, constitutes further restrictions of the market. Thus while the conservatives
generally endorse a market economy they are also perfectly willing to restrict its
operations for goals they consider more important. In the insightful comment
of L. T. Sargent, “The conservative seems to be in the unfortunate position of
opposing government power except when it is on his side.”112
It is also difficult to define the political position of the conservatives with
any degree of precision. While earlier conservatives such as Burke and de
Maistre were opposed to democracy, modern conservatives such as Kirk and
Buckley have appeared to reconcile themselves to such a system. Nevertheless,
their attachment to democracy seems to be strictly conditional: democracy is
permissible so long as it does not endanger “the permanent things,” the traditions
and customs that hold society together. Authority and tradition are viewed as
“pillars of any tolerable social order,” which it is man’s sacred duty to preserve
at all costs.113 While the conservatives have never squarely confronted the issue,
this presumably means that at any time democracy comes into conflict with the
permanent things, democracy must be abandoned for the sake of the latter. It
is the acknowledgement that government is an indispensable social institution
coupled with the reluctance to “accept the verdict of democracy’s tribunal,”114
that results in the marked authoritarian streak that runs throughout conservative
thought.
 Freedom, Society, and the State (excerpt) 529

The conservative sees society as an organic whole.115 If democracy should

conflict with the maintenance of the “permanent things,” it becomes his duty
to defend, and if necessary to sacrifice himself and others, for the sake of the
preservation of the social order. Thus, the conservative’s commitment to de-
mocracy is strictly conditional and masks a deeper authoritarianism that may,
at times, border on fascism.116
3. Summary
Anarchism encompasses a wide range of economic positions ranging from
anarcho-communism to individualist anarchism. Similarly, the capitalistic
economic system is compatible with a spectrum of political structures ranging
from anarchism to hyperarchism. The relationship between these two spectrums
as well as their relationships to other philosophies can be seen in the following
diagram. The political spectrum, ranging from anarchism on the left to hyper-
archism on the right, runs across the top. The economic spectrum, ranging from
capitalism at the top to communism at the bottom, runs down the page. The
unbroken horizontal line across the top indicates the political range of capitalism;
the unbroken vertical line indicates the economic scope of anarchism.117
Box [1] entails both a capitalistic economic system and an anarchistic po-
litical structure. This would include the contemporary individualist anarchists
such as Rothbard and Friedman as well as the philosophical anarchists such
as Tucker and Spooner. Still squarely within the anarchist spectrum but mov-
ing slightly away from capitalism would be Stirner and Godwin. On the other
hand, somewhat less anarchistic but still ardently capitalistic would be the
ultraminarchists such as Hospers.
Box [2] entails a limited form of government coupled with a capitalistic
economic structure. This would include the minarchists, like Nozick, the
evolutionary anarchists, like Spencer and Bastiat, as well as the objectivists.
Also included in this category would be the doctrinaire classical liberals such
The Political/Economic Spectrum
POLITICAL
anarchism minarchism hyperarchism
(1) (2) (3)
capitalism individualist ultra-anarchism minarchism

anarchism
evol. anarchism
philosophical

objectivism

anarchism

classical liberalism


egoism

doct.
mod.


Godwinism conservatism
ECONOMIC (4) (5) (6)
mercantilism/
mixed mutualism pluralism
cameralism
syndicalism modern liberalism facism/

nazism
(7) (8) (9)
anarcho- guild socialism Br. Labor Party (1937)

collectivism
fabianism (1889) fabianism (1908)
socialism/
anarcho-
communism
communism
530 Anarchy and the Law

as Humboldt and Mises, and their more moderate counterparts like Mill and
Smith and, more currently, Hayek.
Box [3] entails a highly interventionist state coupled with a market economy.
Such a state would restrict its interventionist activities to the social realm, regulat-
ing speech, press, drug use, and the like, while permitting the market to function
freely. While this category is, perhaps, of rather limited empirical import, prob-
ably the closest thing to capitalist-hyperarchism would be the conservatism of
Burke and de Maistre and, more currently, Buckley, Kirk and Burnham.
Box [4] entails an anarchist political framework as in Box [1], but a less
capitalistic economic structure than prevailed in Boxes [1-3]. There would still
be much market phenomena and individual ownership, however some form
of collectivism or workers control is also envisioned. This would include the
mutualism of Proudhon and Warren and, while somewhat more collectively
oriented, the syndicalism of Sorel, Rocker, and Goldman.
Box [5] entails the limitation of the market by interest group democracy which
extends government into areas that under Boxes [1-3] would be handled by the
market. This includes the modern exponents of pluralism and the partisans of
contemporary liberalism and the welfare state such as John Rawls.
Box [6] entails severe limitations on the market. Democracy is also rejected
in favor of rule by elites. It includes the mercantilists and cameralists of the
eighteenth century, and the extreme conservatives as well as the exponents of
facism and nazism such as Rockwell and Gentile.
Box [7] entails the rejection of the state coupled with a pronounced movement
toward a marketless economy. This would include the anarcho-collectivism of
Bakunin, and the more extreme anarcho-communism of Kropotkin.
Box [8] entails a socialist economy coupled with some form of limited stat-
ism. It would include the quasi-anarchistic Guild Socialism with its reliance on
functional representation, where the only role for the state is to mediate between
the functional groups when controversies could not be otherwise resolved. Close
to this would be Fabianism (1889) with its emphasis on universal suffrage and
municipal or local control of industry.
Box [9] entails a socialist or communist economic framework with planning
to be done through the instrumentality of the state. This would include the British
Labor Party (1937) with its call for nationalization of industry and a “general
state plan.” Close to this is Fabianism (1908) with emphasis on nationalization
of such industries as water works, the mines, and the harbors, as well as a large
dose of state planning. Also included in this category would be Marxism, which
advocated a planned economy, but one in which all individuals participated in
both the planning and the execution of the plans, and the elite-planned socialist
technocracies outlined by Saint-Simon and Edward Bellamy.
If the foregoing is correct, the traditional view that anarchism is incompatible
with capitalism is clearly incorrect. Both anarchism and capitalism traverse a
wide spectrum of thought, and while some variants of anarchism are incom-
 Freedom, Society, and the State (excerpt) 531

patible with some variants of capitalism, other types are quite compatible.
Moreover, the place of the individualist anarchists in both the economic and
the political spectrums has been pointed out, and the initial groundwork has
been laid for the study of individualist anarchism.
Notes
1. One may distinguish between “states” and “governments.” For example, John
Sanders says that “states are not taken to be the same as governments… They are
communities-with-governments.” Government, therefore, is a necessary but
not a sufficient condition for a state. Since Sanders defines government “in
terms of coercion,” and since government is a necessary condition for a state,
the state too is inherently coercive. See John T. Sanders, The Ethical Argu-
ment Against Government (Washington, D.C.: University Press of America,
1980, pp. xi-xiii. Since the purpose of this study is to present and analyze a
particular voluntary model of social organization and to compare it with the
coercive model, unless otherwise noted, I will use the terms “government” and
“state” interchangeably.
2. Ludwig von Mises, The Free and Prosperous Commonwealth: An Exposition of
the Ideas of Classical Liberalism (Princeton: D. Van Nostrand, 1962), pp. 26-37.
3. Daniel Guerin, Anarchism, from Theory to Practice (New York: Monthly Review
Press, 1970), p. 12.
4. Max Adler, “Max Stirner,” Encyclopedia of the Social Sciences (New York: Macmil-
lan, 1948), Encyclopedia of Philosophy (New York: Macmillan, 1967), vol. 1, pp.
111-14, and especially p. 113 where Stirner is described as being on the “dubious
fringe” of anarchism.
5. Peter Kropotkin, “Anarchist Communism,” The New Encyclopedia of Social Reform,
eds. William Bliss and Rudolph Binder (New York: 1908), p. 47.
6. George Woodcock, Anarchism, A History of Libertarian Ideas and Movements
(Cleveland: Meridian Books, 1969), pp. 163 and 204.
7. William Morris, News From Nowhere (London: 1891).
8. Mikhail Bakunin, “Stateless Socialism: Anarchism,” The Political Philosophy of
Bakunin, ed. G. P. Maximoff (New York: Free Press, 1953), pp. 298-99. Also see
Woodcock, Anarchism, A History, p. 129.
9. Pierre Joseph Proudhon, “What is Property?” Socialist Thought, eds. Albert Fried
and Ronald Sanders (New York: Doubleday, 1964), p. 202; and Woodcock, Anar-
chism, A History, p. 129
10. William Godwin, Enquiry Concerning Political Justice (Middlesex, England:
Penguin, 1976), p. 705.
11. Benjamin Tucker, “State Socialism and Anarchism,” State Socialism and Anarchism,
and Other Essays (Colorado Springs: Ralph MyIes, 1972), pp. 12-16.
12. Mises, p. 37.
13. John Hospers says that “my own option is for limited government.” Libertarianism
(Santa Barbara, Calif.: Reason Press, 1971), p. 417. Ayn Rand asserts that “anarchy
as a political concept is a floating abstraction,” and that “capitalism is incompatible
with anarchism.” Capitalism: The Unknown Ideal (New York: Signet Books, 1962),
pp. 125 and 334. And Leonard Read writes that “the enemy of the free market is
not the state… This formal agency of society, when organized to keep the peace,
to uphold a common justice under law, and to inhibit and penalize fraud, violence,
misrepresentation, and predation is a necessary and soundly principled ally of the
free market.” The Free Market and Its Enemy (Irvington-on-Hudson, N.Y.: Founda-
tion for Economic Education, 1965), pp. 27-28.
532 Anarchy and the Law

14. “To point out the advantages which everybody derives from the working of capi-
talism is not tantamount to defending the vested interests of the capitalists. An
economist who forty or fifty years ago advocated the preservation of the system
of private property and free enterprise did not fight for the selfish class interest of
the then rich.” Ludwig von Mises, Omnipotent Government: The Rise of the Total
State and Total War (New Rochelle: Arlington House, 1969), p. iii.
15. See Adam Smith, The Wealth of Nations (New Rochelle: Arlington House n.d.),
especially vol. 2.
16. Martin Miller Kropotkin (Chicago: University of Chicago Press, 1976), p. 183.
17. Quoted in Paul Eltzbacher, Anarchism (New York: Chips, n.d.), pp. 101 and 106.
Alan Ritter terms these methods “anarchist censure” as opposed to the “legal
sanction” imposed by government. See his Anarchism: A Theoretical Analysis
(Cambridge: Cambridge University Press, 1980). Also see his “The Modern State
and the Search for Community: The Anarchist Critique of Peter Kropotkin,” Inter-
national Philosophical Quarterly (March 1976), especially pp. 24-28.
18. Peter Kropotkin, The Conquest of Bread (New York: Benjamin Blum, 1968), p.
15.
19. Ibid., p. 75.
20. Peter Kropotkin, “Fields, Factories and Workshops,” The Essential Kropotkin, eds..
E. Caporya and K. Tompkins (New York: Liveright, 1975), pp. 270-72.
21. Eltzbacher, pp. 112-13.
22. Kropotkin, “Communist Anarchism,” p. 45. Reasons of space permit only a brief
presentation of the major representative figures of each anarchist type. Thus only
Kropotkin was dealt with here. However, Leo Tolstoy and Paul Goodman could also
be classified as “anarcho-communists.” For a good summary of Tolstoy’s views see
Eltzbacher, pp. 149-81. Also see Paul and Percival Goodman, Communitas (New
York: Vintage, 1960). On the similarities between Kropotkin and Paul Goodman
see William Merill Downer, “Kropotkin in America: Paul Goodman’s Adaptation
of the Communitarian Anarchism of Peter Kropotkin” (Paper Presented at the 1977
Midwest Political Science Convention, April, 1977). Also in the Kropotkinian
tradition is Murray Bookchin. See his The Limits of the City (New York: Harper,
1974).
23. Mikhail Bakunin, “On the Morrow of the Social Revolution,” The Political Phi-
losophy of Bakunin, ed. G.P. Maximoff (New York: Free Press, 1953), p. 410.
24. James Guillaume, “On Building the New Social Order,” Bakunin on Anarchy, ed.
Sam Dolgoff (New York: Alfred A Knopf, 1971), p. 360.
25. Woodcock, Anarchism, A History, p. 164. Witness Bakunin’s remark that any per-
sons who, though robust and of good health, do not want to gain their livelihood
by working shall have the right to starve themselves to death…” “On the Morrow
of the Social Revolution,” p. 412.
26. According to Bakunin, the collectives will form themselves into federations, the
federations into regions, the regions into nations and, ultimately, the nations into
what he terms an “international fraternal association.” See Bakunin, “Stateless
Socialism: Anarchism,” p. 298.
27. Guillaume, p. 366.
28. Ibid., p. 368.
29. It should be pointed out that the anarcho-syndicalist, Rudolph Rocker, explicitly
repudiates Sorel and maintains that Sorel neither “belonged to the movement, nor
had…any appreciable influence on its internal development.” See Rudolph Rocker,
“Anarchism and Anarcho-Syndicalism,” appendix to Paul Eltzbacher, Anarchism
(New York: Chips, n.d.), p. 250.
 Freedom, Society, and the State (excerpt) 533

30. George Sorel, Reflections on Violence (New York: Doubleday, 1941), p. 294.
31. See Mulford Sibley, Political ideas and Ideologies (New York: Harper and Row,
1970), p. 547.
32. Rocker, pp. 253-55.
33. Emma Goldman, “Syndicalism,” Liberty and the Great Libertarians, ed. Charles
T. Sprading (New York: Arno Press 197 2), p. 507; quotation of Hins in Rocker, p.
247.
34. A critic of syndicalism, Ludwig von Mises writes that, “In the syndicalist society
the citizen is made up of the yield from his property and the wages of his labor.”
Socialism (London: Jonathan Cape, 1969), p. 274.
35. See especially ibid., pp. 270-75.
36. Proudhon, pp. 546-48.
37. Pierre Joseph Proudhon, Selected Writings of P. J. Proudhon, ed. Stewart Edwards
(New York: Doubleday, 1969), pp. 96-99.
38. Ibid., p. 59.
39. Ibid., pp. 140-41.
40. See George Woodcock, Pierre Joseph Proudhon (New York: Shocken Books, 1972),
pp. 49-50.
41. For a good summary of Proudhon’s ideas on handling antisocial activity in an anar-
chist society see Alan Ritter, “Godwin, Proudhon and the Anarchist Justification of
Punishment,” Political Theory (February 1975), especially pp. 81-84. An excellent
presentation of Proudhon’s views on justice and law can be found in William O.
Reichert’s “Natural Right in the Political Philosophy of Pierre-Joseph Proudhon,”
The Journal of Libertarian Studies (Winter 1980), pp. 77-91.
42. Proudhon was not a terribly consistent writer. Thus, despite his attacks on large-scale
property, one also finds Proudhon writing that, “Once the land has been freed by
the apparatus of the revolution and agriculture liberated, feudal exploitation will
never be re-established. Let property then be sold, bought, circulated, divided, and
accumulated, becoming completely mobile… It will no longer be the same institu-
tion. However, let us still call it by its own name, so dear to the heart of man and
so sweet to the peasant’s ear: PROPERTY.” Proudhon, Selected Writings, p. 73.
43. H. N. Brailsford, “William Godwin,” Encyclopedia of the Social Sciences (New
York: Macmillian Co., 1948), vol. 6, p. 686.
44. Godwin, pp. 710-24.
45. Ibid., pp. 225-56. A good summary of Godwin’s justification of punishment is
found in Ritter, “Godwin, Proudhon,” p. 72-79. Also useful is Eltzbacher, pp. 31-33,
as is John P. Clark, The Philosophical Anarchism of William Godwin (Princeton:
Princeton University Press, 1977), especially pp. 710-24.
46. Godwin, pp. 710-24.
47. See, for example, Stirner’s statements that “Morality is incompatible with egoism,”
and “the State and I are enemies…” Max Stirner, The Ego and His Own (New York:
Dover, 1973), p. 179.
48. See, for example, James Forman’s sarcastic remark that “As far as Stirner was con-
cerned, two people acting in concert were a crowd.” James D. Forman, Anarchism
(New York: Dell, 1975), p. 74. Incredibly, Forman also claims that Stirner was,
through Nietzsche, a precursor of Nazism.
49. Stirner, pp. 34-36.
50. Ibid., p. 179, fn. Also see Woodcock. Stirnerite egoism, he points out, “does not
deny union between individuals. Indeed, it may well foster genuine and spontaneous
union. For the individual is unique, not as a member of a party. He unites freely
and separates again,” Anarchism, A History, pp. 100-02.
534 Anarchy and the Law

51. Stirner, p. 258.

52. Ibid., pp. 114-15, Emphasis in original.
53. In Paul Thomas, “Karl Marx and Max Stirner,” Political Theory (May 1975), p.
169.
54. Charles Madison, “Anarchism in the United States,” Journal of the History of Ideas
(January 1945), p. 48.
55. The compatibility of egoism and the free market is especially apparent in the
address of the egoist, John Babcock, “Slaves to Duty,” reprinted in Libertarian
Analysis (September 1971), pp. 15-39. On the views of Mackay see Thomas Riley,
“Anti-Statism in German Literature, Modern Language Association Publications
(September 1947), pp. 828-43.
56. Benjamin Tucker, “The Attitude of Anarchism Toward Industrial Combinations,”
State Socialism and Anarchism, and Other Essays (Colorado Springs: Ralph Myles,
1972), pp. 13-21.
57. Ibid., pp. 27-34.
58. For a succinct statement of the similarities and differences between the two schools
of anarchism on the subject of profits and interest, see Murray Rothbard, “The
Spooner-Tucker Doctrine: An Economist’s View,” Egalitarianism as a Revolt
Against Nature, and Other Essays (Washington, D. C.: Libertarian Review Press,
1974), pp. 125-32.
59. Murray Rothbard, Man, Economy and State, A Treatise on Economic Principles,
2 vols. (Los Angeles: Nash, 1970), 2:883-90. Also see Sanders, pp. 97-192.
60. See, for example, Paul Beaird, “On Proper Government, Option (January 1976),
p. 20; John Hospers, “Will Rothbard’s Free-Market Justice Suffice? No,” Reason
(May 1973), pp. 18-23. Also see Jeffrey Paul, “Anarchism and Natural Rights”
(Paper Presented at the Association for the Philosophic Study of Society, October
6, 1977).
61. David Friedman is one of the few individualist anarchists to recognize the distinction
between libertarianism and anarchism, and he extricates himself from this possible
dilemma by refusing to classify himself as a libertarian. See his The Machinery of
Freedom (New York: Harper and Row, 1973), pp. 173-78.
62. John Hospers, “What Libertarianism Is,” The Libertarian Alternative, ed. Tibor
Machan (Chicago: Nelson-Hall, 1974), p. 13.
63. Ibid., pp. 7-8; and Hospers, Libertarianism, pp. 61-62.
64. Hospers, Libertarianism, pp. 386-87.
65. John Hospers, “Rothbard’s Free-Market Justice,” p. 21.
66. Ibid.
67. Hospers, Libertarianism, p. 387.
68. Hospers, “Rothbard’s Free-Market Justice,” p. 21.
69. See, for example, Max Weber, Law in Economy and Society, ed. Max Rheinstein
(New York: Simon and Schuster, 1954), pp. 338-39.
70. It would certainly be stretching the point to maintain that the fee would be vol-
untary since consumers could forego purchasing protection altogether, and those
providing protection could enter a new line of work, if either objected to the fee.
This is tantamount to arguing that the obligation to pay income tax is “voluntarily”
assumed when the individual “chooses” to earn a living.
71. Robert Nozick, Anarchy, State and Utopia (New York: Basic Books, 1974), pp.
15-26.
72. Ibid., pp. 110-13.
73. Ibid., pp. 33-5.
74. Ibid., p. 156.
 Freedom, Society, and the State (excerpt) 535

75. See ibid., pp. 22-25.

76. Ibid., p. 109 (emphasis in original).
77. See John Sanders, “The Free Market Model Versus Government: A Reply to Nozick,”
The Journal of Libertarian Studies (Winter 1977), pp. 35-44.
78. Nozick, p. 118.
79. Roy Childs, “The Invisible Hand Strikes Back,” The Journal of Libertarian Studies
(Winter 1977), pp. 23-33.
80. Herbert Spencer, Social Statics (New York: D. Appleton, 1892), p. 125.
81. Herbert Spencer, The Right to Ignore the State (Cupertino, Cal.: Caymen Press,
1973), p. 5.
82. Spencer, Social Statics, p. 84.
83. Spencer, Right, p. 14.
84. Frederic Bastiat, The Law (Irvington-on-Hudson, N.Y.: Foundation For Economic
Education, 1972), pp. 6-11.
85. Frederic Bastiat, Economic Harmonies (Princeton: D. Van Nostrand, 1964), p.
533.
86. Rand, Capitalism, p. 331.
87. Ibid., p. 335.
88. Ibid., p. 332. Rand also states, however, that the source of the government’s author-
ity is “the consent of the governed” (p. 332). But this introduces a tension—of the
same sort found in John Locke and Herbert Spencer—between natural rights on
the one hand and consent on the other. Would an individual be obliged to obey a
government enforcing only “natural rights” even if he had not consented to it?
89. Ayn Rand The Virtue of Selfishness (New York: Signet, 1961), pp. 116-20. Inter-
estingly, Rand also outlines a scheme for the payment of court services through a
Hosperian-like fee-for-service arrangement, while Hospers, in turn, says he would
have no objections to a Randian-donation policy.
90. Ibid., p. 118-19.
91. Paul Beaird, “Of Proper Government, I, II, and III,” Option (January 1976, April
1976, and May-June 1976), pp. 19-20 and 28, 12-14 and 26-27, and 22-26.
92. Beaird, “Of Proper Government, III,” p. 24.
93. Beaird, “Of Proper Government, II,” p. 12. Beaird defends his consent doctrine by
recourse to “tacit consent.” This, of course, makes it very similar to the Lockean
position, and it is therefore open to the same criticisms. While the landowner con-
sents to a government by the positive act of subscribing to it, a traveler, a renter,
etc., is claimed to be automatically consenting to a government simply “by entering
land” over which a particular government has been given jurisdiction by the owner.
But surely such a strained use of the term robs if of any real meaning.
94. It is true that Rand does mention the possibility of a fee-for-service arrangement
for “one of the needed services” rendered by government, i.e., “the protection of
contractual agreements among citizens.” But not only does Beaird extend this to
all government services, he also ignores Rand’s disclaimer that “this particular
plan is mentioned here only as an illustration of a possible method of approach
to the problem…not as a definitive answer…” Rand, Selfishness, p. 117. She also
mentions the possibility of lotteries, but Beaird has preferred to ignore this sugges-
tion. Moreover, this fee-for-service suggestion, especially when extended beyond
the area mentioned by Rand, would conflict with her goal of providing everyone,
including the poor, with police and court services.
95. Wilhelm von Humboldt, The Limits of State Action (London: Cambridge, 1969);
Mises, Free and Prosperous.
96. Mises, Omnipotent Government, p. 48.
536 Anarchy and the Law

97. Mises, Free and Prosperous, p. 52.

98. Mises, Human Action (Chicago: Henry Regnery, 1966), p. 150 Much, but not all,
of the “Public Choice” literature also expresses the fear that democratic govern-
ment, under the impetus of responding to the will of the electorate, will expand,
with disastrous consequences, into areas that had traditionally been left to the
market. This is especially evident in the writings of James Buchanan and Gordon
Tullock, whose proposal for an “optimal majority”—a requirement of a two-thirds
majority for most issues—was advanced as a device for controlling this tendency
of democratic government to expand. See their The Calculus of Consent (Ann Ar-
bor, Michigan: University of Michigan Press, 1962). For an intriguing contrasting
view, also in the “Public Choice” vein, see Anthony Downs, “Why the Government
Budget is Too Small in a Democracy,” World Politics (July 1960), pp. 541-63.
99. Ibid., p. 807.
100. Mises, Socialism, p. 491.
101. Mill, On Liberty (Chicago: Henry Regnery, 1955), p. 13.
102. George Sabine, A History of Political Theory (New York: Henry Holt, 1937), p.
665.
103. Mill, pp. 140-60.
104. H. J. McCloskey, “Mill’s Liberalism,” Essays in the History of Political Thought,
ed. Isaac Kramnick (Englewood Cliffs: Prentice Hall, 1969), p. 381.
105. Ibid., p. 379.
106. F. A. Hayek, Constitution of Liberty (Chicago: Henry Regnery, 1960), p. 223. Also
see Chapter 15, pp. 220-33.
107. On the emergence of traditions as true values see Eric Vogelin, The New Science
of Politics (Chicago: University of Chicago Press, 1952); Michael Oakeshott,
Rationalism in Politics (New York: Basic Gooks, 1962); and Russell Kirk, The
Conservative Mind (Chicago: Henry Regnery, 1967).
108. Edmund Burke, Reflections on the Revolution in France (New Rochelle: Arlington
House, n.d), pp. 100-01.
109. See Kirk, Conservative Mind; and the same author’s Enemies of the Permanent
Things (New Rochelle: Arlington House, 1969).
110. James Burnham, Suicide of the West (New Rochelle: Arlington House, 1964), pp.
290-91.
111. Ibid., p. 288.
112. L. T. Sargent, Contemporary Political Ideologies (Homewood, Ill.: Dorsey Press,
1972), p. 99.
113. Kirk, Enemies, p. 282.
114. Burnham, p. 139.
115. “Conservatives respect the wisdom of their ancestors… They think society is a
spiritual reality, possessing an eternal life but a delicate constitution: it cannot be
scrapped and recast as if it were a machine.” Kirk, The Conservative Mind, p. 6.
116. For analyses that point out the authoritarianism of conservatism see Edith Effron,
“Conservatism: A Libertarian Challenge,” The Alternative (October 1975), pp.
9-13; Murray Rothbard, “Conservatism and Freedom: A Libertarian Comment,”
Modern Age (Spring 1961), pp. 217-20; Murray Rothbard, “Confessions of a Right-
Wing Liberal,” Ramparts (June 15,1968), pp. 47-52. The contemporary sociologist
Robert Nisbet sees at least the traditional conservatism of Burke, Lemmenais and
DeBonald not only as highly pluralistic but as a bulwark against political central and
the authoritarian state. See his “Conservatism and Libertarians: Uneasy Cousins,”
Modern Age (Winter 1980), pp. 2-8; “Conservatism and Sociology,” The American
Journal of Sociology (September 1952), pp. 167-75; and “DeBonald and the Con-
 Freedom, Society, and the State (excerpt) 537

cept of the Social Group,” Journal of the History of Ideas (June 1944), pp. 315-31.
In emphasizing the role that the “social group” and tradition played in impeding
the growth of centralized power, Nisbet has highlighted an important and unjustly
neglected aspect of conservatism. But this still doesn’t negate the authoritarian
streak in much of conservative thought.
117. Two things should be mentioned regarding the “political spectrum.” First, it might
be argued that there is an inverse relationship between the economic and political
spheres—as one increases the other must decrease—so that both spectrums are
merely measures of the same thing. This, however, not only overlooks the large body
of thought that felt that the reverse was true—that the market presupposed a highly
interventionist and authoritarian state—Marx, for example, and Kropotkin—but
also ignores that group which desired neither the market nor the state—Kropotkin,
Bakunin and Berkman, to name just a few. It seems to me that while a free market
presupposes some restraints on the state, the reverse is not true. A limited state does
not necessarily entail the free market.
Second, one should not jump to the conclusion that the “political spectrum” is
some sort of “freedom index.” This spectrum classifies political frameworks ac-
cording to the degree of state interventionism. Since there would be no state under
anarchism, state intervention would, of course, be zero. But except in the sense in
which freedom is defined in terms of the limits on the state there is no one-to-one
relationship between the absence of state intervention and freedom. This is the major
flaw in the analytical frameworks advanced by David Nolan and Randy Barnett.
(See David Nolan, “Classifying and Analyzing Politico-Economic Systems,” The
Individualist (January 1971), pp. 5-11; and Randy Barnett, In Defense of Political
Anarchism (Unpublished Manuscript, 1974), pp. 1-10.) For the state is not the
only obstacle to freedom. One of the greatest fears by such thinkers as Mill and
Tocqueville was of democracy’s potential for repression by public opinion. Since
many anarchists—Proudhon and Godwin to name but two—would rely, for the
maintenance of order in their communities, on the force of public opinion, this
introduces the possibility of the “tyranny of public opinion” in anarchist as well
as democratic societies. Thus, “authoritarian-anarchism” is at least a theoretical
possibility. Moreover, modern liberals, beginning with T. H. Green, have always
maintained that state intervention is required to overcome the obstacles to freedom,
such as poverty, ignorance, discrimination, and the like. Thus, a highly intervention-
ist state, they hold, is necessary to increase freedom. This group may or may not
be correct, but things are hardly as simple as the analytical frameworks of Nolan
and Barnett imply.
538 Anarchy and the Law

Section IV: Historical Case Studies

of Non-Government Law Enforcement

34
Are Public Goods Really Common Pools?
Considerations of the Evolution of Policing
and Highways in England
Bruce Benson
I. Introduction
Policing and highways are frequently cites as “important examples of produc-
tion of public goods,” and it is often contended that “private provision of these
public goods will not occur,” as in Samuelson and Nordhaus (1985, 48-49 and
713). According to Tullock (1970, 83-84) and Samuelson and Nordhaus (1985,
49), for instance, private-sector production of policing and/or highways gener-
ates non-exclusionary external benefits for which private suppliers are unable
to charge, thus creating free-rider incentives and non-cooperative behavior. I
offer an alternative explanation for this lack of cooperation, however, which fits
the historical evolution of public policing and highways in England. The fact
is that public policing and highways evolved because of changes in property
rights, which undermined private incentives to cooperate in the provision of
these services. Indeed, these services are like the television signals discussed
by Minasian (1964), in that different institutional arrangements create differ-
ent incentives for the allocation of resources.1 However, my presentation goes
beyond simply providing two supporting examples for Minasian’s (1964, 77)
contention that the “public goods” concept is misleading, by proposing a more
appropriate analytical toll for at least some allocation issues labeled as public-
good/free-rider problems.
In the case of policing, for example, before English kings began to concentrate
and centralize power, individuals had rights to a very important private benefit
arising from successful pursuit and prosecution: victims received restitution.
Effective collection of restitution required the cooperation of witnesses, and of
neighbors to aid in pursuit; but anyone who did not cooperate with victims could
not obtain similar support when victimized, and therefore could be excluded
from this very important benefit of law enforcement. Policing was carried out
by neighborhood associations and free riding did not appear to be a problem
because anyone who did not cooperate was ostracized by the group. In other
words, policing was not a public good in medieval England: the primary ben-
efits were private and/or internal to small groups and non-contributors were

538
 Are Public Goods Really Common Pools? 539

excluded. One consequence of the development of monarchical government

was the creation of criminal law as a source of royal revenues. Criminaliza-
tion took away the private right to restitution and significantly reduced the
incentives to voluntarily cooperate in law enforcement. A very different set of
institutions evolved as a consequence. Today, rights to many attributes of public
policing still require a substantial commitment of private resources, including
victim and witness cooperation.2 Incentives for individuals to under-invest in
the commons are substantial relative to incentives to invest in the production of
any private benefits that remain. In other words, policing is not a public good
today either: its publicly produced aspects are generally treated as free-access
common pools and private individuals under-invest in their maintenance. As
demonstrated below, the same is true of highways.
It might be argued that “non-excludable public goods” and “free-access com-
mon pools” are simply two terms for the same concept. However, as Minasian
(1964, 77) explains, the public goods terminology often is “asserted” to imply that
non-excludability is an intrinsic problem that cannot be resolved without coercing
free riders into paying for the good. The common pool terminology emphasizes
that incentives arise because of the definition of property rights and, therefore,
that another property rights assignment can alter such incentives. Beyond that, a
property rights approach actually explains both the historical evolution and mod-
ern production of policing and highways better than public goods analysis.
The incentive structure underlying a hypothetical restitution-based legal
system with private sector policing is discussed in section II below. Section III
then examines an actual example of such a system: Anglo-Saxon law in England
prior to the development of strong kings. This is followed in section IV, by an
exploration of the incentives leading to the withdrawal of restitution and the
development of public policing in England. Section V returns to the contention
that public policing should be characterized as a common pool problem rather
than as a public good by exploring some of the characteristics of modern law
enforcement. It is contended in section VI that a similar, and indeed closely
linked evolutionary process shaped the transition from a system of voluntary
maintenance of roads in England to a system of public common-pool highways,
as the taking of private property rights undermined the incentives to privately
produce and maintain a system of highways. For instance, royal law would not
allow private groups to charge tolls: this right was reserved for the king or those
to whom he sold the privilege. Concluding comments appear in section VII.
II. Restitution and Incentives to Cooperate in Law Enforcement
The current institutional arrangement for criminal law, wherein individu-
als have common access to police services and criminals are punished by the
state, is the only institutional arrangement that is possible for the production
of law enforcement. To see this, assume that the rules of law now considered
as crimes against persons or property are in the nature of torts. That is, if an
accused offender is determined to be guilty of violations of some victim’s
540 Anarchy and the Law

rights, the “punishment” is restitution in the form of a fine or indemnity to be

paid to the victim. Furthermore, as is generally the case with tort law, assume
that the aggrieved party must pursue prosecution. Pursuit and prosecution are
much more effective, however, if several people cooperate in their produc-
tion. Cooperation of non-victim witnesses can be essential for prosecution,
for example. Furthermore, pursuit by the victim alone is less likely to succeed
than pursuit by a large group, or by trained specialists hired by a group. First,
the offender is more likely to elude a single pursuer or a non-specialist, and
second, the offender is more likely to violently resist an individual than a large
group or a specialist.
Individuals never know if they will be the victim of an offense in the future,
but they assign some positive probability to being victimized. Furthermore, an
individual does not know whether an offender will be physically, politically
or economically strong enough to apprehend and prosecute. Cooperation is
desirable, but if each opportunity for pursuit of an offender mistreated as a one-
shot game by victims, witnesses, and others in a position to aid in pursuit and
prosecution, then cooperation is unlikely because only the victim gains from the
cooperative exchange. As Buchanan and Tullock (1962, 37) point out, however,
such a “collective choice is a continuous process, with each unique decision
representing only one link in a long-time chain of social action.” That is, most
individuals in a group are involved in various long-term relationships, so they
are in a repeated-game setting with finite but uncertain horizons, and when each
individual has some probability of being a victim at some point, then cooperation
becomes possible, à la Axelrod (1984). Under these circumstances, individuals
may have incentives to voluntarily “exchange” obligations to support one another
in pursuit of prosecution. Of, course, if individuals can express a willingness to
cooperate and obtain benefits from the cooperative arrangements but then not actu-
ally reciprocate when called upon, such an arrangement will either fail to develop
or break down if established. In a repeated game, however, a commitment can
be made credible if there is a credible potential response by the other player;
that is, if the tit-for-tat response is sufficient punishment for the cheater.
Even a repeated-game situation involves weaker incentives to cooperate than
those which exist in groups wherein each individual enters into several differ-
ent repeated games with different players. In fact, these games need not have
anything to do with policing. For instance, they may involve team production,
trade, religion, or any number of other day-to-day types of interaction, including
road maintenance, as explained below. To the extent that reputation travels from
one game to another, so that refusal to cooperate within one game can limit the
person’s ability to enter into other games, the potential for a credible response
is expanded. Various forms of social pressure or ostracism can be brought to
bear to induce cooperation in law enforcement.3
Indeed, individuals who do not fulfill obligations to support others in pursuit
and prosecution can be excluded from all forms of social interaction with other
members of the group (e.g., trade, religious activities). In other words, because
 Are Public Goods Really Common Pools? 541

each individual has invested in establishing a position in the community and

building a reputation within the group, that investment can be “held hostage”
by the community, à la Williamson (1983), to insure that the commitment to
cooperate is credible. Under these circumstances, Milgrom et al. (1990) and
Schmidtz (1991, 102) explain that the dominant strategy is to behave as expected
in all games, repeated and on-shot alike. Indeed, there clearly is a simultaneous
development of cooperation in law enforcement and other forms of interaction,
since as Benson (1989) notes, most interactions require some degree of certainty
about legal obligation.
This discussion of an alternative institutional arrangement for law enforce-
ment is not just hypothetical. It describes a number of historical, anthropo-
logical, and modern legal systems. The makeup of such groups, including the
institutional arrangement that produces the reputation effects and repeated-game
interactions, may reflect family and/or religion as in Benson (1991), geographic
proximity as described by Klein (1990), Ellickson (1991) and Benson (1992),
functional similarity as detailed in Benson (1989) and Milgrom et al. (1990),
or contractual arrangements as discussed by Friedman (1979) and Umbeck
(1981a). One example is Anglo-Saxon England.
III. Policing in Anglo-Saxon England4
As Stephen (1883, 53) explains, there were no “crimes” against the state,
under early Anglo-Saxon law, but a large proportion of the offenses that appear
in a modern criminal code were defined as illegal. Indeed, Anglo-Saxon laws
were very concerned with protection of individuals and their property; offenses
such as homicide, assaults, rape, indecent assaults, and theft were extensively
treated, but these offenses were treated as torts.
Institutions of Cooperative Policing
The Germanic tribes from which the Anglo-Saxons descended were divided
into pagi, each of which was made up of vici. Lyon (1980, 59) suggests that a
pagus apparently consisted of one hundred men or households, while the vici
was a subdivision of the pagus responsible for policing.5 Conceivably, these vici
were bound by kinship. Successful pursuit of an offender resulted in payment
of restitution defined by a system of wergeld or man-price (wer). As Baker
(1974, 10) emphasizes, anyone who did not cooperate could be “put outside
the protection of the community.” The invaders carried this system to England.
By the tenth century, there was a clearly recognized legal institution called the
“hundred.” Stephen (1883, 66) explains that these voluntary groups provided
“the police system of the country.” Indeed, Blair (1956, 232) points out that
the two primary purposes of these organizations were to facilitate cooperation
in rounding up stray cattle and in pursuing justice.6 When a theft occurred, for
example, the several “tithings” that made up the hundred were informed: they
had a reciprocal duty to cooperate in pursuit and prosecution. A tithing was
apparently a group of neighbors, many of whom probably were kin.
542 Anarchy and the Law

Private Benefits and Incentives to Cooperate

A primary reason for recognizing reciprocal duty in the tithings and hun-
dreds was that these organizations produced a number or private benefits, such
as the return of stray cattle, and significantly, as Stephen (1883,62) explains,
restitution to a victim. Pollock and Maitland (1959, vol. 2, 50) and Stephen
(1883, 58) both note that economic payments could be made for any first time
offender. Pollock and Maitland (1959, vol. 2, 451) point out that “A deed of
homicide,” for example, “can be paid for by money…the offender could buy
back the peace he had broken.” The members of each tithing were clearly in a
position to interact repeatedly on several dimensions, so that reputation effects
were important. Thus, cooperation in pursuit and prosecution, as well as in other
dimensions, such as rounding up stray cattle, and dispute settlement, evolved
to capture various private benefits.
As Umbeck (1981a; 1981b) stresses, the threat of violence underlies any
private property rights system. Thus, in the case of Angle-Saxon tithings and
hundreds, as Stephen (1883, 62) observes, refusal to pay restitution to a mem-
ber of the community in good standing put the offender outside the protection
of the law. Physical retribution against an outlaw became the responsibility
of the entire hundred, and there were also similar cooperative arrangements
between different hundreds.7 Likewise, Pollock and Maitland (1959, vol. 1,
47-48) emphasize that refusing to accept restitution and seeking physical re-
venge meant that the initial victim became an outlaw. Outlawry implied that
physical attacks on the outlaw were legal and the potential for a “blood-feud”
arose.8 The community-wide threat of outlawry and physical revenge generally
induced the reluctant offender, but without the backing of the community, this
was relatively unlikely. Of course there were also common benefits to polic-
ing, such as localized deterrence, so individuals living in the area might benefit
even if they refused to cooperate in policing or other kinds of team production.
Indeed, these associations also produced other benefits common to the group
as a whole, such as road maintenance as explained below, but cooperation in
the production of such common benefits was an investment in reputation that
allowed the individuals to consume the important team-produced private benefits
as well. In fact, if someone was reputed to be uncooperative and therefore not
a member of a tithing, he would be a relatively attractive target, and probably
would have been victimized more often than members of effective tithings.
Furthermore, the individual was ostracized by the community and therefore
would not have access to the community’s dispute resolution arrangements or
other benefits of community interaction, such as the gathering of his stray cattle,
religious rights, trade, etc. The cost of non-cooperation was high, even though
exclusion may not have been possible for some common access benefits such
as road use, and perhaps deterrence.
Pollock and Maitland (1959, vol. 2, 48) explain that early codes make it
clear that “the ealdor man, and the king at need, may be called in if the plaintiff
is not strong enough himself.” Thus, even the most respected members of the
 Are Public Goods Really Common Pools? 543

Anglo-Saxon community were involved in the cooperative arrangements used

in posing the threat of outlawry. In fact, perhaps as a further threat to deter
resistance to payment of restitution, or perhaps as an inducement to ealdormen
to cooperate with the community, the restitution system was expanded: if a
victim had to call upon an ealdorman or king for support, a guilty offender
would not only have to pay wer to the victim or his kin, but he also would
have to make a payment of wite to the ealdorman or king. Ealdormen and
kings had no sovereign powers to coerce compliance, however, as Pollock and
Maitland (1959, vol. 2, 40-41) explain. They simply supported someone who,
due to insufficient strength of his own support group arrangements relative to
the strength of the accused offender, could not get his cause heard in his own
hundred. Nonetheless, this institutionalization of ealdormen’s and king’s role
in the justice process, and in particular a wit as a payment for performing this
role, was one of the first steps in what would soon be a rapid extension of the
king’s role in law. Kingship did not develop for the purpose of establishing
internal law and order, however. Rather, as explained in Blair (1956, 196-198)
and Benson (1990, 26-30; 1993), monarchial government evolved due to exter-
nal conflict, as groups attempted to take land from other groups or to protect
existing holdings.9 But during the centuries of warfare kingship also acquired
important legal ramifications.
IV. Justice for Profit: The Development of English Criminal Law
As Anglo-Saxon kings consolidated their power, they recognized that law
and law enforcement could be used as a direct source of royal revenues. Well
before the Norman conquest, for instance, Pollock and Maitlan (1959, vol. 1,
49) observe that outlawry began to involve “forfeiture of goods to the king.”
More significantly, they note (1959, vol. 1, 49) violations of certain laws began
to be referred to as violations of the “king’s peace,” and punishment involved
fines to the king rather than restitution.
The concept of the “king’s peace” traces directly to Anglo-Saxon law in the
sense that every freeman’s house had a “peace”; if it was broken, the violator
had to pay. Initially, the king’s peace simply referred to the peace of the king’s
house, but as royal power expanded, the king declared that his peace extended
to other places. First, it was applied to places where the king traveled, then
to churches, monasteries, highways, and bridges. Eventually, as Lyon (1980,
42) notes, it would be “possible for royal officers such as sheriffs to proclaim
the king’s peace wherever suitable. Even included were festivals and special
occasions.” Violations of the king’s peace required payment to the king, so
the expansion in places and times protected by the king’s peace meant greater
potential for revenue. Pollock and Maitland (1959, vol. 1, 31-32) explain that
the populace did not accept these changes gracefully, however: “There is a
constant tendency to conflict between the old customs of the family and the
newer laws of the State.”
544 Anarchy and the Law

Royal profits from justice probably were only a small component of total
income for Anglo-Saxon kings. However, they were an increasingly important
component for at least two reasons. First, such income was relatively liquid. The
potential for taxation was modest, for example. By far the largest component of
royal income came from the king’s land holdings, but this income was largely in
the form of agricultural produce, which could not easily be transported or sold.
Indeed, kings and their households traveled from estate to estate throughout the
year, consuming each estate’s output before moving to the next. This lack of
liquidity contrasts sharply with fines collected through the king’s evolving legal
functions. Second, marginal changes in royal revenue could be made relatively
easily by mandating changes in the law, in the form of extensions of the king’s
peace to other offenses, and increasing the wite, as compared to most other
sources of revenue. Indeed, through confiscation of outlaws’ property, kings
expanded their land holdings, creating new sources of perpetual income.
Law enforcement and its profits also became something the king could ex-
change in the political arena. As Pollock and Maitland (1959, vol. 2, 453-454)
stress, “pleas and forfeitures were among profitable rights which the king could
grant to prelates and thegns. A double process was at work; on the one hand the
king was becoming supreme judge in all causes; on the other hand he was grant-
ing out jurisdiction as though it were so much land.” Ealdormen were granted
special status as royal representatives within shires; Lyon (1980, 62-63) notes
that they received “one-third of the fines from the profits of justice” and other
duties levied by the king. In exchange, the ealdormen mustered and led men into
combat, represented the king in shire courts, and executed royal commands. By
the tenth century, a few powerful families provided all the ealdormen in England,
and they had a great deal of national political power. As single earls evolved to
represent the king in groups of shires, the office of sheriff also evolved in each
shire. A sheriff received grants of land from the king and the right to retain some
of the profit from the royal estates he supervised. Furthermore, as explained
in Lyon (1980, 65), “by the reign of Edward the Confessor judicial profits had
come to be lumped in with the farm of the royal manors and all these had to be
collected by the sheriff” in exchange for part of the profit.
Norman Rule: The End of Restitution
Pollock and Maitland (1959, vol. 1, 94) emphasize that following their
successful invasion of 1066, the Normans quickly established “an exceed-
ingly strong kingship,” and as Lyon (1980, 163) notes, one focus of this power
was the use of law and law enforcement to generate revenues. In this regard,
Pollock and Maitland (1959, vol. 1, 53) observe that one of the earliest and
most significant changes the Normans made in English law was replacement
of what remained of the Anglo-Saxon’s restitution-based system’s payments
of clearly defined wer with a system of fines and confiscations for the king,
along with corporal and capital punishment. Most offenses under the early
Normans were still defined by Anglo-Saxon customary law, but elimination of
 Are Public Goods Really Common Pools? 545

the wergeld system meant that those offenses considered to be violations of the
king’s peace were significantly expanded, and the Normans continually added
offenses of this kind. A significant factor in the growth of this list of offenses,
as Lyon (1980, 189) stresses, was the king’s “need of money; to increase his
income the king only needed to use his prerogative and throw his jurisdiction
over another offense.” The Norman kings also brought the concept of felony to
England, by making it a feudal crime for a vassal to betray or commit treachery
against a feudal lord. Feudal felonies were punishable by death, and all the
felon’s property was forfeited to the lord. Soon, felony developed a broader
meaning described by Lyon (1980, 190): “Again royal greed seems to be the
best explanation for the expansion of the concept of felony. Any crime called
a felony meant that if the appellee was found guilty his possessions escheated
to the king. The more crimes called felonies, the greater the income, and so
the list of felonies continued to grow throughout the twelfth century.” During
Henry I’s reign, an attempt was made to translate the codes of the Saxon king,
Edward. Three other law books were added to the translations. Pollock and
Maitland (1959, vol. 1, 106) conclude that, “These law books have…one main
theme… An offense, probably some violent offense, has been committed. Who
then is to get money, and how much money, out of the offender.” Revenues
from law enforcement and their allocation were obviously the most important
consideration in royal law at this time.
With the Norman’s undermining of the Anglo-Saxon restitution-based legal
system, one of the most powerful positive incentives to cooperate in law enforce-
ment disappeared. Common-access benefits, such as deterrence, remained, as
did some private benefits, such as the potential for revenge. But the remaining
private benefits apparently were not sufficient to induce voluntary cooperation,
particularly given other disincentives discussed below. Many of the hundreds
ceased functioning altogether under William, for example, although other lo-
cal associations took over some of the non-policing functions of the hundreds,
such as road maintenance as noted below.10 Thus, Norman kings were forced
to attempt to establish new incentives and institutions in order to collect their
profits from justice. The Normans instituted a local arrangement called the
frankpledge, with similar functions to an Anglo-Saxon tithing. Based on coer-
cively mandated requirements rather than positive incentives, the frankpledge
ordered to pursue offenders and ensure the appearance of members in court
where the victims were to prosecute so the king could collect his fines. If a
frankpledge failed, the group could be fined. Thus, the incentives to cooperate
under the restitution system were replaced with threats of punishment. These
incentives were apparently much less effective, however: Lyon (180, 196) notes
that frequently, entire communities were fined.
Many institutional foundations of the modern English system of law were
laid during the reign of Henry II, a man who Berman (1983, 439) describes as
“hungry for political power, both abroad and at home.” Pollock and Maitland
(1959, vol. 1, 153) explain that when Henry II came to power, he consolidated
546 Anarchy and the Law

and expanded his revenue-collecting system. By 1168, for example, circuit tax
collectors who were also the itinerant judges had become a “great subdivision”
of the royal court.11 The itinerant justices conducted royal inquests regarding
financial issues and issues of justice, and they transmitted royal commands to
counties and hundreds. The justices also amerced frankpledge groups that failed
to or refused to take their policing duties, fined communities that did not form all
men into frankpledge groups, and amerced both communities and hundreds that
failed to pursue offenders or to report all violations of the king’s peace through
inquest juries.12 Such amercements were increasingly important.
Pollock and Maitland (1959, vol. 1, 141) observe that Henry and his judges
defined an ever-growing number of actions as violating the king’s peace. These
offenses came to be known as “crimes” at about this time, and as Laster (1970,
75) explains, the contrast between criminal and civil causes developed, with
criminal causes referring to offenses that generated revenues for the king or
the sheriffs rather than payment to the victim. Indeed, Lyon (1980, 295) notes
that “the king got his judicial profit whether the accused was found guilty or
innocent.” If guilty, hanging or mutilation and exile, plus forfeitures of all goods
to the crown were typical punishments; if the accused was found innocent, the
plaintiff was heavily amerced for false accusation. This further reduced the in-
centives of crime victims and frankpledge groups to report crimes, of course.
Laster (1970, 76) stresses that the loss of restitution and its accompanying
incentives, and the potential for amercement for false accusation, meant that
English citizens had to be “forced” into carrying out their policing functions. In
addition to efforts to mandate formation of frankpledge groups, Laster (1970,
76) details a long series of legal changes, such as declaring that the victim
was a criminal if he obtained restitution prior to bringing the offender before a
king’s justice where the king could get his profits, and creation of the crime of
“theftbote,” making it a misdemeanor for a victim to accept the return of stolen
property or to make other arrangements in exchange for an agreement not to
prosecute. In delineating the earliest development of misdemeanors, Pollock
and Maitland only discuss “crimes” of not cooperating in policing, suggesting
(1959, vol. 2, 521-522):
A very large part of the justices’ work will indeed consist of putting in mercy men
and communities guilty of neglect of police duties. This, if we have regard to actual
results, is the main business of the eyre…the justices collect in all a very large sum
from hundreds, boroughs, townships and tithings which have misconducted them-
selves by not presenting, or not arresting criminals…probably no single “community”
in the county will escape without amercement.
Laster (1970) explains that more laws were added. For instance, civil rem-
edies to a criminal offense could not be achieved until after criminal prosecution
was complete; the owner of stolen goods could not get his goods back until
after he had given evidence in a criminal prosecution; and a fine was imposed
for advertising a reward for the return of stolen property, no questions asked.
Coercive efforts to induce victims and communities to cooperate in pursuit and
 Are Public Goods Really Common Pools? 547

prosecution were not sufficient, however, and crime was on the rise.13 Thus, a
public component to policing and prosecution inevitably developed.
Public Institution for Policing and Prosecution
An early development in the evolution of public policing and prosecution
was the creation of the office of justice of the peace (JP) in 1326. Stephen (1883,
190) notes that at the time, JPs were simply “assigned to keep the peace,” but
in 1360 they were empowered “to take and arrest all those they may find by
indictment or suspicion and put them into prison.” JPs were appointed by royal
commission for each county; and Langbein (1974, 5) observes that as with
much of the local apparatus of justice, these men were expected to perform
their functions without monetary compensation. Lanbeing (1973, 334; 1974,
66) also explains that over thirty statutes were issued from the late fourteenth
to the middle of the sixteenth centuries, establishing various functions for JPs
in the criminal process. For instance, while victims or frankpledge groups
continued to be responsible for pursuing criminals and prosecuting most cases,
after a 1555 statue, JPs were obliged to take active investigative roles in felony
cases; to organize cases for prosecution, including examination of documents;
to assist the assize judge in coordinating the prosecution at trail; to bind over
for appearance all relevant witnesses, including the accusers and the accused;
and to act as a backup prosecutor when a private citizen was not available.
The declining incentives of citizens and victims to pursue and prosecute left
a gap that JPs were intended to fill. However, the growing duties of JPs, particu-
larly in urban areas, meant that “voluntary” JPs were not willing to fulfill the
need. In fact, Beattie (1986, 59-65) stresses that one of the deterrents to private
prosecution was the difficulty in finding a JP willing to perform the criminal
justice functions assigned to them by various statues. These duties were becom-
ing increasingly time consuming and the rewards (the various fees a JP could
collect, the prestige of the position) were clearly not sufficient to compensate
for the time and inconvenience of the job. Thus, in 1729, the central government
chose to financially support one Middlesex JP to provide criminal investigative
and prosecutorial services; he became known as “the court JP.” Middlesex was
the seat of government officials and parliamentarians were located there. The
self-interest motives of these government officials in transferring the cost of
law enforcement onto taxpayers certainly comes into question. They were the
first to benefit from such expenditures at any rate.
Little record of the first court JP remains, but Langbein (1983, 63) explains
that the second, Henry Fielding, along with his brother John who succeeded
him in the position, appears to have had a dramatic effect on policing and pros-
ecution in the Middlesex-London area.14 For instance, George II began paying
Middlesex and some London watchmen with tax monies.15 Then, as Langbein
(1983, 67) notes, Henry Fielding began organizing a force of quasi-professional
constables in the early 1750s, known as the “Bow Street Runners,” to seek out
and apprehend suspects, assist in the retaking of goods, patrol, and infiltrate
548 Anarchy and the Law

criminal gangs. Fielding was court JP so this group had some “public” status,
but they were not a true public police force because their income came from
rewards for criminal apprehensions.16 Wooldridge (1970, 119-120) stresses that
“Fielding continuously agitated for governmental financial assistance so his
platoon could be regularly salaried…(but) Englishmen opposed on principle
the idea of public policing during Fielding’s lifetime. They feared the relation
between police and what is known now as the police state.”
In 1822 Robert Peel was appointed Home Secretary. According to Post and
Kingsbury (1970, 13), Peel believed that “you cannot have good policing when
responsibility is divided,” and that the only way to consolidate responsibility
was through government. But it took Peel some time to actually set up a publicly
financed police force. Even after 1829 when Parliament gave Peel the author-
ity and financing to form a London metropolitan police department, including
Middlesex, of course, there was substantial opposition from the populace. Citi-
zen concerns were apparently justified. Between 1829 and 1831, for example,
Rocks et al. (1981, 6) observe that 3,000 of 8,000 public police officers referred
to as “Peel’s bloody gang” or “blue devils” who had been hired were fired. But
support gradually increased in the face of cyclical upsurges in crime.17 And, as
Beattie (1986, 67) notes, once powerful individuals and groups began to see
that they could shift part of the cost of their own protection to taxpayers, special
interest support for public police began to grow. Some London merchants had
organized and paid a police force to patrol the Thames River docks, for example,
and the metropolitan police department absorbed this function, thereby reduc-
ing the merchants’ costs. Public police also began to gain political power and
expand its scope by, for instance, performing prosecution.18 Distrust of public
police persisted for much of the century, however.
V. Common Pool Problems in Modern Public Policing
The fact that the restitution-based system was replaced by a system dominated
by public policing is not a reflection of the superior efficiency of government
in production of a public good. Indeed, a clear implication of the analysis is
that by taking the private right to restitution and increasing the private cost of
cooperation, the only primary benefits of policing that remained for general
citizens were common-access benefits. The one exception appears to be revenge.
Another benefit was royal revenues, of course, but these revenues were not likely
to benefit any victim or witness in any noticeable way, and as Benson (1992;
1993) explains, they ultimately disappeared under the pressures of interest
groups politics. Consider two widely cited consequences of common property:
(1) inefficient overuse or congestion of the common-access resources and (2)
under-investments by individuals in privately provided resources used to produce
common-access attributes. Both clearly apply to criminal law enforcement in
the United States, which inherited much of its legal system from Great Britain,
including the crime/tort distinction.
 Are Public Goods Really Common Pools? 549

Common Access and Congestion

When resources are available in common pools, individuals do not bear the
full cost of personal use, so they tend to overuse the resources. An example
of the seriousness of the commons problem with public police resources is
evident in the direct links that individuals and businesses have between alarm
systems and the police. Most studies of such systems find a false alarm rate of
well over 95 percent. Kakalik and Wilhorn (1971, 29) report that in Beverly
Hills, California, for example, a survey of 1,147 alarm calls to which police
responded found that 99.4 percent were not warranted. These false alarms
have been attributed to several factors, including problems with equipment
and subscriber error, but the argument here suggests another reason. Those
using alarm systems do not pay the cost of each police response so they have
no incentive to minimize those costs. And the real cost of these false alarms
are the alternative, more valuable uses which are crowded out or must wait for
attention-response to real emergencies, crime deterrence. More generally, if
policing is a pure public good, then the demands of one individual would not
prevent another individual from consuming the same services. In fact, however,
the tremendous number of competing demands for police services means that
many demands are crowded out. This is actually the type of “free” good that
Minasian (1964, 78) is referring to when he notes that “explicit prices are not
allowed to operate as either signaling or rationing devices, but resources are
consumed in their production.” The congestion that results means that individual
police officers and police departments as a whole decide which laws to attempt
to enforce and the magnitude of the effort made for each of those laws. This
allocation decision results in selective enforcement, as some crimes are crowded
out, receiving very little consideration or none at all, while other consume all
the police resources.19
Under-Investment by Victims
Inputs to policing must include privately provided resources. Victims are
particularly important inputs in the crime control process. As McDonald (1977,
301) observes, a huge portion of all crimes that come to the attention of police
are those reported by victims. Very few arrests for property or violent crimes
result from police initiated investigations or actions. Furthermore, without
victim testimony, a very substantial portion of the criminals that are arrested
would never be successfully prosecuted. Thus, successful production of the
commonly shared benefits of crime control such as deterrence requires that an
investment be made in providing the victim input. Victims themselves bear the
cost of this investment, however, and they therefore have incentives to under-
invest in the commons. Non-reporting can be viewed as a decision not to invest
in crime control, for instance, and over 60 percent of the FBI Index crimes are
not reported to police. One survey, reported by research and Forecasts, Inc.
(1983, 105), concludes that 60 percent of personal larceny cases with no contact
between thief and victim go unreported and that less than half of all assaults,
550 Anarchy and the Law

less than 60 percent of all household burglaries, less than 30 percent of house-
hold larcenies, and only a little over half of all robberies and rapes are reported.
Non-reporting is a natural reaction to the high cost of victim involvement with
the criminal justice system relative to the private benefits obtained. It is not
an example of free riding to consume benefits without paying. By definition,
deterrence has not worked if there is a victim, so to obtain any benefits, they
must bear costs.20
Under-Investment by Potential Victims
Non-victim witnesses and victims’ neighbors are also important inputs
into policing, but they have to incur costs of involvement themselves and their
private benefits are virtually non-existent. A widespread popular perception is
that large numbers of witnesses and others who could provide evidence regard-
ing crimes choose “not to become involved.” One tangential piece of evidence
provides some insights in regard to the magnitude of their under-investment.
As Sherman (1983, 158) emphasizes, private patrols and neighborhood watches
are quite effective at crime prevention. Yet, such voluntary arrangements are
not particularly widespread. A gallop poll reported by Sherman (1983, 145)
indicates that organized participatory crime prevention efforts, including but
not exclusively consisting of such patrols and watches, were only in place in the
neighborhoods of 17 percent of the Americans surveyed. And non-participation
is a problem for many of these organizations. After all, even without participat-
ing, individuals cannot access public police services or the deterrence arising
from private patrolling of public streets.
This under-investment in crime control by witnesses, neighbors, etc. obvi-
ously fits the idea of public good free riding better than the under-investment
by victims, discussed above, but as Minasian (1964, 77) stresses, even this kind
of situation does not mean that an alternative institutional arrangement cannot
create a different set of incentives: “The concept of a public good has mislead
people to infer the need for collective action for its production and allocation.”
Increases in private benefits from control, such as an expectation of restitution
for potential future victims, or privatization of streets to allow exclusion, as
discussed in Benson (1990, 209-211 and 243-244), could create incentives for
cooperation, either in participatory watches or in hiring specialists. Indeed,
Benson (1990, 211-213) explains that there are over twice as many private police
in the United States today as there are public police, and a substantial majority
of these private police are employed as watchmen or security officers in order
to prevent crime. They may produce common pool benefits for others in the
vicinity, but in fact, deterrence from watching actually tends to be localized, as
it probably was with the Anglo-Saxon tithing. At any rate, the private benefits
of such crime prevention clearly must also be substantial.21
Even if the deterrence aspect of policing might be labeled as public goods,
perhaps because non-payers cannot be excluded from public streets, it is not
clear that public police effectively produce it. After all, legislators do not en-
 Are Public Goods Really Common Pools? 551

joy a clear information source like prices when determining how to allocate
publicly employed resources, so they often use some statistical representation
of the “quality” of work being done. The number of crimes deterred cannot be
determined, for example, but as Sherman (1983, 156) notes, arrests is a natural
measure of police output, and this is a primary measure that police focus on
in their lobbying efforts for expanded budgets. Given this emphasis on arrest
statistics, police have incentives to wait until a crime is committed in order to
make an arrest, and indeed, after an extensive study of police performance,
Sherman concludes (1983, 149): “Instead of watching to prevent crime, motor-
ized police patrol [is] a process of merely waiting to respond to crime.” In fact,
Sherman (1983, 151) explains that about half of an officer’s time is spent in
preventative patrolling, presumably to produce the public good of deterrence,
but systematic observation indicates that such time is largely occupied with
conversations between officers, personal errands, and sitting in parked cars
on side streets. In other words, police manpower is being allocated to focus
on measurable outputs in the form of arrests while sacrificing unmeasurable
outputs in the form of crime prevention, just as Lindsay (1976) explains other
bureaucracies do. An increase in the probability of arrest does not deter some
crime, of course—see Benson et al. (1992) for example. The suggestion made
here and in Sherman (1983), however is that a more effective way to deter crime
would be for police to actively watch. As Minasian (1964, 77) emphasizes, the
“real problem” is the choice between alternative intuitional arrangements, and
although none “will reside in the ideal world of Pareto,” some will come closer
to maximizing the value of scarce resources than others will. When a private
security firm is hired to protect a neighborhood or business, for example, the
price that consumers are willing to pay measures effectiveness, and that firm
has incentives to deter crime through watching and wariness.
VI. Highways
The public-good free-rider argument is an ex post rationalization for public
provision of policing rather than an ex ante explanation for its development.
The same is apparently true of highways, as Albert (1972, 3) explains: “In
England the various transport sectors developed gradually and were controlled
almost entirely by private enterprise.” Direct evidence of the extent and quality
of roads in Britain between the Roman occupation and the twelfth or thirteenth
century is almost non-existent, but a good deal can be inferred from various
travel records.22 For instance, Gregory (1932, 94) and Parkes (1925, 5) observe
that records of military marches demonstrate that at least some roads were in
good condition. Similarly, Hindle (1982, 193) explains that Anglo-Saxon and
early Norman kings and their courts “also moved incessantly around the king-
dom,” thus requiring passable roads to carry what Stenton (1936, 6) notes was
a “very sizable company.” Representatives of the king, including tax collectors
and judges, and of the church with its widespread holdings, also traveled ex-
tensively. Furthermore, as Gregory (1932, 95) and Willan (1976, 13) both point
552 Anarchy and the Law

out, England had fairly steady advances in population and in culture during this
period, and internal trade was expanding, all requiring increasingly extensive
internal communications. Clearly, as Stenton (1936, 21) concludes, the road
network in medieval England was adequate for “the requirements of an age
of notable economic activity, and it made possible a centralization of national
government to which there was no parallel in western Europe.” However, the
roads were not created nor maintained by the state.
While considerable long-distance travel occurred in the early medieval pe-
riod, Beresford and St. Joseph (1979, 273) note that “most medieval roads were
entirely local in purpose with an ambition no higher than to serve the villagers’
immediate wants. There was need for lanes to provide access to holdings in the
fields; to take loaded wagons to the windmill or the watermill in the meadows;
to reach the woodland with its timber, its fruit and its pannage for swine; to
take the flock to the common pastures and heaths.” Indeed, most of the benefits
of were internal to a hundred. According to Webb and Webb (1963, 5), there
is no actual documentation of local road maintenance and production before
manorial records began to be produced in the twelfth and thirteenth centuries,
but several inferences can be drawn from customary law. First, as Webb and
Webb (1963, 6-7) observe, those with customary obligations to maintain roads
were primarily responsible for removing any impediments to travel such as
overhanging trees, hedges, logs, and water through a drainage ditch and/or
building up of the roadway. Second, some of the property rights to the land
over which a road passed belonged to the owner of the land on either side of
the road: Pawson (1977, 66) also stresses that one customary Anglo-Saxon
right to that property was assigned to the commons: “The right of passage
was a communal right.” Indeed, Jackman (1966, 5) explains that the concept
of the “highway” referred to this customary right of passage rather than to
the roadway or path itself. Third, Jackman (1966, 4) also points out that the
manorial records indicate that all landowners were obliged to the hundred, and
later to the parish, to watch over the roads on their land and keep them clear
of obstructions. Thus, as Jackman (1966, 33) explains, the hundred and/or
parish was responsible for seeing that its members maintained the roadways
over their land, although Bodey (1971, 14) notes that the actual need for
enforcement was rare. Individuals apparently cleared roads in recognition of
the many benefits of neighborhood cooperation outlined above and of other
factors discussed below.
As long distance travel increased, particularly by merchants and by represen-
tatives of the church and government, the need for good connections between
different communities’ road networks increased. But most local communities
had relatively little interest in building and maintaining connecting arteries and
bridges.23 Of the three groups most in need of good inter-community connec-
tions, however, it was the church and the merchant community that took up the
task, not the government.
 Are Public Goods Really Common Pools? 553

Merchants and Monasteries

Jackman (1966, 15-16 and 30-32), Gregory (1932, 97-98) and Pawson (1977,
72-73) provide numerous examples of merchant organizations contributing to
the construction and/or maintenance of roads, and especially bridges. Indeed,
some guilds and wealthy benefactors continued supporting bridges and roads
well into eighteenth century, as Pawson (1977, 73) explains:
Many private improvements were, of course, carried out purely in self-interest. New
roads were built to promote the exploitation of mineral wealth within estates, and
to enable landowners to divert existing highways… Sometimes an economic inter-
est led to improvements in the surrounding area, benefiting everyone… However,
when there was little direct return to those involved in private schemes, there efforts
were primarily for the social good. It was illegal for a toll to be charged on a public
highway without the consent of parliament so it was not possible to charge those
who benefited from such works except by voluntary means.
However, there were actually some very important rewards for such local
benefactors in the form of local prestige and respect. After all, as Hindle (1982,
207) stresses, roads played a very significant role in determining the success of
a town and its established markets, so other members of the community would
tend to be very grateful to someone who aided the community in this way.
Building and maintaining roads and bridges was an investment in reputation,
not unlike advertisers who pay for television programming to be broadcast free
of charge as discussed in Minasian (1964).24 And for Christians, even more
significant personal benefits were anticipated.
The medieval church had considerable demands for long-distance travel. The
church encouraged pilgrimages and maintained frequent tours by peripatetic
preachers and friars. Perhaps the most significant source of church travel was
the monasteries, however: as Gregory (1932. 95) and Jackman (1966, 8) both
note, the monasteries’ scattered estates required constant visits. Thus, Jack-
man (1966, 8) emphasizes that the church promulgated the belief that care of
the roads was “a work of Christian beneficence, well pleasing to God.” This
created incentives for private citizens to aid in the maintenance of roads and
bridges and Jackman (1966, 16) observes that the bishops’ registers throughout
England provide ample evidence of such activity. Indeed, Jackman (1966, 15)
and La Mar (1960, 13) both find that it was not uncommon for bequests to be
left for the construction or maintenance of a road or bridge. More importantly,
as Jackman (1966, 30-31) stresses, the monks were assigned, by custom, the
responsibility of maintaining the roads and they willing took on the task because
it “was a pious work highly to be commended.” Furthermore, by promulgating
such beliefs, the church hierarchy created incentives for local parishioners to
maintain roads throughout the country, thus explaining the longstanding cus-
tomary obligation that local parishes had for road maintenance, as Jackman
(1966, 30) and Pawson (1977. 68) explain.25 Indeed, with the breakdown of the
hundreds under the Normans, the parishes apparently took on the major obliga-
554 Anarchy and the Law

tions of road maintenance, with the aid, encouragement, and where necessary,
supervision of the monasteries and bishops.
The various groups and individuals who maintained roads in England and
prior to 1500 were apparently quite effective, as suggested in Darby (1973,
174 and 287), given the technology available. The system of voluntary road
maintenance, based on the cooperation of the monasteries and parishes, was
ultimately undermined, however, by the almost continuous struggle for power
between the English kings and the church. As Jackman (1966, 29) points out,
Henry VIII finally dissolved the monasteries in 1536-1539, divided their prop-
erties, and transferred them to “a class of rapacious landlords who would be
slow to recognize any claim upon their rents for the maintenance of roads…the
inevitable result would be a rapid decadence of many highways which had
hitherto been in common use”; also see Gregory (1932, 93) and Parkes (1925,
7) for similar observations. While various individuals and guilds continued to
provide support for some roads and bridges, the undermining of the incentives
of the church to encourage its parishioners to maintain roads in general was
apparently quite significant. The customary right of passage that had evolved,
primarily as a right for members of local communities, apparently was, for
some of those communities, creating a common pool problem that could not
be alleviated without the monasteries. Indeed, Jackman (1966, 30-31) contends
that the dissolution of the monasteries was the primary reason for passage of the
“Statute for Mending of Highways” in 1555 mandating that parishes establish
very specific road maintenance institutions.
The Mandate Parish System
Under the 1555 statute, two surveyors of highways were to be chosen by the
JPs from a list provided by each parish. The surveyors were obliged to travel the
parish at least three time a year to inspect the roads and bridges, see to it that
landowners kept the roads and ditches clear of impediments, organize annual
maintenance procedures for parishioners, watch for and stop wagons drawn
by more than an allowed number of horses or oxen, and announce before the
church meeting any violators of the statute. They were also required to collect
and account for the fines, compositions, and commutations that arose in con-
junction with highway maintenance or lack thereof. The JPs were to audit the
surveyors’ accounts, hear pleas of excuse for non-fulfillment of the statute’s
labor requirements, levy fines and order seizures for violations, and when neces-
sary, collect a tax from the parish residents to cover an extraordinary expense.
Furthermore, both JPs and surveyors were to perform their tasks gratuitously.
All manual labor, tools, horses and carts needed for repairing the roads were
to be provided gratuitously by the parishioners for four eight-hour days, and
then six after 1563, chosen by the surveyors.26
In much of the country the mandated obligations of the highway statue of
1555 were probably unnecessary and in the rest of the country they were unsuc-
cessful. It appears that roads were not deteriorating significantly in most rural
 Are Public Goods Really Common Pools? 555

areas where the benefits and costs of road maintenance were largely internal
to the parish because through traffic was minimal. This accounted for perhaps
80 to 85 percent of the roads in the country. On the other hand, the mandated
obligations were not sufficient for the maintenance of many of the major arter-
ies of long-distance travel, particularly in the area of London and some other
trading centers. As Parkes (1925, 6-7) explains, these were the roads over which
government officials and merchants traveled, and where traffic by heavy wagons,
long pack trains, and herds of cattle “kept the roads in a perpetual slough.” It is
recognized in Parkes (1925, 8), Albert (1972, 8), Darby (1973, 290 and 372),
Webb and Webb (1963, 29), and Pawson (1977, 68-69) that parishioners were
unwilling to invest in maintenance when the road was, in effect, a free-access
common pool whose benefits were bring consumed by outsiders. Indeed, as
Parkes (1925, 9) explains, the mandated investments were often made even
higher because the best time of year for road repairs was also the busiest time of
year for most parishioners. Many parishioners did not show up for the mandated
work, others sent their children or a substitute instead, and as Parkes (1925, 9)
reports, those who did present themselves, “often poor men who could ill afford
wageless days—would spend most of their time in standing still and prating,
or asking for largesse of the passers-by…so that they became known as The
King’s Loiterers, in derision of their earlier title, the King’s Highwaymen.”
Thus, Willan (1976, 3) finds that JPs were obliged to collect large numbers of
fines from those who were unwilling to work.
A long series of statutes followed in an attempt to create sufficient negative
incentives for the parishioners and surveyors to do their mandated statutes in
maintaining the common pool highways. Ultimately, as Pawson (1977, 71) and
Webb and Webb (1963, 20-21) explain, none worked and the system of fines
developed into commutations, relieving parishioners’ obligations and allowing
JPs to hire laborers to work under surveyor supervision. These funds proved
inadequate, however, as noted by Webb and Webb (1963, 36): “Indeed, what
with the lack of any definite valuation roll or fixed assessment, the complica-
tions and uncertainty of the law, and the unwillingness of both Surveyors and
Justices to be at the trouble of legal proceedings against their neighbors, it is
plain that under the commutation system the greatest inequality and laxness
prevailed.” Thus, commutations were supplemented with a general highway
tax after the mid-seventeenth century. However, Wenn and Webb (1963, 51-61)
also emphasize that an even more important source of funds was generated by
criminal fines levied through presentment or indictment of the parish as a whole
for the non-repair of its highways. They (1963, 53-54) observe that some par-
ishes were perpetually under indictment, and “At varying dates in the different
Counties, but eventually…nearly all over England, it became the regular thing
for a parish periodically to find itself indicted at the Sessions for neglecting to
keep it’s highways in repair.” Parishioners chose to pay substantial fines rather
than repair roads. Despite these sources of revenues, however, Parkes (1925, 30)
and Jackman (1966, 48-49) both conclude that the quality of road and bridge
556 Anarchy and the Law

construction and repair did not compare to conditions that had existed under
the monk’s supervision and encouragement.
Alternative Institutions: Tolls and Turnpike Trusts
Roads obviously do not have to be treated as common pool resources. Tolls
can be charged and non-payers can be excluded, given appropriate property
rights. However, in England, the right to charge a toll was severely restricted.
Landowners could charge for the right to pass through private grounds, given
that a customary right of passage had not been established, and Pawson (1977,
73-74) points out that enterprising landowners began to establish and charge
tolls on “private roads,” allowing travelers to avoid the “ill-repaired public
highways.” Furthermore, the king, and later parliament, could grant the power
to collect tolls, and Jackman (1966, 9-11) explains that there is evidence that
the merchants who formed local governments of several market centers, the
burgesses, had requested and been granted the right to collect tolls as early as
1154. Tolls were, in fact, an important source of royal revenues, as Jackman
(1966, 11) notes, but those who collected them often could retain some portion
for their own purposes, including for road and bridge maintenance.
The destruction of the monasteries and the failure of the parish system to
maintain the major long-distance arteries of the country left the government
with few options. One was an attempt to ration the commons through various
restrictions on how it could be used, such as weight limits, limits on number
of horses, and so on, as detailed in Pawson (1977, 74-75). The local officials
expected to enforce these laws were reluctant to do so, however. The second
and more important approach was to loosen the central government’s control
over and claim to tolls so that charges for actual road users could be made
by local groups. A long series of Acts were passes beginning in 1663 which
established local ad hoc bodies known as “Turnpike Trusts.” It must be em-
phasized, as in Albert (1972, 12), that these turnpike trusts were not a central
government innovation, however. Members of local parishes, burdened by high
road maintenance costs under the parish system, began to petition parliament
for the right to charge tools.27
After about 1700 the process became increasingly standardized. Moyes
(1978, 406) explains that a group of local landowners and/or merchants would
accumulate the money necessary to fund a Turnpike Act in parliament and to
carry the cost of the trust through its startup period. Most Turnpike Acts estab-
lished a Turnpike Trust made up of a large number of important parishioners.
The trustees were unpaid and forbidden to make personal profit from the trust.
They were responsible for erecting gates to collect tolls, and for appointing
collectors, a surveyor to supervise repairs, a clerk, and a treasurer. The funds
collected could only be applied to the road named in the Act. These roads
were usually existing highways, although there were some cases of new roads,
particularly after 1740. The trusts were granted monopoly power over the road,
generally for twenty-one years, so the common property attributes of the road
 Are Public Goods Really Common Pools? 557

were substantially reduced. As explained below, however, significant common

property attributes remained.
Turnpike formation really began to accelerate during the 1740s and 1750s
as Moyes (1978, 407) notes, and by 1770 Trusts controlled almost 75 percent
of the eventual 22,000 miles of turnpikes. In Darby (1973, 374, 502 and 454)
it is noted that the turnpikes were maintained using the same techniques as the
monasteries and parishes had employed before, that only about one-fifth of the
nation’s roads became turnpikes, and that in general, the parish roads were not
in any worse condition than the turnpikes. This does not mean that the same
expense and effort was required to maintain the parish and turnpike roads, of
course. Turnpikes developed into the parishes where the commons problems
of overuse and under-investment by long-distance travelers were the greatest,
while the roads in the remaining parishes were primarily used for local travel.
Thus, at least initially, the turnpikes used conventional methods of repair, but
as Pawson (1977, 107) stresses, the turnpikes used these methods far more in-
tensively. However, some trusts hired paid surveyors who developed expertise
in road maintenance, and after 1750 some specialists engaged in considerable
experimentation and innovation.
The turnpike era came to an end due to a combination of at least two politi-
cal economy factors. First, the structure and characteristics of the trusts cre-
ated significant principle-agent problems. The Trustees were not allowed to
earn a profit. The toll gates were farmed out, and while trustees were suppose
to monitor the gatekeepers and surveyors, their incentives to do so were very
weak. Furthermore, the Trusts had monopoly rights and there was no threat of
takeover. With little monitoring and no competition, Hindly (1971, 63) notes
that corruption was rampant “and only a small part of the money collected for
the upkeep of the road was in fact used for that purpose.” Second, there was
significant political opposition to the trusts, from those involved in competitive
transportation modes such as the river and canal barges, from trade centers that
already had effective transportation connections and feared competition from
other centers where road connections were to be improved, from some land-
owners and farmers who feared that better roads would make it easier for their
low-wage laborers to be attracted away and from those farmers supplying local
markets who feared that improved roads would bring in competition from distant
suppliers. Therefore, Albert (1972, 12 and 24-29) demonstrates that success-
ful Turnpike Acts always reflected significant political compromise, including
long lists of toll-exemptions for some of the powerful individuals and groups
who opposed each Act. Jackman (1966, 260-261) observes that large-scale
agricultural interests and, in some areas, industrial groups, were particularly
effective at obtaining exemptions. Often those who obtained exemptions were
some of the worst abusers of what to them remained a common pool resource.
Jackman (1966, 261) stresses that exemptions grew over time and seriously
reduced the revenues of the trusts.
558 Anarchy and the Law

The combination of principle-agent problems and political exemptions meant

that trusts were unable to fully finance road maintenance. Rather than solving
the underlying incentive problems, however, the government began to empower
the trusts to draw on “statute labor”—the labor parishioners were mandated to
provide under the 1555 highway statute. Initially, the trusts were required to
pay wages fixed by parliament, but Hindley (1971, 62) notes that later some
labor was required without payment. Some trusts could even appropriate ma-
terials. Opposition to turnpikes grew, and turnpike riots occurred throughout
the country: Albert (1972, 26) explains that the rioters were usually parish
laborers required to work without pay, and farmers, miners and carriers who
were not influential enough to obtain exemptions but who wanted free access
to carry large loads over the turnpikes. Hindley (1974, 63) sums up the view of
many regarding these events, concluding that, “What was needed, of course,
was some mechanism of national road policy.” Indeed, Hindley (1971, 73) goes
on to state that, “Whatever other thoughts may be provoked by a study of the
history of English roads during the eighteenth century at least we may be led
to doubt whether the Englishman’s much-vaunted love for personal liberty is
not quite simply a dislike of efficiency and a scarcely secret love of violence.
The refusal to countenance the expenditure of public money on road-building,
or on a central and effective police force, guaranteed him a road system that
was among the least serviceable and most dangerous in Europe.” While there
are numerous parallels between the development of public policing and pub-
lic roads, the common pool perspective suggests a different conclusion than
Hindley’s for both services. Recognizing that these are common pools reinforces
Minasian’s (1964, 79) point that the outcomes reflect existing property-rights
arrangements and that “alternative exclusion and incentives systems” would
produce different results.
VII. Conclusions
According to Samuelson (1969), there is “a knife-edge pole of the private
good case, and with all the rest of the world in the public good domain by vir-
tue of involving some consumption externality,” but a “slippery slope between
private and common property” might be a better analogy. Indeed, when stacked
against the reality of historical institutional evolution, the public goods concept
appears to be little more than an ex post justification for claiming that the only
efficient policy is publicly providing various goods and services, such as po-
licing and highways, at zero money prices. In contrast, common pool analysis
emphasizes that incentives arise because of the definition of property rights,
and, therefore, it suggests an array of possible policy prescriptions involving
the internalization of various costs and benefits through privatization of rights.
Furthermore, this property rights perspective provides an accurate description of
the historical evolution from private to public arrangements for the production
of both policing and highways, something that the public goods concept cannot
do; after all, as Samuelson and Nordhaus (1985, 713) explain, public goods
 Are Public Goods Really Common Pools? 559

could not have been produced by private institutional arrangements. A series of

property rights alterations and limitations made by the government of England
undermined the incentives of individuals to cooperate in the production of both
policing and road maintenance, creating significant common pool problems that
government production has not been able to overcome. Suggesting that these
services are now public goods, even up to the point where crowding sets in, is
analytically empty because, as Minasian (1964, 79-80) explains, “the theory
generates economic analysis which is not based on the opportunity cost notion.”
Rationing of scarce resources cannot be avoided by declaring that no one can be
excluded; such a declaration simply means that first-come first-served and the
inevitable reality of congestion costs determine who gets what, or that regula-
tions establishing non-price rationing mechanisms must be established.
Notes
1. Minasian (1964) criticizes the theory of public goods by examining the allocation
of resources in production of television services, another of Samuelson’s examples
of a pure public good. Similarly, Coase (1974) demonstrates the fallacy of the light-
house as a public good, explaining that historically, private provision was the norm
in England (interestingly, Coase quoted and refuted the 6th edition of Samuelson’s
economics, but the quoted passage is unchanged in the 12th edition), and Klein
(1990) explains that private associations produced highways in early America.
2. Barzel (1989, 64) emphasizes that a good or service can have many attributes and
the bundle of rights associated with it can assign some benefits to particular indi-
viduals while other attributes are held in common. “Police services” clearly can be
so characterized, for example. In fact, as demonstrated in Benson (1990, 201-213)
many of the private attributes of policing, such as protection and property recovery,
can be and are privately produced.
3. See Benson (1993) for an extensive discussion of the theoretical potential for
cooperation under these and other circumstances, and Benson (1989; 1990-1991;
1992; 1993), Friedman (1979), Milogram et al. (1990), and Klein (1990) for specific
examples.
4. The following description of Anglo-Saxon legal institutions is certainly not uni-
versally accepted by legal historians, in part because the written records from the
period are quite sketchy, and in part because of the theory of legal positivism un-
derlying many of the alternative views, wherein law is assumed to require a system
of top-down command. See Benson (1993) for a detailed examination and rejection
of alternative views, citations to relevant literature, and extensive support of the
view presented here based on theoretical predictions, empirical analogy provided
by contemporaneous legal systems in Ireland and Iceland as well as more recent
anthropological evidence, and the admittedly sketchy historical date from this
period of Anglo-Saxon history.
5. These groups had other functions as well. For instance, Lyon (1980, 83) notes that
membership involved a surety responsibility, and Baker (1971, 10) explains that
the groups provided dispute resolution. For more details, see Benson (1990; 1992;
1993), from which some parts of sections III and IV are drawn.
6. They also produced the functions suggested in note 5, and road maintenance, as
explained below. They have been incorrectly characterized as an innovation of
Anglo-Saxon kings by Lyon (1980, 84) and others, but see Blair (1956, 235) and
Benson (1990; 1992; 1993) for counterarguments.
560 Anarchy and the Law

7. Institutions were developed to avoid violence even when a person was unable to
pay restitution. Pollock and Maitland (1959, vol. 2, 441 and 449) explain that an
offender was apparently given up to a year to pay a large debt, for example, and
debts could be worked off through indentured servitude.
8. Some historians, such as Lyon (1980, 84) view outlawry and the blood-feud as the
primary legal sanction prior to efforts by kings to force acceptance of economic
restitution. Given the incentives and institution arising in this legal system and
others like it, as described by Friedman (1979) and Benson (1990, 1991; 1993),
however, blood-feud was clearly acceptable only after an attempt to go to trial,
long before kings became active in law.
9. Blair (1956, 196) explains that Saxon and Jutish chieftains that led raiding parties
into Britain were war leaders whom freeman chose to follow. Warfare apparently was
virtually permanent, as efforts were continually being made to expand landholdings.
Military ability won a small group of entrepreneurial war chiefs prestige and land,
and their accumulated wealth allowed some to set themselves apart as kings. If a
warleader king’s successor was endowed with military ability, his kingdom would
last; and if the king could establish a blood descendant as his successor, precedent
for a hereditary dynasty would be established. Most Anglo-Saxon kings apparently
did not presume to be lawmakers, however, and law enforcement remained in the
hands of the hundreds and tithings.
10. Other private benefits arising from local cooperation also began to disappear due in
part to Norman takings, so it should not be inferred that the end of restitution was the
only relevant factor in undermining the hundred. For instance, the Normans seized
much of the land in England and granted large tracts to Barons and the Church in
exchange for support, and as noted in Darby (1973, 85), enclosure of some land
soon followed. The land held directly by the lords, called the demesne, could be
enclosed. Other types of land were controlled by freeholders who paid rent to the
lord, and by the villiens who provided labor to the lords. Estimates from the Hundred
Rolls of 1279 indicate that the demesne involved about 32 percent of the arable land
at that time, as indicated in Darby (1973, 86). The Statute of Merton (1236) also
permitted the lords to enclose large portions of the “waste,” the high woodlands
and unimproved pastures that lay in clumps around the arable lands, and as noted
in Darby (1973, 98-99), grazing was significantly restricted in the vast royal forests
and parks “in the interest of the chase.” With increasing enclosure, the potential for
straying cattle was diminishing. Then in the 1400s, as wool prices rose relative to
grain prices, the lords evicted large numbers of tenants and enclosed large tracts
of land, converting it to sheep pasture from crops and stubble fields upon which
cattle grazed. Hundreds of local villages were abandoned, as explained in Darby
(1973, 210-211).
11. The reduced incentives to participate in law enforcement meant that the king could
not count on the hundred and country courts to collect his profits from justice. Thus,
royal courts developed quite quickly. Pollock and Maitland (1959 vol. 1, 109-110)
explain that the first permanent tribunal representing the king, beyond the king’s
own council, consisted of Henry I’s financial administrators. The itinerant justices
were another aspect of the king’s effort to take on many of the functions of the
county and hundred courts.
12. Henry II used inquisitional juries extensively, requiring them to inform the king’s
justices on various matters and make accusations. Sheriffs arrested and jailed those
accused by the juries.
13. Indeed, the incentives for victims themselves to avoid the pursuit and prosecution
functions were growing, so the failure of non-victims to cooperate is not very
surprising. As noted above, unsuccessful prosecution was a finable offense, for
 Are Public Goods Really Common Pools? 561

example. Furthermore, when a victim filed a complaint before a justice of the peace,
he might have to pay for subpoenas and warrants if his witnesses and the suspect
were not present. Beattie (1986, 41) explains that other fees were incurred for the
recognizances in which he and witnesses were bound over for trial, for the clerk
of the peace or of the assize for drawing up the indictment, for the officer of the
court who swore the witnesses, for the doorkeeper of the courtroom, for the crier,
and for the bailiff. Beyond these fees, the level of the cost of attending court was
uncertain, because the length of the wait for an appearance before a grand jury and
the timing of the trial were not known. A victim often had to bear costs of food and
lodging for both himself and his witnesses.
14. Beattie (1986, 226) emphasizes that international military involvement served as
a major impetus for the development of public prosecution and police during the
eighteenth and nineteenth centuries: “The conclusion of wars…brought ‘a great
harvest of crime’…the peace brought back to England large numbers of disreputable
men who had spent several years being further brutalized by service in the armed
forces, without any provision being made for theirs reentry into the work force.”
15. Parkes (1925, 35) notes that private watchmen had been employed for at least two
centuries, and establishment of an unpaid watch had been mandated since Edward
I.
16. Private rewards for the return of stolen property had been offered for some time,
but beginning in 1692, public rewards for apprehension and conviction of criminals
were offered in an effort to induce private sector pursuit, and a class of professional
thief-takers or bounty hunters had developed. By 1792, seven other magistrate of-
fices in the London area had operations similar to those in Middlesex.
17. The reason for the crime cycles in alluded to in note 14.
18. Public prosecution was also resisted for a long time, as Cardenas (1986, 361)
emphasizes, because “a private prosecutorial system was necessary to check the
power of the Crown. If not so limited, the power of criminal prosecution could
be used for politically oppressive purposes.” However, fear of public prosecution
was primarily directed at the central government, so a localized bureaucracy was
the natural organization to take on such duties. For more details on public police
and prosecution, criminal courts, the end of “justice for profit” and other aspects
of modern criminal law as they evolved, see Benson (1990, 43-83, 1992; 1993).
19. Participants in gambling, prostitution, and drug exchanges enter the transaction
voluntarily, so victims are not demanding that the police correct specific offensive
acts, and there is no direct evidence of crowding, such as files full of unsolved
burglaries. There is, nonetheless, a common pool allocation system: demand
filters through the political process. Some neighborhoods have no drug dealers or
prostitutes walking their streets, for instance, while such activities are very visible
in other neighborhoods. See Benson et al. (1992) for direct evidence of crowding.
Also see Barnett (1986), Benson (1988; 1990) and Benson and Rasmussen (1991)
for common pool analysis of policing.
20. There may still be some private benefits associated with public policing and pros-
ecution, but they appear to be relatively insignificant. Stolen property is often not
recovered, money loss is generally not restored, for example, and revenge is not very
likely either. Uniform Crime Reports indicate that the portion of reported crimes
cleared by arrest is less than 20 percent and declining, and only a small portion of
arrests result in convictions.
21. As explained in Benson (1990), the private sector is still heavily involved in the
production of policing services, of course, even though the close knit families and
neighborhoods are generally not the institutional basis for cooperation. The fact is
that contracting is another way to establish reciprocal relationships, and Benson
562 Anarchy and the Law

(1990, 357-364) stresses that a wide variety of additional private contractual ar-
rangements can be anticipated, given expanded private benefits to crime control,
such as restitution, thereby reducing the underinvestment incentives associated with
policing services.
22. The Romans built “great military highways” in Britain, as Jackman (1966, 1) notes,
and there is little doubt that these roads, largely constructed with “public” funding,
were important transportation arteries for centuries. However, Jackman (1966, 4)
goes on the explain that the Roman road system “was by no means so good nor so
complete” as the road system in later periods. Also see Gregory (1932, 94) for a
similar observation.
23. Some bridges were built and maintained by hundreds, however: Webb and Webb
(1963, 107) note that the term. “Hundred Bridges” continued in use into the eigh-
teenth century.
24. See Klein (1990) for an excellent discussion of the interplay between self-interests
and social pressures in the private development of highways in the early history of
the United States.
25. Religious beliefs were significant in the Anglo-Saxon legal system as well. When
the guilt or innocence of the accused could not be determined from the evidence,
the hundred turned to God as an arbitrator. Both parties would agree to perform
an ordeal and accept the outcome as a decision, and the superhuman arbitrator re-
vealed a decision by the failure of one of the parties to survive the ordeal unharmed.
Without strong religious beliefs or modern sources of evidence, blood feuds might
have been more common.
26. See Webb and Webb (1963, 14-26) for more details on this statute and others which
followed.
27. For extensive discussion of the Turnpike Trusts, see Pawson (1977), Webb and
Webb (1963), and Albert (1972).
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 35
Property Rights in Celtic Irish Law
Joseph R. Peden
“The laws which the Irish use are detestable to
God and so contrary to all laws that they ought not
to be called laws…”—Edward I of England (1277)
“Leviathan in swaddling clothes”—D. A. Binchy on the Irish Tuath

Introduction
It is impossible at the present time to present a systematic, coherent descrip-
tion of the ancient Irish law of property. The reason is that considerable portions
of the sources have not been published in modern scientific textual editions and
translations. The principal sources used repeatedly by historians in the 19th and
early 20th centuries are the multi-volumed editions of the old Irish law tracts
edited and translated by Eugene O’Curry and John O’Donovan and published
posthumously by other editors between 1864 and 1901. While both these pioneer
scholars were competent in their understanding of Middle and early Modern
Irish, the language of the glosses and commentaries, neither was able to cope
too successfully with the archaic and very technical terminology of the early
Irish texts of the law—the oldest and most valuable strata for understanding
Irish legal concepts and principles. The later editors of the O’Curry-O’Donovan
transcriptions and translation were, with one exception, almost wholly ignorant
of the Irish language, and the result was that their footnotes were misleading
and inaccurate, their introductory essays teemed with misinterpretations, and
the printed texts themselves were full of glaring errors.1
Scientific study of the Irish law tracts had to await the development of Celtic
philology. This was begun in the early 20th century through the interest of the
German Celticist Rudolph Thurneysen, the English linguist Charles Plummer
and the Irish historian Eoin Mac Neill. These three undertook the first really
competent study of the difficult Old Irish texts, and more importantly, they
trained and encouraged younger scholars to pursue the very difficult linguistic,
historical and juristic studies which would prepare them for further study of
the law tracts.
Unfortunately, many historians not specializing in the study of the ancient
Irish law tracts have been unaware of the textual inaccuracies of the O’Curry-
O’Donovan translations and have continued to incorporate their older unsci-
entific work, and that of their editors, into their own work. For example, one

565
566 Anarchy and the Law

of the most commonly cited sources for early Irish history is Patrick Joyce’s
A Social History of Ancient Ireland, first published in 1906 and republished
in 1913 and again as late as 1968.2 This work is notoriously inaccurate; it has
no sense of the fact that a chronology of at least 1000 years is being covered
during which some changes in social and legal institutions took place. Joyce’s
book was used between 1914-1918 when the great French historian P. Bois-
sonade was preparing his epochal history of social life and work in medieval
Europe. Thus Boissonade speaks of “the soil of Ireland (belonging) to 184
tribes or clans…the clans held the land in common…no man held individual
property save his household goods, and each held only the right of usufruct
over his strip of tribal domain…in each district of Ireland the free population
lived communistically in immense wooden buildings…they lived and fed in
common, seated on long benches, and all the families of the district slept there
upon beds of reeds….” One can see immediately that the writer is using the
words “tribe,” “clan,” “tribal domain,” “district” and “population” equivocally,
leading to great confusion. Almost every part of this passage is incorrect or
very misleading.3
We might ignore Boissonade’s errors except they are typical of many other
secondary sources including the Cambridge Economic History, whose editor
Eileen Power, incidentally, translated Boissonade’s work into English in 1927.
Worse yet, this translation was reprinted as a Harper Torchbook in 1964 and
circulates widely in American colleges, perpetuating errors dating back more
than 60 years.
Even when native Irish authors like lawyer Daniel Coghlan attempted to
write a systematic description of land law under the ancient law tracts, his work
was described by a scholarly reviewer as “inaccurate and unreliable, of little
value.”4 Despite nearly 50 years of persistent and rewarding scientific study of
the Irish law tracts by professionally competent philologists and jurist-historians,
a recent historical work appeared which ignores all that has been published on
the problem of Irish land law in the ancient law tracts, and in a chapter entitled
“Celtic Communism” repeats all the inaccuracies of Joyce.5
Under these circumstances, conscious of my own lack of knowledge of the
Irish language, and keenly aware of the shoals that await the historian who is
not expert in this highly specialized field of study, I have deliberately avoided
all reliance upon authorities who are not themselves trained in Irish language
and history. I am not presenting a coherent systematic review of the Irish law of
property; I am presenting a review of what the most competent Irish scholars of
the last half century have discovered since they applied modern scientific philo-
logical and historical standards of criticism to the ancient Irish Law tracts.
My survey of the literature indicates that (1) private ownership of property
played a crucial and essential role in the legal and social institutions of ancient
Irish society; (2) that the Irish law as developed by the professional jurists—the
brehons—outside the institutions of the State, was able to evolve an extremely
 Property Rights in Celtic Irish Law 567

sophisticated and flexible legal response to changing social and cultural condi-
tions while preserving principles of equity and the protection of property rights;
(3) that this flexibility and development can be best seen in the development of
the legal capacity and rights of women and in the role of the Church in assimilat-
ing to native Irish institutions and law; (4) that the English invasion, conquest
and colonization in Ireland resulted in the gradual imposition of English feudal
concepts and common law which were incompatible with the principles of Irish
law, and resulted in the wholesale destruction of the property rights of the Irish
Church and the Irish people.
I
Irish law is almost wholly the product of a professional class of jurists called
brithim or brehons. Originally the Druids and later the filid or poets were the
keepers of the law, but by historic times jurisprudence was the professional
specialization of the brehons who often were members of hereditary brehonic
families and enjoyed a social and legal status just below that of the kings. The
brehons survived among the native Irish until the very end of a free Irish soci-
ety in the early 17th century. They were particularly marked for persecution,
along with the poets and historians, by the English authorities. The statutes of
Kilkenny (1366) specifically forbade the English from resorting to the brehon’s
law, but they were still being mentioned in English documents of the early 17th
century.6
The absence from the function of lawmaking of the Irish kings may seem
startling. But Irish kings were not legislators nor were they normally involved
in the adjudication of disputes unless requested to do so by the litigants. A king
was not a sovereign; he himself could be sued and a special brehon was assigned
to hear cases to which the king was a party. He was subject to the law as any
other freeman. The Irish polity, the tuath, was, one distinguished modern scholar
put it, “the state in swaddling clothes.” It existed only in “embryo.” “There was
no legislature, no bailiffs or police, no public enforcement of justice…there
was no trace of State-administered justice.” Certain mythological kings like
Cormac mac Airt were reputed to be lawgivers and judges, but turn out to be
euhemerized Celtic deities. When the kings appear in the enforcement of justice,
they do so through the system of suretyship which was utilized to guarantee
the enforcement of contracts and the decisions of the brehon’s courts. Or they
appear as representatives of the assembly of freemen to contract on their behalf
with other tuatha or churchmen. Irish law is essentially brehon’s law—and the
absence of the State in its creation and development is one of the chief reasons
for its importance as an object of our scrutiny.7
The bulk of the Irish law tracts were committed to writing in the late seventh
and early eighth centuries, and though influenced somewhat by the impact of
Christianity, they are basically reflective of the social and legal principles,
practices and procedures of pagan Irish society. In the early ninth century, the
oldest texts were being glossed because the original meaning was no longer
568 Anarchy and the Law

certain, or practice had in fact undergone developmental change. By the 10th

century elaborate commentaries were being added which indicate that the texts
were either so obscure to the new generation as to be inexplicable, or change
had become so marked that the commentaries often contradict the text itself.
Part of this confusion was due to the very archaic and technical language of the
earliest texts and the subsequent change in the Irish language from what we call
now Old Irish to Middle Irish. If we recall the marked differences between the
English of Chaucer and that of Shakespeare, we will understand the difficulties
of the brehon jurists over a comparable period of time.8
To complicate matters further, the earliest Irish texts reflect the existence
of several different schools of law, each producing its own particular code or
tract. While all the tracts are recognizably Irish in character, they do reflect
local, perhaps regional differences; if the evidence were fuller, several local
schools might be identified. As of now it appears that a northern and a southern
regional affinity can be detected. The fact that in later historical times certain
families of brehons were associated with specific tuatha or regions suggests
that local variations in specific procedures and penalties were almost inevitable.
But from the tenth century, the legal fiction arose that the Irish law was a unity
and all contradictions were to be explained away by the commentaries. The
multiple and competing law systems of the early period were now subjected
to homogenization to produce what was considered to be a uniform law for
the whole island. And this fiction, like the equally unhistorical claim that there
was a single High-King of Ireland—the King associated with Tara—retained
its hold on historians down to the application of modern textual criticism in
the 20th century.9
The conversion of the Irish to Christianity begun in the fifth century was
bound to affect profoundly Irish life and institutions. The Christian church was
already very Romanized in its institutional and cultural conceptions. It was
urban-oriented and, thanks to St. Augustine, had reconciled itself to the Ro-
man conception of the State as part of the natural (if sinful) order of the world.
In Ireland Romanized Christians found a wholly rural-oriented society with a
barely embryonic conception of the State, and a well-developed legal tradition
in which lawmaking was the special function of essentially private persons—a
professional class of jurisconsults and arbitrators known as the brehons. Law
and order, and the adjustment of conflicting interests, were achieved through
the giving of sureties rather than State-monopolized coercion. The Church
could not depend upon the Irish kings to compel their people to convert to
Christianity nor could they use the State to impose Christian law on an unwilling
population. Significantly, the conversion of the Irish was undertaken without
State-directed compulsion and not a single martyrdom is associated with the
Church’s triumphant success.10
Without the instrumentality of the State to enforce its commands, the
Church’s impact on Irish law was still very weak in the sixth century; canonical
 Property Rights in Celtic Irish Law 569

texts of this period forbid Christians to make use of the brehon’s court against
one another. They are to resort to the clergy to arbitrate among them as in the
pre-Constantinian Church. But the collapse of the Roman empire in the West,
and the isolation from Roman influences, coupled with the rise of a wholly
native clergy during the period, forced the Irish Church to integrate itself more
fully into the native Irish institutions and culture.11
In legal tracts dating from the late seventh and early eighth centuries, the
clergy are recognized in their seven ranks, with appropriate honor-prices, and
other rights and obligations under the law. The right of free men to bequeath
property to the Church under certain conditions was recognized, and the right
of women to give gifts was also approved by the jurists. St. Patrick had men-
tioned the practice of newly baptized women placing their gold bracelets upon
the altar as a gift, and his practice of returning them. He may have done so to
avoid litigation as to their right to make such a gift at this early period when
their legal capacity was dubious. The law also ruled out deathbed bequests to
the Church as invalid due to possible mental impairment, and the laws on mar-
riage and other sexual relations remained wholly pagan.12
The failure of the Church to impose its own will upon the Irish law is best
appreciated if one considers the fact that the Church was compelled to create
its own legal codes in which a wide variety of criminal and moral practices
were outlawed and appropriate penalties assigned. The so-called penitentials
of the Irish Church were later carried by Irish missionaries to the continent
and became a vital part of the judicial structure of the entire Western Christian
Church. Penalties ranged from set periods of prayer, fasting, abstinence, pil-
grimage, hermitage, exclusion from the sacraments, and other spiritual acts,
to a fixed scale of monetary commutations of these penalties. The influence of
Irish secular law, with its dependence upon monetary compensation for offenses
under law, seems clear.13
One way in which the Church did influence Irish law was by seeking to have
the Irish kings and assemblies accept a specific written code of law composed
by an outstanding ecclesiastic. The Annals of Ulster for A.D. 778 record that
Bresal, Abbot of Iona, and Dunnchad, King of Southern O’Neill “confederacy,”
had agreed to accept the laws of St. Columcille, founder of Iona, as binding
upon their peoples. This was something akin to a treaty or compact governing
internal and external relations. The compact publicly committed the people
represented here by their king to obey the new law. This is the closest that the
Irish got to legislating a system of law. The law codes, always attributed to some
saint, represent the intrusion of Christian moral practices into the customary
law of the land—the brehons’ law. They were largely concerned with ensuring
better protection for the persons and property of the clergy, their households,
clients, servants, tenants, and ordinary women and children. There were also
efforts to impose Sabbath laws. But these new ecclesiastic-inspired codes
were thoroughly Irish in structure and principles. As Kathleen Hughes has put
570 Anarchy and the Law

it: “The general effect of Christianity upon Irish law was to modify it without
dislocating it; its rigidity was reduced and the result was a strengthening of
native institutions.”14
The study of the law texts and the canonical texts has suggested to at least one
historian that the existence of two competing law systems in medieval Gaelic
Ireland reflected a more subtle tendency in Irish jurisprudence and practice
to conceive of Ecclesia and Tuath as separate and alternate entities with each
having its own rights, and relations between the two governed by contract. For
example, a study of the development of the Church’s manner of holding land
suggests that it seems to have controlled some of its property as a sovereign
entity—outside and apart from the authority of any king and the jurisdiction of
any tuath. Some churches were very clearly held under lay proprietorship—the
proprietor being a layman with the right of patronage. In other cases the land
was given away without any restrictions at all—public or private—into absolute
allodial ownership by an ecclesiastical corporation. In some cases familial land
was donated with the consent of all the kindred but the abbot or cleric holding the
benefice had to be chosen from the kindred of the donor. For example, ten of the
first eleven Abbots of Iona were kinsmen of the founder, St. Columcille. Lastly,
royal land—land which was attached to the public office of the kingship—was
donated to the church with the consent of the assembly of the tuath in return
for the clergy performing spiritual offices without fee among the people. These
lands were apparently freed of all public obligations to billet troops, answer a
call to arms or give tribute to the king.15
The Church continually pressed to free itself of all obligations to lay owners
or public authorities. This effort accelerated during the 11th and early 12th cen-
tury as part of the Gregorian reform movement and the investiture controversy.
But as early as the 6th century, many monasteries were operating as virtual
ecclesiastical tuatha ruled by their abbots. Daughter houses were established
which recognized the abbot of the founding house as their “overlord” and the
many houses and properties, tenants, clients and unfree dependents located over
wide areas of the British isles and Ireland appear to be ecclesiastical principali-
ties dealing with the secular tuatha as equals rather than subjects. By the early
seventh century the Archbishopric of Armagh heads a federation of churches
spread across the north and west of Ireland, while the bishoprics of Kildare, and
probably Cork and Emly in the south, are following suit. Armagh claimed over-
lordship over any church that was free of obligations to an existing overlord—be
he king, lay proprietor or abbot. By the 8th century the bishops of Armagh and
Kildare, and the Abbots of Iona, Clonmacnois and Bangor were rulers over vast
ecclesiastical principalities free of the rule of any secular authority.16
This situation continued in those parts of Ireland not subjected to English
rule. For example, when the native Irish archbishop of Armagh, Nicholas mac
Moel Iosa, received the notorious papal bull Clericis laicos asserting the most
extreme papal claims to immunity from State control (issued by Boniface VIII
 Property Rights in Celtic Irish Law 571

in 1296), he called a meeting of the kings of all the tuatha within his jurisdic-
tion, explained the implications of the papal bull, and asked for their oaths of
affirmation. Apparently without any great conflict, they agreed to respect the
immunity of the clergy, their property, tenants and artisans from any lay im-
positions—fiscal, alimentary or servile, and undertook to respect the right of
the clergy to have all cases involving their delicts, debts or contracts heard in
the bishop’s court rather than the brehon’s. They further undertook the obliga-
tion of acting as sureties to the church for the apprehension of anyone in their
jurisdiction who failed to appear before the episcopal courts.17
While the Archbishop had no difficulty in getting the Irish kings to recognize
the immunities of the Church, he ran into grave difficulties with the English king
Edward I whose rule extended over parts of the province of Armagh. He was
accused by Edward’s officials in Ireland of wholesale usurpation of the King’s
rights over the Irish Church. He had appropriated to himself the custody of the
temporalities—properties—of vacant bishoprics and abbacies; he had conse-
crated new prelates for these offices without the king’s license; he had heard
pleas in his court that by right belonged to the King’s court, to the detriment
of the royal prerogatives and revenues. Archbishop Nicholas defended himself
by arguing that he had acted in accordance with the ancient rights (under Irish
law) of his Church as in the days before the conquest, rights which the English
king Henry II had sworn to uphold. Edward replied to that argument by impos-
ing a heavy fine and ordering that his officials make sure no Irishman ever was
elected again as Archbishop of Armagh.18
This is but one clear instance in which the property rights and the freedom
the Irish church achieved under Irish law were to be radically reduced under
the impact of English feudal and common law traditions. By the 14th century,
the antagonism of the two peoples was so great that the English government
forbade any religious order, monastery, collegiate church or cathedral to admit
to its membership anyone of Irish nationality. Moreover, anyone who was
Irish presenting himself for ordination to clerical orders in a diocese under the
English king’s jurisdiction was presumed to “have lived continuously among
evil people and to come from an evil background,” and was to be denied sacred
orders. Thus were the native Irish dispossessed of their own churches in their
own land to give places to foreign invaders.19
II
Let us now examine in some detail the character of Irish law and the role of
in legal and social institutions.
Irish society was a precisely stratified, class-conscious society in which
rank had legal and economic foundations, The earliest law tracts divide the
population into two legal classes: the free and the unfree. The free are the kings,
nobles and commoners—all those who own land and thus enjoy the franchise,
a place in the assembly of tuath, and have a legal capacity to make contracts
572 Anarchy and the Law

in their own right or through their father, husband or male kinsmen. Possibly
under the influence of the Church, which had seven orders of clergy, the jurists
subdivided the kings into three grades, the nobles and commoners into seven
each. The grade or rank of a man was determined by the amount of property
he owned and the number of clients he had. Since the clients varied according
to his available wealth (see below), wealth was the principal basis for a man’s
rank in Irish society. The unfree were those who did not own land, thus did
not have the franchise, and were usually household retainers or tenants at will
of a landowner.
What is somewhat surprising is the fact that these ranks and categories were
not fixed. The law texts say that “the free may sit in the seat of the unfree” and
“the unfree may sit in the seat of the free.” “Everyone may become free by his
wealth and unfree by his lips.” The free who become unfree are those who sell
all their land or rights or body in service to another (slavery). The unfree in the
seat of the free are those who buy land or the right to the franchise by their art
(skilled craftsmen), their talent (bards), or by husbandry (tenants at will). This
social mobility is reflected in the legal maxim: A man is better than his birth.
The only class excluded permanently from recovering their free statues were
those who had forfeited their lives for some crime, but were ransomed and
kept as servile tenants by some freeman, But generally, wealth, talent or skilled
craftsmanship were enough to make free status possible. In effect, economic
self-sufficiency was the hallmark of free status.20
While some historians have been dubious as to the reality of the fine distinc-
tions in grade or rank which the law tracts reveal when applied to the actualities
of everyday life, I do not share their view. Admittedly medieval intellectuals
in general, and the Irish jurists in particular, show a marked predilection for
making numerically ordered distinctions in all sorts of situations. But it must
be remembered here that the assessment of a man’s property—its character and
value (land, chattels, clients)—was absolutely necessary if he was to participate
in the very elaborate system of suretyship which was the basic mechanism by
which all law was enforced. And it also was vital to assess his honor-price—an-
other essential part of the Irish system of justice.21
The honor-price (dire or enclann) was the payment due to any free man if
his honor or rights were injured or impugned in any fashion by another person.
It might be invoked for the violation of any contract, any act of violence to his
person or that of his dependents, any trespass on his rights or property, or even a
malicious use of “satire” without cause which damaged his reputation (usually
the work of a bard or poet). In the oldest texts, honor-price varied in amount
according to the rank of the victim, and the penalty for the offense varied, being
fixed according to the seriousness of the offense at the amount of his honor-price
or some multiple or fraction thereof. At a later stage of legal development, the
jurists established fixed penalties for specific crimes and enforced them equally
regardless of the rank of the victim. But in addition, the offender still had to
pay the honor-price appropriate to the victim’s rank.
 Property Rights in Celtic Irish Law 573

Honor price was also essential in the workings of the surety system by which
means all judgments of the brehons’ courts were enforced. Since law enforce-
ment was not a function of the state or king in the Irish tuath, it was entirely
dependent upon each party in an action or suit providing himself with sureties
who would guarantee that the judgment of the brehon’s court would be honored.
If a person was about to bring suit, he sought sureties to help him in persuad-
ing the defendant to submit to peaceful adjudication of the dispute; this might
involve applying the law of distraint in which the plaintiff seized some movable
property of the defendant and impounded it under lawful procedures until the
defendant gave surety that he would submit to adjudication. If he refused to
do so, the community would consider him an outlaw—and he and his property
would lose the protection of the law.22
There were three kinds of surety: first, a surety might offer the plaintiff to
join him in enforcing his claim against the defendant. Since Irish law did not
distinguish between tort and criminal actions, all crimes or suits were pun-
ished by payment of fines and honor-prices. Thus the plaintiff—if he won his
suit—became a creditor, the defendant became a debtor. The surety guaranteed
payment by pledging his own honor-price. A second form of surety (aitire) had
the surety pledge his person and freedom as a guarantee. If the party defaulted
on his obligations, the surety had to surrender himself to the aggrieved party and
then begin to negotiate his freedom by paying the debt and also the honor-price
of the creditor for this new injury. Once freed he could of course try to recover
his losses from the defaulter.23 A third type of surety (rath) guaranteed that in
the event the debtor defaulted the creditor would be paid out of the surety’s own
property. If the surety was subjected to loss, the debtor must pay his honor-price.
If he defaulted, his honor-price was forfeited and he lost his legal status.
Because of the vital role that it played in the surety system, honor-price was
one of the chief attributes of a person’s rank and only men of full legal capacity
possessed it in their own right. Wives, children and sons living in their father’s
house were protected by the honor-price of their husbands, fathers or male
guardians. Sureties and compurgators—persons who gave oaths as to the truth-
fulness of contestants in a legal dispute—had to have their honor-price assessed
because they were forbidden to pledge payment of any debt beyond the value
of their honor-price which was, of course, assessed on the basis of their rank
which was in its turn based upon an assessment of their wealth. Thus ownership
of property in all its forms was the basis of a man’s legal status and marked the
extent of his participation in and protection within the legal system.
The Irish law recognized three distinct kinds of contract: sochor, dochor
and michor. A sochor was a “good contract” which had three qualities: it was
a contract between two or more free men; these free men were legally capable
to act (not insane or minors or otherwise restricted in legal capacity); and lastly,
the objects exchanged were of “equal profitableness.” In contrast is the dochor
or “bad contract” in which the first two qualities are present, but the third is
lacking. Here the seller has suffered some loss of value in the exchange. What
574 Anarchy and the Law

appears to be present here is the intrusion of the Christian concept of the “just
price,” perhaps an early influence of the Church upon the law. But what is most
significant is that, while failure to exchange at a just price renders a contract
“bad,” it does not render it invalid. An invalid contract—called michor—is one
which is illicit or void because one or more of the parties had not the legal ca-
pacity to act in his own right or was not a free man. The moral dubiousness of
the dochor is not the issue and has no direct legal impact. However, as we shall
see, the legal distinction did have legal impact in cases where women executed
contracts in the absence of their husbands, or men without the consent of their
wives in some instances.24
As in so many ancient societies, in Ireland many economic transactions took
place under the guise of a contractual relationship known as clientship. In Irish
law, clientship was of two distinct types—free and base—distinguished from one
another by the type of services required by each. Free clientship (soer-celsine)
was the grant by a king or noble to another free man of livestock in return for
the payment of a “rent” of 1/3 of the value of the livestock to be paid annually
for 7 years. At the end of that time, the client became sole and absolute owner of
the livestock and his clientship terminated. All classes of free men were eligible
to become free clients without any loss of legal status, franchise or honor-price.
The only other obligations were that the free client did homage to his “lord” or
creditor by standing in his presence and by attending him on certain ceremonial
occasions. Since a noble’s or a king’s rank depended in part on the number of
clients that he had attending him, the Irish upper classes invested a large part
of their assets in acquiring as many clients as they could afford. This gave them
increased social and legal status, and probably increased their political power
in the assemblies as well. It also raised the value of their honor-price, thereby
increasing their capacity to act as sureties and compurgators.
The base client was also a free man, an owner of some land, but usually a
commoner. He received a grant of either stock or land from a person of higher
rank in return for the payment of an annual rent in kind (a food-rent) propor-
tionate in value to the value of the borrowed land or stock. In addition he owed
specified labor services to his “lord” or creditor, and this is why his clientship
was “base.”
The Irish apparently considered that laboring for another man somehow
impugned one’s honor because the “lord” had to pay the base client upon the
initiation of the contract the value of his honor-price. In return the “lord” was
entitled to receive a percentage of the base client’s honor-price and other com-
pensation paid to him if he sustained any injury or violence resulting in a legal
settlement. The base client thus remained a free man and could terminate his
base clientship at any time upon returning the “lord’s” property and compensat-
ing him for any possible losses.25
The Anglo-Norman invasion of Ireland in the late 12th century and the
subsequent partial conquest of its territory was to have a detrimental effect
 Property Rights in Celtic Irish Law 575

upon the status and legal rights of the Irish clients, particularly on those who
were base. Neither form of Irish clientship was equivalent to Anglo-Norman
vassalage. Free clientship was essentially a form of commercial contract in
which the purchaser bought livestock on a deferred time payment system. He
remained free in legal status and the contract was terminable at the end of seven
years or even earlier if paid in full. No one could mistake this for a feudal bond
of vassalage or a fief despite the free client’s minimal social obligations to his
creditor. But base clientship, where manual labor services were required along
with an annual food-rent, was more easily misunderstood by the Anglo-Normans
as equivalent to English villeinage or serfdom.26
In Irish law among the ranks of the unfree were a specific class—the
sen-chleithe—who are the legal equivalent of the English villeins. They are
hereditary holders of a parcel of land in return for uncertain service and pass
as appurtenances of the land should it be alienated or sold. They are included
as part of the owner’s property for purposes of assessing his honor-price and
rank. Another class of the unfree are the fuidir who are not “villeins” in Irish
law but are tenants at will bound to uncertain services. However, they are free
to move or abandon their holding upon due notice to their landlord, and may
rise in social status or fall to the rank of sen-chleithe if they have had ancestors
living on the same land for nine generations—an unlikely situation.27
With the English occupation both the fuidir and the base clients were reduced
to serfdom under English law. They are called betaghs or betagius in the English
documents from the 12th century onwards. The fuidir lost the right to leave his
holding and the possibility of rising in status. The base client lost his personal
status as a free man, his right to the ownership of his own land and moveable
property, and the right to bequeath his property to the Church or others. Even the
free clients seem to have suffered some loss in status as the distinction between
them and the base clients was often ignored by the English in their efforts to
seize the properties of the conquered Irish. Thus the English conquest meant
a vast displacement and dispossession, and loss of status for most of the Irish
landholding classes and tenantry as well.28
As we have already indicated, one of the most persistent myths of Irish history
is the belief that a form of primitive communism prevailed in landholding. Due
in part to the failure of the translators and editors of the law tracts published in
the 19th century to use such words as “tribe,” “clan” and “sept” precisely, later
writers, particularly those dependent upon Patrick Joyce’s work as a source,
confused the lands of the tuath with those of the fine or family. In addition,
Irish law recognized joint-ownership and co-tenancy as well as co-operative
work ventures. All of these have been vaguely described in different places as
“communal ownership” or communism.
In a very detailed critique of Joyce’s work, Eoin MacNeill, one of the first
professional historians who was also able to read and interpret the law tracts
from their manuscripts with competency in Old Irish, pointed out that there
576 Anarchy and the Law

was no evidence whatever to suggest that the lands of the tuath were held in
common or periodically redistributed. Quoting Sir Henry Maine who had
admitted that “all the Brehon writers seem to have had a bias towards private
as distinguished from collective ownership,” MacNeill wryly comments that
it was hardly a bias—it was a reality. It was a myth of collective ownership
that was the product of bias. There are only two kinds of land which seem to
have been viewed as being without owners: mountain peaks and woodlands
or forests which were not partitioned or appropriated. There was also the land
that belonged to the king by reason of his office. But since the kingship was
normally hereditary within a kindred or derbfine—four generations of males of
which one had been a reigning king—even the royal domains had a semi-private
character as they circulated in usufruct within the royal dynasty.29
The English government encouraged Irish rulers to surrender their tuath
and its landed territory to the English Crown which would then re-grant it in
feudal tenure to the Irish king who thenceforth would be a feudal vassal. The
result of such a transaction in effect would be to transfer ownership of all lands
from the allodial Irish owners to the English king and then as a fief to the new
Irish vassal—dispossessing the people to the benefit of the Crown and the Irish
former king. Needless to say, such Irish kings were swiftly repudiated by their
people.30
Ownership of property in Ireland was generally absolute; but some instances
of limitations were recognized in the law tracts. For example, there were three
instances in which the rights of ownership were subject to adversative prescrip-
tion. If two successive generations of landowners failed to challenge the right
of a millrace to cross their land without receiving some form of compensation
for the infringement, the millrace became the absolute property of the mill
owner(s). The same rule applied to the construction of a fishing weir across
a stream or estuary and the right of way of a bridge or plank roadway across
a stream or bog. Also, the law recognized that certain personal “necessities”
suspended private property rights in particular instances: a man might take a
single salmon from a stream or a single drawing of a net from a river or lake
without infringing on the property rights of the owners; he could also cut a
sapling for a riding crop or the shaft of a spear or commandeer a wagon to carry
home a corpse. The gathering of nuts or kindling from woodlands was free to
all equally, provided the woodlands were not partitioned or appropriated for
private use. Seaweed could be taken also under the same restrictions. As for
wild beasts, they belonged to whoever killed them.31
A very common form of property holding was joint-tenancy. This was es-
pecially common where the kindred were acting as a close economic unit in
livestock raising or tilling the soil. In a pastoral enterprise where summer and
winter pasture were needed and large herds of cattle, sheep or kine required
only a few persons to attend them in the fields, co-tenancy was a reasonable
solution involving both division of labor and maximum utilization of land. The
 Property Rights in Celtic Irish Law 577

Irish took a dim view of trespassing and neighbors were required to give each
other sureties against trespass; in co-tenancy of land, the repair and maintenance
of fencing was the responsibility of each co-tenant along the outer boundary of
his own land; failure to keep it properly fenced compelled him to pay a fine to
his co-tenants, and he probably forfeited his surety to his neighbor for trespass
as well. Each tenant was required to supply some tool which was stored in a
common place; each morning he was required to appear at a fixed time when
the day’s work on the fencing would begin. If late, another might take his tool
for the day and he paid a fine. The co-tenants also took turns in guarding their
livestock. To protect themselves against suit for negligence, the co-herders
set limits to their personal liability before witnesses and gave sureties to each
other. The losses due to attacks by wolves, gorings, and wanderings into bogs
were provided against by these contracts and individual responsibility for loss
thus established.32
A form of joint-ownership was used in the construction of mills. The owners
were usually monasteries, kindred groups or individual joint owners. If a mill
was wholly within the lands of a single landowner that would obviate the need
for joint-ownership. But frequently the water for the millrace and pond had to
be diverted from a distant lake or stream. This meant that the owners of the
source of the water, and the landowners through whose land the millrace ran,
had to be compensated for the infringement of their property rights. This might
be done by payment of a single sum to the owners of the land or water resource,
or else recognizing them as joint-owners with specific rights of use of the mill
for set periods in varying proportions. The owner of the mill and pond and the
owner of the source of the waters got the largest share, with the landowners of
the land through which the millrace passed getting proportionately less. (It was
noted elsewhere that the landowners had to allow the millrace and could lose
their rights to compensation after two generations).33
The climate of Ireland is such that drainage is a major problem. Thus ditches
abound for drawing off water, and for keeping cattle impounded. The occurrence
of drownings was apparently so common that the jurists waived the liability
of owners for drownings in ditches, or other accidental deaths in ditches sur-
rounding cattle pens, homesteads, churches, or grave mounds, or in millraces
and ponds, peat bogs or from footbridges. But if an accident was due to the
failure to fence one’s fields, the owner was liable to be fined.34
One of the more difficult problems in studying the Irish law of land owner-
ship is the property of a family or kindred group. Mac Neill admits that here we
may have “communal” ownership. By this he means that certain land cannot be
sold without the consent of the derbfine—all males descended from a common
great-grandfather to the third generation. Thus this group is also the normal
range of inheritors and also entitled to the compensation for homicide for any
of its members. While each member held and disposed of the fruits of his own
parcel of land, some residual control was exercised by the kinsmen. When the
578 Anarchy and the Law

land was redistributed is not clear, but some division must have taken place
when a young man came of age, perhaps his share of his father’s patrimony
was transferred at this time. If he died without sons, it probably was redivided
among his brothers. Sons were the normal and equal heirs of their fathers, and
their mothers.35
Whether land was distributed in proportional share upon the death of any
kinsman amongst all the kinsmen seems dubious. The fractionalization would
seem very much against the interest of orderly management. Some writers im-
ply this was the case, but may have been misled by a law tract dealing with the
division of compensation due a dead man levied on his murderer by an armed
raid into another tuath. In this tract, the deceased’s compensation is obviously
movable—it had been captured and taken from another territory. Also, it was
divided first into three thirds—one went to the king and nobles of every grade above
the deceased’s; a second third to the members of the hosting other than the above;
and the last third to the deceased’s kindred. This last third was then divided by a
series of apportionments by fractions among the kinsmen according to the close-
ness of their relationship to the dead man. This legal rule for a specific type of
bloodletting should not be assumed to be the norm for the division of ordinary
property. Thus the actual distribution of landed property may well have been
confined normally to the immediate male issue, while the more distant kinsmen
retained residual rights of inheritance in case of failure of direct issue.36
One result of the English conquest was the displacement of the Irish law
of inheritance. Under the feudal customs of England the law of primogeniture
prevailed and was also applied to Ireland. Certain 16th-century legal agree-
ments have Irishmen trying to preserve the old system of equal sharing among
sons, but these were not recognized in English courts, thus disinheriting the
normal Irish heirs.37
One last look at Irish concepts of property right may be revealing. A 17th-
century manuscript reveals a poetic dialogue between two contestants before
a brehon. The first, representing the “men of Munster,” claims they own the
Shannon River and its resources on three grounds; the Shannon was conquered
in the 11th century by the Munster king Brian Boru from the Vikings; that the
river in its lower courses runs through their lands; and that in a previous case
Brian’s rights were upheld. The poet representing the “men of Connacht” bases
his claim on the fact that the river was always recognized as theirs from the
time of Patrick to that of Brian; that the passage of a river through the land
of Munster does not make it the property of Munster, any more than a man
traveling through Munster becomes thereby a Munsterman; that the judgment
in favor of Brian was invalid because made by a foreigner (thus unfamiliar
with Irish law); and lastly that the river belonged to Connacht because it had
its source in that land.
The brehon decided in favor of the poet of Connacht. He held that “just as
the offspring of every father belongs to the father and inherits his patrimony, the
 Property Rights in Celtic Irish Law 579

natural father of every stream is every unexhausted well from which it springs
forth first.” As the Shannon has its source in Connacht, it and its resources
belong to the men of Connacht. The previous judgment on behalf of Brian is
interesting also, and not repudiated explicitly. Brian as presumptive owner of
the river claimed ownership of a jewel found in the gullet of a fish taken from
the river by a trespassing fisherman. He won his claim since the fish in a lake
or river belonged to its owner.
Rivers and streams and waters in Ireland are still held in private owner-
ship—but by descendants of the English feudalists.38
III
A fair test of the sophistication of any legal system might be to examine
the extent to which women enjoy legal capacity and property rights. By this
standard Irish law in the 8th century may have had more sophistication than
English law in the days of Queen Victoria.
Irish law was typically Indo-European in that it was patriarchal in character
at the dawn of the historical period. In all the oldest legal texts women have
no legal capacity to act or own property in their own right. They are under the
tutelage of some male—father, brother, husband or son—just as if they were
children.
Yet even under this burden, women were in practice straining to break the
bonds of the law. The early law tracts found it necessary to mention that a
husband has the right to rescind any contract made by his wife in his absence,
even if she had found sureties to support it. The contract was deemed invalid,
and the sureties as well. But the clear implication is that women were in fact
making contracts in their husband’s name in his absence, and the jurist who
composed the tract must have been under some pressure to acknowledge the
practice, for he specified that such an invalid contract could be validated if the
husband neglected to repudiate it within 15 days of his return home or of his
being notified of its existence.39
The legal incapacity of women is also evident in the earliest forms of mar-
riage contract in which the wife is under her husband’s tutelage. But already a
concession to her appears. If she is of rank equal to him, she may interpose to
prevent him making a dochor, a “bad” or disadvantageous contract (see above).
Her intervention does not invalidate the contract; it merely suspends its com-
ing into force until her son or husband’s kinsmen can be informed and given
time to act. The implication is that her husband is about to alienate property
that is not fully his to dispose of. Even if she is only betrothed, a woman can
intervene in some instances to prevent her future husband from acting, at least
temporarily.40
Another somewhat important breach which opened the way for extending
women’s legal capacity was recognition of her right to give a gift of a value no
greater than her honor-price—normally half that of her husband. Gift-giving is
580 Anarchy and the Law

not a contractual act, but it implies the capacity to own property in one’s own
right. Specifically she had the right to give the “product of her own hands” to
the Church.41
The greatest departure from the system of male tutelage over women is found
in the law tract called the Senchus Mor composed in the early 8th century and
reflecting the teachings of a school of law operating in Northern Ireland. There,
as in so many other cases, one of the pressure points for granting women wider
legal capacity was the natural desire of sonless fathers to wish to bequeath their
property to their daughters. In the SM daughters are recognized as having the
right to a life interest in the landed property of their father if he left no sons, or
presumably grandsons of the male line. But at the daughter’s death, the land,
which appears to have been familial, reverted to the natural male heirs of the
father’s fine or kindred. As an heiress to such property, the daughter logically had
to have the means to protect it; therefore she was recognized as having a variety
of legal rights including the right to sue and be sued, to engage in distraint and
even to make legal entry on disputed or unoccupied land by almost the same
procedure as was open to males in the same circumstances. Recognition of life
interest in familial land in certain circumstances also implied that she had full
ownership of the product of that land, and the right to dispose of it freely. The
older form of marriage contract in which the woman was under her husband’s
tutelage did not lend itself to such a situation, and it now gave way to a new
form of marital contract which soon became the norm among the propertied
classes. Called a marriage of “mutual portions,” it required that each partner to
a marriage bring to it a set portion of property which was to be held jointly by
husband and wife, its profits being divided proportionately between them. In
this joint ownership-partnership, no contract was valid without the consent of
each partner, except when the contract “advanced their common well-being.” If
either party made a dochor or disadvantageous contract, it could be rescinded
within 15 days of the other partner returning home or receiving notification of
its having been made. Specific types of contracts mentioned in the texts include
the hire of land, the purchase of livestock, the purchase of necessary household
equipment or supplies, and agreement between kinsmen for joint tillage of
fields. No object whose lack was disadvantageous to the joint household could
be sold without mutual consent.42
In addition to the property which the marriage partners held jointly, each
could own additional property, including the profits of their joint holding, in
absolute single or sole ownership. The only restriction on the profits of their
joint enterprise was that the wife could dispose of her share only to the value of
her honor-price which was half that of her husband. This may have had some
further restriction as to time limit but the texts are silent on it. The husband’s
share of the profits of their joint household was his sole property, but in certain
instances his wife could dispose of it without his consent. She could alienate it
to his advantage, but was subject to a fine if she acted without his consent. If he
 Property Rights in Celtic Irish Law 581

incurred any loss in the transaction, and she somehow made a gain, she could
be sued by her husband for theft. This rule seems to envision embezzlement or
fraud among partners.43
A woman could inherit property from her mother if there were no sons,
but normally the sons were the natural heirs to their mother’s as well as their
father’s property. If childless, a woman’s property reverted to her nearest male
kinsmen—not her husband—or she could bequeath it to the Church.
One of the most startling aspects of the Irish law was its treatment of the
rights of women in various sexual relationships outside Christian marriage
and their right to divorce. In one legal tract no less than ten different kinds of
sexual union between males and females are legally recognized—each having
a very precise legal character, each partner enjoying specific property rights
and obligations. From a Christian viewpoint, some of these relationships are
clearly polygamous, others irregular, some even casual or violent. Most legal
systems in Christian Europe denied these women legal status and rights, and
extended these deprivations to the children unless the father recognized them.
The Irish law recognized rights of maintenance and support which vary in degree
and amount according to the character of the sexual union. For example, in a
marriage of mutual portions the cost of “fostering” or rearing a child is shared
equally by the parents; but if the child is born of a bondwoman, or as a result of
rape, or in secret, the father is responsible solely for its rearing costs. In some
instances the male has some control over the woman’s property rights and a right
to share in her honor-price; in others she controls some of his property rights and
shares in his honor price. The detail, extensiveness, balance and proportionality
with which the rights and obligations of each partner are assigned in these very
unchristian couplings is unique in the law tracts of Christian Europe.44
Although it has been suggested that this is another instance of the archaic and
unreal character of the Irish law tracts, which could not have had validity in a
Christianized Ireland, the evidence suggests otherwise. Throughout the medieval
period, both Irish clerical and foreign commentators frequently denounce the
Irish for their failure to suppress sexual promiscuity and adhere to the marriage
laws of the Church and “civilized” societies. It is most unlikely that the Irish
were more promiscuous than other peoples; but it was their unique practice of
continuing to separate canon law from civil law that seemed so scandalous to
other Europeans.45
Similarly, the Irish law recognized the right of divorce. A man might repudiate
his wife for dishonoring him, doing him some injury or willful abortion. But,
incredibly, the wife could initiate a divorce action against her husband! She
could charge consanguinity, incurable infirmity, sterility, cruelty evidenced by
lasting injury, slanderous remarks as to her character, abandonment for another
woman, willful neglect in supplying the necessities of life, or abandonment by
reason of his entering a monastery. None of the above except consanguinity was
grounds for annulment in canon law. There were also some eleven categories of
582 Anarchy and the Law

legal separation with respective property rights and obligations regarding the
care of children and distribution of property. That these laws were not “obsolete”
can be shown in the marital history of Gormflath. Wife first of Olaf, Viking
king of Dublin, widowed, she married Malachy, king of Meath and High-King
of Tara A.D. 980. Malachy repudiated her, and she later married and divorced
Brian Boru, who also won the High-Kingship by replacing Malachy. Thus she
had two ex-husbands still living when she became betrothed to a third, Sigurd,
Earl of Orkney.46
While the history of Irish law between the 8th and 17th centuries is very
sketchy due to the lack of surviving historical materials, occasional references
indicate that women continued to enjoy an exceptional standing in law with
regard to their property rights down to the end of native Irish culture and inde-
pendence in the early 17th century. In the early 14th century there is reference
to a woman acting as an agent for an English proprietor whose cattle have been
“stolen” by some Irishmen. She is commissioned to mediate for their return—the
Irish having in their law invoked the law of distraint on the Englishmen’s cattle.
There is even a reference to a woman sitting as an arbitrator along with a brehon
in a suit. In the early 17th century the English observer Sir John Davies in his
book investigating why the Irish were so hard to conquer remarks that the Irish
are so savage that “the wives of Irish lords and chieftains claim to have sole
property in a certain portion of the goods during coverture with the power to
dispose of such goods without the assent of their husbands; (therefore) it was
resolved and declared by all the (English) judges that the property of such goods
should be adjudged to be in the husbands and not in the wives as the (English)
common law is in such cases.”47 This is but another example of the destructive
and retrogressive effect of the imposition of English common law on the legal
status and property rights of the Irish people.
Conclusion and Summary
While a comprehensive survey of the Irish law of property and property rights
cannot yet be written, we can already see that the idea of private ownership
permeates those aspects of the law which have been subjected to recent study.
The Irish frankly and openly used assessments of property as the criterion for
determining a man’s social and legal status, the extent of his capacity to act as
a surety or compurgator, and to fix the amounts of compensation due him as a
victim of crime or any kind of injury. Ownership of land determined a man’s
status as free or unfree and his right to participate in the public assembly. The
needs of the Church modified but did not alter the basic character of native
Irish institutions and law. While it secured for itself almost total freedom from
lay ownership and secular obligations, it was never able to fully destroy the
essentially secular character of Irish law as exemplified in the laws on marriage
and divorce. The legal capacity of women showed exceptional development
and gave women property rights in the 8th century that were centuries ahead
 Property Rights in Celtic Irish Law 583

of those enjoyed by English women. The fact that Irish law was the creation of
private individuals who were professional, even hereditary, jurists, gave to the
law both a conservative yet flexible and equitable character. Their power rested
upon the free consent of the community in choosing them as arbitrators in dis-
putes; and this made equity and justice more likely than in royal courts where
the interests of the State and its rulers are paramount. The invasion and conquest
of Ireland, the work of over 400 years before it was completed, was eventually
fatal to the Irish system of law and the culture and civilization it expressed. The
English State was incompatible with the Irish tuath; the English common law
was totally incompatible with the Irish law. Ireland from the 12th century was
a single land in which two nations and two laws and two cultures engaged in a
constant struggle for survival. The end came in the early 17th century with the
flight of the last Irish kings from Ulster and the new plantation of that region
by Protestant Scots sent by James I—that most absolute of English Kings.
As for the native Irish and their ancient culture, the English official Sir
Davies thought he said it all:
For if we consider the Nature of the Irish Customes, we shall finde that the people
that doeth use them, must of necessity be Rebelles to all good government, destroy
the commonwealth wherein they live, and bring Barbarisme and desolation upon the
richest and most fruitfull Land of the world.48
Notes
1. The Ancient Laws of Ireland, 6 volumes, 1865-1901. The most complete evalua-
tion of the law tracts by a competent Irish philologist and jurist is D. A. Binchy’s
Rhys Memorial Lecture before the British Academy entitled The Linguistic and
Historical Value of the Irish Law Tracts (London, 1943). Also, Binchy, “Ancient
Irish Law,” Irish Jurist NS 1 (1966), 84-92.
2. Patrick W. Joyce, A Social History of Ancient Ireland (Dublin, 1906), 2 vols. Re-
printed in 1913 and 1968.
3. P. Boissonade, Life and Work in Medieval Europe, trans. by Eileen Power (London,
1917). Harper Torch book edition (New York, 1964). See pp. 78-79 of the latter.
4. See the review of Daniel Coghlan’s Ancient Land Tenures of Ireland in Irish Law
Times and Solicitors’ Journal (March 10, 1934) Further comments in July 14 and
Sept. 15 issues. The reviewer is anonymous.
5. P. Beresford Ellis, A History of the Irish Working Class (London, 1972). The author
ignores all modern scholarship on the subject and rejects MacNeill’s criticism of
Joyce because he was pro-capitalist!
6. Binchy, Historical Value of Irish Law Tracts, 22 Also, Gearoid Mac Niocaill, “Notes
on Litigation in Late Irish law,” Irish Jurist NS 2 (1967), 299-307, and G. J. Hand,
“The Forgotten Statutes of Kilkenny,” Irish Jurist NS 1 (1966), 301.
7. D. A. Binchy in Early Irish Society (Dublin, 1954), 56-58. Also, Myles Dillon and
Nora Chadwick; The Celtic Realms (London, 1967), 93 -98.
8. Binchy, Irish Jurist NS 1 (1966), 84-92.
9. Ibid. See also, Eoin MacNeill, “Prolegomena to a Study of the Ancient Laws of
Ireland,” Irish Jurist NS 2 (1967), 106-115.
10. The most authoritative recent study of the Irish church in the pre-conquest period is
Kathleen Hughes, The Church in Early Irish Society (London, 1966). See chapters
4 and 5 in particular here.
584 Anarchy and the Law

11. Ibid. Chapter 12, pp. 123 -133 and Chapter 5, pp. 45-55.
12. Ibid. Also, for St. Patrick, see R.P.C. Hanson, St. Patrick: His Origins and Career
(New York, 1968), 139.
13. Ludwig Bieler, “The Irish Penitentials,” Scriptores Latini Hiberniae (Dublin,
1963).
14. Hughes, Chapter 14, pp. 143-156. See especially 149-153.
15. See paper given to Columbia University Faculty Seminar in History of Legal and
Political Thought (1966) by Prof. Charles Donohue of Fordham University: On
the Senchas Mor, an early 8th century tract including material on Church–State
Relations. Also, Hughes, 161.
16. Hughes, Chapter 8, pp. 19-90 in monastic paruchiae and Chapter 11, 111-122 on
Armagh.
17. J. A. Watt, The Church and the Two Nations in Medieval Ireland (Cambridge,
England, 1970). 160- 169.
18. Ibid.
19. Ibid., 206-207 and 211.
20. Eoin Mac Neill, “The Law of Status or Franchise,” Proc. Royal Irish Academy 36C
(1921-24), 265-316. See here p. 273.
21. Binchy expressed some doubt on this in his Historical Value, p. 33.
22. See Dillon and Chawick, Celtic Realms (London 1967), 98-99. Also, see Mac Neill,
op. cit.
23. Ibid.
24. Rudolf Thurneysen, “Socher and Docher,” Essays and Studies in Honor of Profes-
sor Eoin Mac Neill, edited by John Ryan S. J. (Dublin, 1940), 158-159.
25. For a discussion for clientship, see D. A. Binchy, Crith Gablach (Dublin, 1941),
pp. 78, 80, 96-97 and 107. Also, Dillon and Chadwick, 95-96.
26. Gearoid Man Niocaill, “The Origins of the Betagh,” Irish Jurist NS 1 (1966),
292-298. Liam Price disagrees with Mac Nicoaill in Eriu 20 (1966), 185-190, but
J. A. Hand is convinced by Mac Niecaill’s analysis in his English Law in Ireland
1290-1324 (Cambridge, 1967), 213.
27. Binchy, Crith Gablach, 105.
28. On fuidir, ibid., 93 Otherwise, see op. cit.
29. Eoin Mac Neill, Celtic Ireland (Dublin, 1921), 144-151.
30. On the policy if “surrender and re-grant” under Henry VIII see J. C. Becket, The
Making of Modern Ireland (London, 1966), 18-19.
31. D. A. Binchy, “Irish Law Tracts Re-edited: Coibnes Uisci Thairidne (AL IV, 206-
222),” Eriu 17 (1955), see p. 81 n. 9 52ff. Also, Mac Neill, Celtic Ireland, 170 ff.
32. Ancient Laws, IV, p. 372 ff.
33. Op. cit.
34. Ibid., 71-72
35. Mac Neill, Celtic Ireland, 152-176. Also, Mac Neill, “The Irish Law of Succession,”
Studies 8 (1919), 367 ff.
36. Mac Neill, Studies 8 (1919, 376-377. Also, Kuno Meyer, in Eriu 1 (1904), 214-
215.
37. J. Otway-Ruthven, “The Native Irish and English Law in Medieval Ireland,” Irish
Historical Studies 8 (1950), 1-16.
38. Brian O’ Cuiv, “The Poetic Confrontation about the Shannon River,” Eriu 19 (1962),
89-105. The poem is dated to the 15th century.
39. D. A. Bunchy, ed. Studies in Early Irish Law (Dublin, 1936). This is the most
complete study of the Irish law and the product of a seminar conducted by Rudolph
 Property Rights in Celtic Irish Law 585

Thurneysen, the distinguished Celtist. See here D. A. Bunchy, “The Legal Capacity
of Women in Regard to Contracts,” SEIL, pp. 207-234, especially 211-216.
40. Bunchy, SEIL, 226-228.
41. Ibid., 226-227 and on 209 note 1. Women could act as sureties under certain limita-
tions, see pp. 232-234. On gifts see Myles Dillon, “The Relationship of Mother and
Son, Father and Daughter and the Law of Inheritance,” SEIL, 129-179 passim.
42. Binchy, SEIL, 226-228.
43. Ibid., 227-230. Some texts indicate daughters may inherit some kinds of chattels
from their fathers, Dillon, SEIL, 171, n3.
44. Nancy Power, “Classes of Women Described in the Senchas Mor,” Studies in Early
Irish Law (SEIL), 81-108.
45. For a discussion of Irish marriage law and 12th century criticisms of it, A. Gwynn,
“The First Synod of Cashel,” Irish Ecclesiastical Review 66 (1945), 81-92; 67
(1946), 109-122.
46. August Knoch, “Die Eheschudung in alter Irischen Recht,” Studies in Early Irish
Law, 235-268. For Gormflath, see Edmund Curtis, A History of Ireland (Dublin,
1950), 28-30.
47. A quotation from Sir John Davies on “The Irish Custome de Gravelkind” in a
review of Studies in Irish Law edited by D. A. Binchy in The Irish Law Times, 15
August, 1936.
48. Sir John Davies, A discovery of the true causes why Ireland was never entirely
subdued (London, 1612), 165.
 36
Private Creation and Enforcement of Law—
A Historical Case
David Friedman1
Iceland is known to men as a land of volcanoes, geysers and glaciers. But it ought
to be no less interesting to the student of history as the birthplace of a brilliant lit-
erature in poetry and prose, and as the home of a people who have maintained for
many centuries a high level of intellectual cultivation. It is an almost unique instance
of a community whose culture and creative power flourished independently of any
favouring material conditions and indeed under conditions in the highest degree
unfavourable. Nor ought it to be less interesting to the student of politics and laws as
having produced a Constitution unlike any other whereof records remain and a body
of law so elaborate and complex, that it is hard to believe that it existed among men
whose chief occupation was to kill one another.—James Bryce, Studies in History
and Jurisprudence 263 (1901)

I. Introduction2
The purpose of this paper is to examine the legal and political institutions of
Iceland from the tenth to the thirteenth centuries. They are of interest for two
reasons. First, they are relatively well documented; the sagas were written by
people who had lived under that set of institutions3 and provide a detailed inside
view of their workings. Legal conflicts were of great interest to the medieval
Icelanders: Njal, the eponymous hero of the most famous of the sagas,4 is not a
warrior but a lawyer—“so skilled in law that no one was considered his equal.”
In the action of the sagas, law cases play as central a role as battles.
Second, medieval Icelandic institutions have several peculiar and interesting
characteristics; they might almost have been invented by a mad economist to
test the lengths to which market systems could supplant government in its most
fundamental functions. Killing was a civil offense resulting in a fine paid to
the survivors of the victim. Laws were made by a “parliament,” seats in which
were a marketable commodity. Enforcement of law was entirely a private affair.
And yet these extraordinary institutions survived for over three hundred years,
and the society in which they survived appears to have been in many ways an
attractive one. Its citizens were, by medieval standards, free; differences in status
based on rank or sex were relatively small;5 and its literary output in relation to
its size has been compared, with some justice, to that of Athens.6

586
 Private Creation and Enforcement of Law—A Historical Case 587

While these characteristics of the Icelandic legal system may seem peculiar,
they are not unique to medieval Iceland. The wergeld—the fine for killing a
man—was an essential part of the legal system of Anglo-Saxon England, and
still exists in New Guinea.7 The sale of legislative seats has been alleged in
many societies and existed openly in some. Private enforcement existed both
in the American West8 and in pre-nineteenth-century Britain; a famous char-
acter of eighteenth-century fiction, Mr. Peachum in Gay’s “Beggar’s Opera,”
was based on Jonathan Wild, self-titled “Thief-Taker General,” who profitably
combined the professions of thief-taker, recoverer of stolen property, and large-
scale employer of thieves for eleven years, until he was finally hanged in l725.9
The idea that law is primarily private, that most offenses are offenses against
specific individuals or families, and that punishment of the crime is primarily
the business of the injured party seems to be common to many early systems
of law and has been discussed at some length by Maine with special reference
to the early history of Roman law.10
Medieval Iceland, however, presents institutions of private enforcement of
law in a purer form than any other well-recorded society of which I am aware.
Even early Roman law recognized the existence of crimes, offenses against
society rather than against any individual, and dealt with them, in effect, by
using the legislature as a special court.11 Under Anglo-Saxon law killing was
an offense against the victim’s family, his lord, and the lord of the place whose
peace had been broken; wergeld was paid to the family, manbote to the crown,
and fightwite to the respective lords.12 British thief-takers in the eighteenth cen-
tury were motivated by a public reward of £40 per thief.13 All of these systems
involved some combination of private and public enforcement. The Icelandic
system developed without any central authority comparable to the Anglo-Saxon
king;14 as a result, even where the Icelandic legal system recognized an essen-
tially “public” offense, it dealt with it by giving some individual (in some cases
chosen by lot from those affected) the right to pursue the case and collect the
resulting fine, thus fitting it into an essentially private system.
In the structure of its legislature, Iceland again presents an almost pure form
of an institution, elements of which exist elsewhere. British pocket boroughs,
like Icelandic godord, represented marketable seats in the legislature, but Par-
liament did not consist entirely of representatives from pocket boroughs. All
godord were marketable and (with the exception, after Iceland’s conversion to
Christianity, of the two Icelandic bishops) all seats in the lögrétta were held by
the owners of godord, or men chosen by them.
The early history of Iceland thus gives us a well-recorded picture of the
workings of particularly pure forms of private enforcement and creation of law,
and of the interaction between the two. Such a picture is especially interesting
because elements of both have existed, and continue to exist, in many other
societies, including our own.
There are three questions in the economics of law which I believe this history
may illuminate. The first is the feasibility of private enforcement.15 The second
588 Anarchy and the Law

is the question of whether political institutions can and do generate “efficient”

law. The third is the question of what laws are in fact efficient. All three involve
formidable theoretical difficulties; in the body of this paper I limit myself to
sketching the arguments, describing how the Icelandic institutions worked,
and attempting to draw some tentative conclusions. Appendix A gives some
numerical information on the scale of punishments in Iceland, and Appendix
B suggests how the Icelandic system might be adapted to modern society.
II. The Modern Literature
Some years ago, Becker and Stigler pointed out that a system of private
enforcement of law, in which the person who caught a criminal received the
fine paid by the offender, would have certain attractive characteristics;16 in par-
ticular, there would be no incentive for bribery of the enforcer by the criminal,
since any bribe that it paid the criminal to offer it would pay the enforcer to
refuse.17 The argument was criticized by Landes and Posner; they argued that
since the level of fine determined both the “price” of criminal activities to the
criminal and the “price” of enforcement activities, it could not in general be
set at a level which would optimize both criminal and enforcement activities.18
They further argued that enforcement had a positive externality (raising the
probability of catching a criminal, hence lowering total crime) which would
not be internalized by the enforcer; this effect by itself would tend to lead to
suboptimal enforcement.
The first argument may well be correct; since government enforcement also
provides no guarantee of optimality, it leaves open the question of which system
is superior, as Landes and Posner pointed out. This is an empirical question
and one on which the Icelandic case may provide some evidence. Landes and
Posner’s second argument shows insufficient ingenuity in constructing hypo-
thetical institutions. If “enforcers” contract in advance to pursue those who
perpetrate crimes against particular people, and so notify the criminals (by a
notice on the door of their customers), the deterrent effect of catching criminals
is internalized; the enforcers can charge their customers for the service. Such
arrangements are used by private guard firms and the American Automobile
Association, among others. The AAA provides its members with decals stat-
ing that, if the car is stolen, a reward will be paid for information leading to its
recovery. Such decals serve both as an offer to potential informants and as a
warning to potential thieves. Under medieval Icelandic institutions, who was
protected by whom was to a considerable degree known in advance.
Another difficulty with private enforcement is that some means must be found
to allocate rights to catch criminals—otherwise one enforcer may expend re-
sources gathering evidence only to have the criminal arrested at the last minute by
someone else. This corresponds to the familiar “commons” problem. One solution
in the literature19 is to let the right to prosecute a criminal be the private property
of the victim; by selling it to the highest bidder he receives some compensation
for the cost of the crime. This describes precisely the Icelandic arrangements.
 Private Creation and Enforcement of Law—A Historical Case 589

Posner has asserted at some length20 that current common law institutions
have produced economically efficient law. I will argue that while that may or may
not be true of those institutions, there are reasons why the Icelandic institutions
might be expected to produce such law. Two specific features of “efficient” law
in the Icelandic system which I will discuss are efficient punishment and the
distinction between civil and criminal offenses.
III. History and Institutions
In the latter half of the ninth century, King Harald Fairhair unified Norway
under his rule. A substantial part of the population left;21 many went either di-
rectly to Iceland, which had been discovered a few years before, or indirectly
via Norse colonies in England, Ireland, Orkney, the Hebrides, and the Shetland
Islands. The political system which they developed there was based on Norwe-
gian (or possibly Danish22) traditions but with one important innovation—the
King was replaced by an assembly of local chieftains. As in Norway (before
Harald) there was nothing corresponding to a strictly feudal bond. The relation-
ship between the Icelandic godi and his thingman (thingmenn) was contractual,
as in early feudal relationships, but it was not territorial; the godi had no claim
to the thingman’s land and the thingman was free to transfer his allegiance.
At the base of the system stood the godi (pl. godar) and the godord (pl.
godord). A godi was a local chief who built a (pagan) temple and served as its
priest; the godord was the congregation. The godi received temple dues and
provided in exchange both religious and political services.
Under the system of laws established in A.D. 930 and modified somewhat
thereafter, these local leaders were combined into a national system. Iceland
was divided into four quarters, and each quarter into nine godord.23 Within
each quarter the godord were clustered in groups of three called things. Only
the godar owning these godord had any special status within the legal system,
although it seems that others might continue to call themselves godi (in the sense
of priest) and have a godord (in the sense of congregation); to avoid confusion,
I will hereafter use the terms “godi” and “godord” only to refer to those having
a special status under the legal system.
The one permanent official of this system was the logsogumadr or law-
speaker; he was elected every three years by the inhabitants of one quarter (which
quarter it was being chosen by lot). His job was to memorize the laws, to recite
them through once during his term in office, to provide advice on difficult legal
points, and to preside over the lögrétta, the “legislature.”
The members of the lögrétta were the godar, plus one additional man from
each thing, plus for each of these two advisors. Decisions in the lögrétta were
made, at least after the reforms attributed to Njal, by majority vote, subject
apparently to attempts to first achieve unanimity.24
The laws passed by the lögrétta were applied by a system of courts, also
resting on the godar. At the lowest level were private courts, the members being
chosen after the conflict arose, half by the plaintiff and half by the defendant—es-
590 Anarchy and the Law

sentially a system of arbitration. Above this was the thing court or “Varthing,”
the judges25 in which were chosen twelve each by the godar of the thing, making
thirty-six in all. Next came the quarter-thing for disputes between members of
different things within the same quarter; these seem to have been little used and
not much is known about them.26 Above them were the four quarter courts of the
Althing (althingi) or national assembly—an annual meeting of all the godar each
bringing with him at least one-ninth of his thingmen. Above them, after Njal’s
reforms, was the fifth court. Cases undecided at any level of the court system
went to the next level; at every level (except the private courts) the judges were
appointed by the godar, each quarter court and the fifth court having judges ap-
pointed by the godar from all over Iceland.27 The fifth court reached its decision
by majority vote; the other courts seem to have required that there be at most six
(out of thirty-six) dissenting votes in order for a verdict to be given.28
The godord itself was in effect two different things. It was a group of
men—the particular men who had agreed to follow that godi, to be members
of that godord. Any man could be challenged to name his godord and was
required to do so, but he was free to choose any godi within his quarter and to
change to a different godord at will.29 It was also a bundle of rights—the right
to sit in the lögrétta, appoint judges for certain courts, etc. The godord in this
second sense was marketable property. It could be given away, sold, held by a
partnership, inherited, or whatever.30 Thus seats in the lawmaking body were
quite literally for sale.
I have described the legislative and judicial branches of “government” but
have omitted the executive. So did the Icelanders. The function of the courts was
to deliver verdicts on cases brought to them. That done, the court was finished.
If the verdict went against the defendant, it was up to him to pay the assigned
punishment—almost always a fine. If he did not, the plaintiff could go to court
again and have the defendant declared an outlaw. The killer of an outlaw could
not himself be prosecuted for the act; in addition, anyone who gave shelter to
an outlaw could be prosecuted for doing so.
Prosecution was up to the victim (or his survivors). If they and the offender
agreed on a settlement, the matter was settled.31 Many cases were settled by
arbitration, including the two most serious conflicts that arose prior to the final
period of breakdown in the thirteenth century. If the case went to a court, the
judgment, in case of conviction, would be a fine to be paid by the defendant
to the plaintiff.
In modern law the distinction between civil and criminal law depends on
whether prosecution is private or public; in this sense all Icelandic law was
civil. But another distinction is that civil remedies usually involve a transfer (of
money, goods, or services) from the defendant to the plaintiff, whereas criminal
remedies often involve some sort of “punishment.” In this sense the distinction
existed in Icelandic law, but its basis was different.
Killing was made up for by a fine. For murder a man could be outlawed, even
if he was willing to pay a fine instead. In our system, the difference between
 Private Creation and Enforcement of Law—A Historical Case 591

murder and killing (manslaughter) depends on intent; for the Icelanders it de-
pended on something more easily judged. After killing a man, one was obliged
to announce the fact immediately; as one law code puts it: “The slayer shall not
ride past any three houses, on the day he committed the deed, without avowing
the deed, unless the kinsmen of the slain man, or enemies of the slayer lived
there, who would put his life in danger.”32 A man who tried to hide the body, or
otherwise conceal his responsibility, was guilty of murder.33
IV. Analysis
One obvious objection to a system of private enforcement is that the poor
(or weak) would be defenseless. The Icelandic system dealt with this problem
by giving the victim a property right—the right to be reimbursed by the crimi-
nal—and making that right transferable. The victim could turn over his case to
someone else, either gratis or in return for a consideration.34 A man who did
not have sufficient resources to prosecute a case or enforce a verdict could sell
it to another who did and who expected to make a profit in both money and
reputation by winning the case and collecting the fine. This meant that an attack
on even the poorest victim could lead to eventual punishment.
A second objection is that the rich (or powerful) could commit crimes with
impunity, since nobody would be able to enforce judgment against them. Where
power is sufficiently concentrated this might be true; this was one of the prob-
lems which led to the eventual breakdown of the Icelandic legal system in the
thirteenth century.35 But so long as power was reasonably dispersed, as it seems
to have been for the first two centuries after the system was established, this
was a less serious problem. A man who refused to pay his fines was outlawed
and would probably not be supported by as many of his friends as the plaintiff
seeking to enforce judgment, since in case of violent conflict his defenders
would find themselves legally in the wrong. If the lawbreaker defended himself
by force, every injury inflicted on the partisans of the other side would result
in another suit, and every refusal to pay another fine would pull more people
into the coalition against him.
There is a scene in Njal’s Saga that provides striking evidence of the sta-
bility of this system. Conflict between two groups has become so intense that
open fighting threatens to break out in the middle of the court. A leader of one
faction asks a benevolent neutral what he will do for them in case of a fight.
He replies that if they are losing he will help them, and if they are winning he
will break up the fight before they kill more men than they can afford!36 Even
when the system seems so near to breaking down, it is still assumed that every
enemy killed must eventually be paid for. The reason is obvious enough; each
man killed will have friends and relations who are still neutral—and will remain
neutral if and only if the killing is made up for by an appropriate wergeld.
I suggested earlier that one solution to the externality problem raised by
Landes and Posner was to identify in advance the enforcer who would deal
with crimes committed against a potential victim. In Iceland this was done by
592 Anarchy and the Law

a system of existing coalitions—some of them godord, some clearly defined

groups of friends and relatives. If a member of such a coalition was killed, it was
in the interest of the other members to collect wergeld for him even if the cost
was more than the amount that would be collected; their own safety depended
partly on their reputation for doing so. This corresponds precisely to the solu-
tion to the problem of deterrence externality described above.
How well do the Icelandic laws fit the ideas of “economically efficient” law
in the modern literature?37 In Appendix A, I give some quantitative calculations
on the value of various fines. Here I will discuss two qualitative features of
Icelandic law which seem to correspond closely to the prescriptions of modern
analysis.
The first is the prevalence of fines. A fine is a costless punishment; the cost
to the payer is balanced by a benefit to the recipient. It is in this respect superior
to punishments such as execution, which imposes cost but no corresponding
benefit, or imprisonment, which imposes costs on both the criminal and the
taxpayers.38
The difficulty with using fines as punishments is that many criminals may
be unable to pay a fine large enough to provide adequate deterrence. The Ice-
landic system dealt with this in three ways. First, the offenses for which fines
were assessed were offenses for which the chance of detection was unity, as
explained below; it was thus sufficient for the fine to correspond to the cost of
the crime, without any additional factor to compensate for the chance of not
being caught.39 Second, the society provided effective credit arrangements. The
same coalitions mentioned above provided their members with money to pay
large fines. Third, a person unable to discharge his financial obligation could
apparently be reduced to a state of temporary slavery until he had worked off
his debt.40
The second feature is the distinction between what I have called civil and
criminal offenses. Since civil offenses were offenses in which the criminal made
no attempt to hide his guilt, a reasonably low punishment was sufficient to deter
most of them. High punishments were reserved for crimes whose detection was
uncertain because the criminal tried to conceal his guilt. A high punishment
was therefore necessary to keep the expected punishment (at the time the crime
was committed) from being very low.41 Further, the difference between the two
sorts of offenses provided a high “differential punishment” for the “offense” of
concealing one’s crime, an offense which imposed serious costs—both costs of
detection and the punishment costs resulting from the need to use an inefficient
punishment (since no payable fine, multiplied by a low probability of being
caught, would provide a sufficiently high deterrent).
V. Generating Efficient Law
Is there any reason to expect the Icelandic system to generate efficient law?
I believe the answer is a qualified yes. If some change in laws produced net
benefits, it would in principle be possible for those who supported such a change
 Private Creation and Enforcement of Law—A Historical Case 593

to outbid its opponents, buy up a considerable number of godord, and legislate

the change. A similar potential exists in any political system; one may think
of it as the application of the Coase theorem to law. The effect is limited by
transaction costs—which were probably large even in the Icelandic system but,
because the godord was legally marketable, smaller than under other political
arrangements.42
A second reason is that inefficient laws provided, in some cases, incentives
for individual responses which could in turn make changes in the laws Pareto
desirable (without side payments). Suppose, for example, that the wergeld
for killing was too low—substantially below the point at which the cost of an
increase to an individual (involving the possibility that he might be convicted
of a killing and have to pay) balanced the advantages of increased security and
higher payments if a relative were killed. The individual, functioning through the
coalition of which he was a member, could then unilaterally “raise” the wergeld
by announcing that if any member of the coalition were killed, the others would
kill the killer (or some other member of his coalition, if he were not accessible)
and let the two wergelds cancel. This is essentially what happens in the famous
“killing match” in Njal’s Saga, where Hallgerd and Bergthora alternately ar-
range revenge killings while their husbands, Njal and Gunnar, pass the same
purse of silver back and forth between them.43 Once such policies became
widespread, it would be in the interest of everyone, potential killers, potential
victims, and potential avengers, to raise the legal wergeld. And even before the
legal wergeld was raised, killers would begin offering higher payments (as part
of “out-of- court” settlements) to prevent revenge killings.44
Conclusion
It is difficult to draw any conclusion from the Icelandic experience concerning
the viability of systems of private enforcement in the twentieth century. Even
if Icelandic institutions worked well then, they might not work in a larger and
more interdependent society. And whether the Icelandic institutions did work
well is a matter of controversy; the sagas are perceived by many as portraying
an essentially violent and unjust society, tormented by constant feuding. It is
difficult to tell whether such judgments are correct. Most of the sagas were
written down during or after the Sturlung period, the final violent breakdown of
the Icelandic system in the thirteenth century. Their authors may have projected
elements of what they saw around them on the earlier periods they described.
Also, violence has always been good entertainment, and the saga writers may
have selected their material accordingly. Even in a small and peaceful society
novelists might be able to find, over the course of three hundred years, enough
conflict for a considerable body of literature.
The quality of violence, in contrast to other medieval literature, is small in
scale, intensely personal (every casualty is named), and relatively straightfor-
ward. Rape and torture are uncommon, the killing of women almost unheard
of; in the very rare cases when an attacker burns the defender’s home, women,
594 Anarchy and the Law

children, and servants are first offered an opportunity to leave.45 One indication
that the total amount of violence may have been relatively small is a calculation
based on the Sturlung sagas. During more than fifty years of what the Icelanders
themselves perceived as intolerably violent civil war, leading to the collapse of
the traditional system, the average number of people killed or executed each
year appears, on a per capita basis, to be roughly equal to the current rate of
murder and nonnegligent manslaughter in the United States.46
Whatever the correct judgment on the Icelandic legal system, we do know
one thing: it worked—sufficiently well to survive for over three hundred years.
In order to work, it had to solve, within its own institutional structure, the prob-
lems implicit in a system of private enforcement. Those solutions may or may
not be still applicable, but they are certainly still of interest.
Appendix A: Wages and Wergelds
Two different monies were in common use in medieval Iceland. One was
silver, the other wadmal (va*d*mal), a woolen cloth. Silver was measured in
ounces (aurar) and in marks; the mark contained eight ounces. Wadmal was of
a standard width of about a meter, and was measured in Icelandic ells (alnar)
of about 56 centimeters.47 The value of an ounce (eyrir) of silver varied, dur-
ing the twelfth and thirteenth centuries, between 6 and 7 1/2 ells.48 The “law
ounce” was set at 6 ells;49 this appears to have been a money of account, not
an attempt at price fixing.
Gragas, the earliest book of Icelandic written law, contains a passage setting
maximum wages—presumably an attempt to enforce a monopsonistic cartel
agreement by the landowning thingmen against their employees.50 The passage
is unclear. Porkell Johannesson estimates from it that the farm laborer’s wage,
net of room and board, amounted to about one mark of silver a year and cites
another writer who estimates it at about three-quarters of a mark.51 Porkell Jo-
hannesson also states that wages (net of room and board) seem to have been low
or zero at the time of settlement but to have risen somewhat by the second half
of the tenth century. He dates Gragas to the second half of the twelfth century,
or perhaps earlier; Conybeare gives its date as 1117.
These figures give us only a very approximate idea of Icelandic wages. The
existence of maximum wage legislation suggests that the equilibrium wage was
higher than the legislated wage.52 But wages, as Porkell Johannesson points
out, must have varied considerably with good and bad years; the legislation
might be an attempt to hold wages in good years to a level below equilibrium
but above the average wage.
I have attempted another and independent estimate of wages, based on the fact
that one of the two monetary commodities was woolen cloth, a material which
is highly labor intensive. If we knew how many hours went into spinning and
weaving an ell of wadmal, we could estimate the market wage rate; if it takes y
hours to produce one ell, then the wage of the women making cloth (including
the value of any payment in kind they receive) should be about l/y.
 Private Creation and Enforcement of Law—A Historical Case 595

I have estimated y in two ways—from figures given by Hoffman for the

productivity of Icelandic weavers using the same technology at later periods,53
and from estimates given me by Geraldine Duncan, who has herself worked
with a warp-weighted loom and a drop spindle, the tools used by medieval
Icelandic weavers.54 Both methods lead to imprecise results: the first because
reports disagree and also because the sources are vague whether the time given
is for weaving only or for both weaving and spinning, the second because Mrs.
Duncan did not know the precise characteristics of wadmal, or precisely how
the skill of medieval Icelandic weavers compared with her own. My conclusion
is that it took about a day to spin and weave an ell of wadmal; this estimate
could easily be off by a factor of two in either direction. If we assume that, in
a relatively poor society such as Iceland, a considerable portion of the income
of an ordinary worker went for room and board, this figure is consistent with
that given in Gragas.
A rough check on these estimates of wages is provided by the fact that the
logsogumadr received an annual salary of 200 ells of wadmal, plus a part of the
fines for certain minor offenses. While his position was not a full-time one, it
involved more than just the two weeks of the Althing; he was required to give
information on the law to all comers. Since the man chosen for the post was an
unusually talented individual, it does not seem unreasonable that the fixed part
of his salary (which, unlike the wages discussed before, did not include room
and board) amounted to five year’s wages, or an amount of wadmal which would
have taken about ten months to produce. Thus, this figure is not inconsistent
with my previous estimate of wages.
It is interesting to note that during the Sturlung period, when wealth had
become relatively concentrated, the richest men had a net worth of about three
to four hundred year’s production of wadmal—or about a thousand cows. The
former figure would correspond today to about six million dollars, but the latter
to only a few hundred thousand—wages having risen considerably more, over
the last millennium, than the price of cattle.
Table 1 gives values for a number of things in ounces, ells, years of produc-
tion of wadmal, and years of wages. The ounce is assumed to be worth six ells,
the year’s production of wadmal to be three hundred ells (three hundred days
at one ell/day) and the year’s wages to be one mark of forty-eight ells.
Wergeld for a thrall, the price of a thrall, and the manumission price of a
thrall were all equal, as might be expected. The price of a thrall presumably
represents the capitalized value of his production net of room and board. It seems
at first surprising that this should amount to only a year and a half of wages
(also net of room and board), but we must remember that wages, according
to Thorkell Johanneson, were lower in the early period, when thralldom was
common; thralldom disappeared in Iceland by the early twelfth century, about
when Gragas was being written.
It is worth noting that the wergeld for a thrall was considerably lower than
for a free man. This is to be expected. The wergeld for a thrall was paid to his
596 Anarchy and the Law

Table 1

Years Production Years

Ounces Ells Source
of Wadmal Wages
Normal Price of Carl O. Williams,
12 72 .24 1.5
Male thrall supra note 4, at 29
Manumission Sveinbjorn Johnson,
12 72 .24 1.5
price of thrall supra note 4, at 225
Wergeld for thrall 12 72 .24 1.5 Id.
Wergeld for Njal’s saga,
free man 100 600 2 12.5
supra note 3, at 108
Wergeld for
400 2400 8 50 Id.
free mana
Wergeld for
200 1200 4 25 Id. at 225 ns.
important man
Wergeld for
800 4800 16 100 Id.
important mana
Law-speaker Vigfusson & Powell,
200+ .8+ 5+ supra note 1, at 348
salary
Wealth of very Einar Olafur
rich man 120,000 400 2500 Sveinsson,
(Sturlung Period) supra note 44, at 45
Wealth of very
rich man 96,000 320 2000 Id.
(Sturlung Period)
Price of Cow
(c. A.D. 1200) 90–96 .3–.32 1.9–2 Id. at 56

a
Magnusson & Palsson (Njal’s Saga, supra note 3, at 63, trans. n.) interpret the ounce by which
compensations are measured as probably meaning “an ounce of unrefined silver…worth four legal
ounces.” Williams, supra note 4, at 31, interprets it as the legal ounce.

master and it was his master, not the thrall, who had some part in the political
bargaining process by which, I have argued, wergelds were set. The value of a
thrall to his master would be the capitalized value of his net product. But the
value of a free man to himself and his family includes not only his net product
but also the value to him of being alive. Food and board, in other words, are
expenses to the owner of a thrall but consumption to a free man. Furthermore,
one would expect that the costs of the thrall to the owner would include costs
of guarding and supervision that would not apply to the free man’s calculation
of his own value.
If we interpret the “ounce” of Njal’s Saga as a legal ounce, the usual wergelds
for free men again seem somewhat low, ranging from 12 l/2 year’s wages for an
ordinary man to twice that for a man of some importance.55 Here again we must
 Private Creation and Enforcement of Law—A Historical Case 597

remember that there is considerable uncertainty in our wage figures. Twelve

and a half years’ wages might be a reasonable estimate of the value of a man
to his family, assuming a market interest rate of between 5 and 10 percent, but
it hardly seems to include much allowance for his value to himself. If we ac-
cept the interpretation in Magnusson and Palsson56 of the ounce in which the
wergelds of Njal’s Saga are paid as an ounce of unrefined silver, worth four
legal ounces, the figures seem more reasonable.
Appendix B
The first step in applying the Icelandic system of private enforcement to a
modern society would be to convert all criminal offenses into civil offenses,
making the offender liable to pay an appropriate fine to the victim. In some
cases, it might not be obvious who the victim was, but that could be specified
by legislation. The Icelanders had the same problem and took care to specify
who had the right to pursue each case, even for procedural offenses.57 For some
minor offenses anyone could sue; presumably, whoever submitted his case first
would be entitled to the fine. It must be remembered that specifying the victim
has the practical function of giving someone an incentive to pursue the case.
The second step would be to make the victim’s claim marketable, so that he
could sell it to someone willing to catch and convict the offender. The amount
of the claim would correspond approximately to the damage caused by the
crime divided by the probability of catching the criminal.58 In many cases it
would be substantial.
Once these steps were taken, a body of professional “thief-takers” (as they
were once called in England) would presumably develop and gradually replace
our present governmental police forces.
One serious problem with such institutions is that most criminals are judg-
ment proof: their resources are insufficient to pay any large fine. The obvious
way to deal with this would be some variation on Icelandic debt-thralldom.
An arrangement which protects the convicted criminal against the most obvi-
ous abuses would be for every sentence to take the form of “so many years or
so many dollars.” The criminal would then have the choice of serving out the
sentence in years or accepting bids for his services. The employer making such
a bid would offer the criminal some specified working conditions (possibly
inside a private prison, possibly not) and a specified rate at which the employer
would pay off the fine. In order to get custody of the criminal, the employer
would have to obtain his consent and post bond with the court for the amount
of the fine. In order for the private-enforcement system to work, it would be
necessary for most criminals to choose to work off their sentences instead of
sitting them out (since their fines provide the enforcer’s incentive). This could
be arranged by appropriately adjusting the ratio between the number of years
and the number of dollars in the sentence.
There might be some crimes, such as murder, for which the appropriate
fine would be so high that the convicted killer would be unable to work it off,
598 Anarchy and the Law

however unattractive the alternative. For such cases the system would break
down and would have to be supplemented by some alternative arrangement—
perhaps a large bounty paid by the state for the apprehension and conviction
of murderers.
It would be beyond the scope of this article to argue the advantages and
disadvantages of such a system, or to compare at length its potential abuses
with those of our present system of enforcement and punishment; it would be
beyond my competence to discuss the legal problems, and in particular the
constitutional objections, that might be raised to its introduction.
Notes
1. I would like to especially thank Professor Jere Fleck of the Germanic Languages
Department at the University of Maryland for answering innumerable questions
and Julius Margolis for his initial encouragement. Thanks are also due to Juergen
Backhaus, for the difficult feat of translating an Icelander’s German, and to Ger-
aldine Duncan. Finally, I am grateful to the authors and translators of Njal’s Saga,
Egils Saga. Haralds Saga, Gisla Saga, and the Jomsvikinga Saga.
2. I have been hampered in this work by my unfortunate ignorance of Old Norse. In
particular Gragas, the earliest compilation of Icelandic law. seems never to have
been translated into English, save for a few fragments in Origines Icelandicae (Gud-
brand Yigfusson and F. York Powell, trans., 1905) (hereinafter cited as Yigfusson
& Powell). A Norse scholar willing to correct that lack would do a considerable
service to those interested in the legal institutions of this extraordinary society.
3. Most of the principal sagas were written down in the second half of the thirteenth
century, or at the latest, the first half of the fourteenth. Prior to 1262 the institutions
seem to have been relatively close to those established in the tenth century, although
their workings may have been substantially different as a result of the increased
concentration of wealth and power which led to their final collapse.
4. Magnus Magnusson and Hermann Palsson, trans., Njal’s Saga (Penguin ed., 1960)
(hereinafter cited as Njal’s Saga).
5. Sveinbjorn Johnson, Pioneers of Freedom (1930). A partial exception is the status
of thralls, although even they seem freer than one might expect; in one saga a thrall
owns a famous sword, and his master must ask his permission to borrow it. Carl O.
Williams, in Thraldom in Ancient Iceland 36 (1937), estimates that there were no
more than 2000 thralls in Iceland at any one time, which would be about 3 percent
of the population. Williams believes they were very badly treated, but this may
reflect his biases; for example, he repeatedly asserts that thralls were not permit-
ted weapons despite numerous instances to the contrary in the sagas. Stefansson
estimates the average period of servitude before manumission at only five years
but does not state his evidence. Vilhjalmur Stefansson, “Icelandic Independence,”
Foreign Affairs, January 1929, at 270.
6. C. A Vansittart Conybeare, The Place of Iceland in the History of European Institu-
tions 6-8 (1877).
7. New York Times, Feb. 16, 1972, at 17, col. 6. For an extensive survey of wergeld in
Anglo-Saxon and other early societies, see Frederic Seebohm, Tribal Custom in
Anglo-Saxon Law (1911).
8. Terry L. Anderson and P. J. Hill, “An American Experiment in Anarcho-Capitalism:
The Not So Wild, Wild West” (1978) (staff paper in economics, Montana State
University at Bozeman, Ag. Econ. & Econ. Dept.).
9. Marilyn E. Walsh, The Fence 17-23 (1977).
 Private Creation and Enforcement of Law—A Historical Case 599

10. H. S. Maine, Ancient Law 355-71 (1963).

11. Id. at 360-61.
12. Seebohm, supra note 6 at 330-335: and Naomi D. Hurnard, The King’s Pardon for
Homicide before A.D. 1307, at 1-5 (1969).
13. Walsh, supra note 8, at 18-19.
14. “In no part of Anglo-Saxon England and at no time in its history is any trace to
be found of a system of government knowing nothing of the rule of kings.” P. H.
Blair, An Introduction to Anglo-Saxon England 194 (2nd ed. 1977).
15. This question is discussed at some length in modern libertarian or anarcho-capitalist
writings. See David Friedman, The Machinery of Freedom (1973); and Murray N.
Rothbard, For a New Liberty (l973).
16. Gary Becker and George Stigler, “Law Enforcement, Malfeasance, and Compensa-
tion of Enforcers,” 3 J. Legal Stud. I (1975).
17. This is not quite true, since the trial process might impose costs on the criminal,
such as uncertainty and unreimbursed time, he might be willing to pay the enforcer
more than the expected value of the fine. In this case bribery is an efficient substitute
for the court process.
18. William M. Landes and Richard A. Posner, “The Private Enforcement of Law,” 4
J. Legal Stud. I (1975).
19. Id. at 34.
20. Richard A. Posner, Economic Analysis of Law (2nd ed., 1977).
21. Some estimates put it at about 10 percent.
22. Barthi Guthmundsson, The Origin of the Icelanders (Lee M. Hollander, trans., 1967),
argues that the settlers were in large part Danes who had colonized in Norway and
thus brought Danish institutions with them to Iceland.
23. In the northern quarter there were twelve godord; the rules for membership in the
lögrétta and the appointment of judges were modified to compensate for this fact,
so that the northern quarter had the same number of seats as each of the other
three quarters. I shall ignore the resulting complications (and some other details
of the system) in the remainder of the description. I shall also ignore the disputed
question of which features were in the original system and which were added by
modifications occurring between A.D. 930 and c. A.D. 1000.
24. Conybeare, supra note 5, at 95 ns.; and I Vigfusson & Powell, supra note 1, bk. 2,
§ 3, at 343-344.
25. The Icelandic judges correspond more nearly to the jurymen of our system than
to the judge, since it was up to them to determine guilt or innocence. Conybeare,
supra note 5 at 146. There was no equivalent of our judge; individual experts in the
law could be consulted by the court. According to Sigurdur A. Magnusson, North-
ern Sphinx 14 (1977), “Since every breach of the law had a fixed fine, the judges
merely had to decide whether the culprit was guilty or innocent.” The lögrétta had
the power to reduce sentences.
26. Conybeare, supra note 5, at 48.
27. Id at 50-51 at 50-51. But Sveinbjorn Johnson, supra note 4, at 64; and James Bryce,
Studies in History and Jurisprudence 274 (1901), state that the judges of the quarter
court were appointed only by the godar of that quarter.
28. Magnusson supra note 24, at 14; and Conybeare, supra note 5, at 95 ns., both
interpret the requirement for the lower courts as no more than six dissenting votes.
If this was not achieved, the case was undecided and could be taken to a higher
court. While there does not seem to have been anything strictly equivalent to our
system of appeals, claims that a case had been handled illegally in one court could
be resolved in a higher court. In a famous case in Njalssaga the defendant tricks
the prosecution into prosecuting him in the wrong court by secretly changing his
600 Anarchy and the Law

godord, and hence his quarter, in order to be able to sue the prosecutors in the fifth
court for doing so. Id. at 93-94; Njal’s Saga, supra note 3, at 309-310. Similarly,
if a private court was unable to reach a verdict, or in cases of “contempt of court,
disturbance of the proceedings by violence, brawling, crowding, etc.,” or if the
plaintiff was unwilling to submit the case to a private court, it went to the appropri-
ate public court instead. Conybeare, supra note 5, at 77.
29. Id. at 33-34, 47; Bryce, supra note 26, at 268-69.
30. Conybeare, supra note 5, at 28.
31. But according to Johnson, supra note 1, at 112, for certain serious offenses the plain-
tiff was liable to a fine if he compromised his suit after it had been commenced.
32. Quoted by Conybeare, supra note 5, at 78 ns., from the Gulathing Code.
33. For a discussion of the contrast between Icelandic and (modern) English ideas of
murder, see id. at 78-81.
34. For examples, see Njal’s Saga, supra note 3, at 75, 151.
35. The question of why the system eventually broke down is both interesting and
difficult. I believe that two of the proximate causes were increased concentration
of wealth, and hence power, and the introduction into Iceland of a foreign ideol-
ogy—kingship. The former meant that in many areas all or most of the godord
were held by one family and the latter that by the end of the Sturlung period the
chieftains were no longer fighting over the traditional quarrels of who owed what
to whom, but over who should eventually rule Iceland. The ultimate reasons for
those changes are beyond the scope of this paper.
36. “But if you are forced to give ground, you had better retreat in this direction, for I
shall have my men drawn up here in battle array ready to come to your help. If on
the other hand your opponents retreat, I expect they will try to reach the natural
stronghold of Almanna Gorge…I shall take it upon myself to bar their way to this
vantage ground with my men, but we shall not pursue them if they retreat north or
south along the river. And as soon as I estimate that you have killed off as many as
you can afford to pay compensation for without exile or loss of your chieftaincies,
I shall intervene with all my men to stop the fighting; and you must then obey my
orders, if I do all this for you.” Njal’s Saga, supra note 3, at 296-97. A similar pas-
sage occurs id. at 162-63.
37. See especially Posner, supra note 19; and Gary Becker, “Crime and Punishment:
An Economic Approach,” 76 J. Pol. Econ. 169 (1963). Also, Gordon Tullock, The
Logic of the Law (1971).
38. I am here comparing the direct costs and benefits of different sorts of punishment.
Both execution and fine have the additional indirect “benefit” of deterrence. Execu-
tion has the further indirect benefit of preventing repetition of the crime.
39. Some additional punishment might be required to compensate for the chance that
a guilty person would be acquitted on a technicality, as sometimes happened. The
advantage of private enforcement for acts where detection is easy is discussed by
Landes & Posner, supra note 17, at 31-55, in the context of modern law.
40. My only source for this is Williams, supra note 4, at 117-121. The system seems
to have differed from the later English imprisonment for debt, which served as an
incentive to pay debts but not as a means of doing so.
41. This may be only an approximate statement. The sagas describe many miscarriages
of justice, including outlawry based on relatively minor offenses. Here as elsewhere
I am trying to distinguish what the rules were from how they may sometimes have
been applied, partly because I believe that misapplications probably became com-
mon only in the later years, as part of the general collapse of the system described
in the Sturlung sagas. Since most of the sagas were written during or shortly after
the Sturlung period, I regard their description of that period as accurate and their
 Private Creation and Enforcement of Law—A Historical Case 601

description of the earlier “saga” period as somewhat exaggerating the resemblance

between the two periods. They portray the Sturlung period as one in which justice
was less common than in the saga period, and much less common than in the period
between the two.
42. For a description of a very different system of private production of law (by law-
yers), see Maine, supra note 9, at 32-41. There seems no obvious reason to expect
the Roman system he describes to generate efficient law.
43. Njal’s Saga, chs. 36-45, at 98-119.
44. One common procedure was for the defendant to offer the plaintiff “self-judg-
ment”—the right to set the fine himself.
45. Einar Ólafur Sveinsson, The Age of the Sturlungs 68, 73 (Johann S. Hannesson,
trans., 1953) (Islandica vol. 36); Njal’s Saga 266.
46. Id. at 72 gives an estimate of three hundred and fifty killed in battle or executed
during a fifty-two-year period (1208-1260). The population of Iceland was about
seventy thousand. For the U.S. figures, see Michael S. Hindelang et al., Sourcebook
of Criminal Justice Statistics—1976, at 443 (1977).
47. Marta Hoffman, The Warp-Weighted Loom 213 (1964).
48. Knut Gjerset, History of Iceland 206 (1924).
49. Njal’s Saga 41, trans. n. Also Porkell Johannesson, Die Stellung der Freien Arbeiter
in Island 37 (1933).
50. Id. at 207-208.
51. Id. at 211.
52. The existence of maximum wage legislation raises a problem for my thesis that
the Icelandic system generated efficient law. The simplest answer is that I do not
expect to see perfectly efficient law. Maximum wage legislation can most naturally
be interpreted as a cartel arrangement among the landowners; such an arrangement
may well be in their interest, provided that the farm workers are unable, for orga-
nizational reasons connected with the public-good problem, to combine in order
to bribe the landowners to repeal the legislation or, within the Icelandic system, to
buy sufficient godord to repeal it themselves.
53. Hoffman, supra note 46, at 215-16.
54. Private communication.
55. In comparing this figure with current sentencing levels for murder or manslaughter,
one must remember that killing, in Icelandic law, was distinguished from murder
by the fact that the killer “turned himself in.” Thus, even if the average sentence
served by the convicted killer in our society were as high as 12 1/2 years—which
it surely is not—the corresponding expected punishment would be much higher in
the Icelandic case.
56. Njal’s Saga, supra note 3, at 63.
57. Vigfusson & Powell, supra note 1, bk. 2, at 340, 356, 358-59.
58. This is only a first approximation; the optimal fine must make allowance for enforce-
ment costs—part of the cost of a crime is the cost of catching the criminal—and
for the net cost of collecting the fine. This is a complicated subject and beyond the
scope of this paper.
 37
The Role of Institutions in the Revival of
Trade: The Law Merchant, Private Judges, 6

and the Champagne Fairs

Paul Milgrom, Douglass North, and Barry Weingast
How can people promote the trust necessary for efficient exchange when in-
dividuals have short run temptations to cheat? The same question arises whether
the traders are legislators swapping votes, medieval merchants exchanging
goods, or modem businesspeople trading promises about future deliveries. In
each of these situations, one of the important ways in which individuals ensure
one another’s honest behavior is by establishing a continuing relationship. In
the language of economics, if the relationship itself is a valuable asset that a
party could lose by dishonest behavior, then the relationship serves as a bond: a
trader would be unwilling to surrender this bond unless the gain from dishonest
behavior was large.
Variants on this basic idea are found throughout the literatures of economics
(Klein and Leffler, 1981; Shapiro, 1983; Shapiro and Stiglitz, 1984), politics
(Axelrod, 1984, 1986; Calvert, 1989) and game theory (Abreu, 1988; Aumann,
1985; and Fudenberg and Maskin, 1986). Even in a community in which any
particular pair of people meet rarely, it is still possible (as we show) for an
individual’s reputation in the group as a whole to serve as a bond for his good and
honest behavior toward each individual member. This illustrates the important
fact that a reputation system may sometimes work only when it encompasses
sufficiently many traders and trades, that is, there are economies of scale and
scope in reputation systems.
These conclusions about the potential effectiveness of a reputation system
however, leave us with a puzzle: If informal arrangements based on reputations
can effectively bond good behavior, then what is the role of formal institutions in
helping to support honest exchange? The legal apparatus for enforcing business
contracts in many ages and many parts of the world, the suppliers’ organizations
that negotiate contracting patterns among modern Japanese firms, the complex
institutional structure that facilitates agreements among U.S. Congressmen,1
the notaries that recorded agreements in the Italian city-states in the Middle
Ages, and the organization of international trade via the Champagne Fairs are
all examples of institutionalized arrangements to support trade and contracting.

602
 The Role of Institutions in the Revival of Trade 603

All involve the creation of specialized roles which would not be necessary if
reputations alone could be an adequate bond for trade. But, why can’t a simple
system of reputations motivate honest trade in these various settings? And, what
role do formal institutions play when simple reputational mechanisms fail?
We embed our study of these questions in the time of the revival of trade in
Europe during the Early Middle Ages. At that time, without the benefit of state
enforcement of contracts or an established body of commercial law, merchants
evolved their own private code of laws (the Law Merchant) with disputes ad-
602 judicated by a judge who might be a local official or a private merchant. While
hearings were held to resolve disputes under the code, the judges had only
limited powers to enforce judgments against merchants from distant places. For
example, if a dispute arose after the conclusion of the Champagne Fair about
the quality of the goods delivered or if agreements made at the Fair for future
delivery or for acceptance of future delivery were not honored, no physical
sanction or seizure of goods could then be applied.
The evolution and survival for a considerable period of a system of private
adjudication raises both particular versions of our general questions and new
questions about the details of the mechanism. What was the purpose of the pri-
vate adjudication system? Was it a substitute for the reputation mechanism that
had worked effectively in earlier periods (Greif, 1989)? Also, if there was no
state to enforce judgments, how did they have any effect? How could a system
of adjudication function without substantial police powers?
The practice and evolution of the Law Merchant in medieval Europe was so
rich and varied that no single model can hope to capture all the relevant varia-
tions and details. Our simple model is intended to represent certain universal
incentive problems that any successful system would have to solve. It abstracts
from many of the interesting variations that are found across time and space as
well as from other general problems, such as the spatial diversion of traders and
trading centers and the interactions among competing trading systems.
We begin in section 1 with a discussion of the medieval Law Merchant and
related institutions. We set the theoretical context for our analysis in section 2. It
is well known, as we have explained above, that in long-term, frequent bilateral
exchange, the value of the relationship itself may serve as an adequate bond to
ensure honest behavior and promote trust between the parties. We argue in section
2 that even if no pair of traders come together frequently, if each individual trades
frequently enough within the community of traders, then transferable reputations
for honesty can serve as an adequate bond for honest behavior if members of
the trading community can be kept informed about each other’s past behavior.
Well-informed traders could boycott those who have violated community norms
of honesty, if only they knew who the violators were. It is the costliness of
generating and communicating information—rather than the infrequency of
trade in any particular bilateral relationship—that, we argue, is the problem
that the system of private enforcement was designed to overcome.
604 Anarchy and the Law

In section 3, we introduce our basic model of a system of private enforcement

and develop our core thesis that the role of the judges in the system, far from
being substitutes for the reputation mechanism, is to make the reputation system
more effective as a means of promoting honest trade. The formal system is more
complex than the simple informal system of reputations that preceded it, but that
was a natural outcome of the growing extent of trade. In a large community, we
argue, it would be too costly to keep everyone informed about what transpires
in all trading relationships, as a simple reputation system might require. So the
system of private judges is designed to promote private resolution of disputes
and otherwise to transmit just enough information to the right people in the
right circumstances to enable the reputation mechanism to function effectively
for enforcement. In order to succeed, such a system must solve a number of
interconnected incentive problems: Individual members of the community must
be induced to behave honestly, to boycott those who have behaved dishonestly,
to keep informed about who has been dishonest, to provide evidence against
those who have cheated, and to honor the decisions of the judges. All of these
problems can be resolved by the system if certain institutional constraints are
satisfied, as we show in section 3. Briefly, the costs of making queries, provid-
ing evidence, adjudicating disputes, and making transfer payments must not
be too high relative to the frequency and profitability of trade if the system is
to function successfully.
Intuitively, the system of private judges accomplishes its objectives by bun-
dling the services which are valuable to the individual trader with services that
are valuable to the community, so that a trader pursuing his individual interest
serves the community’s interest as well. Unless a trader makes appropriate
queries, he cannot use the system to resolve disputes. The requirement that the
traders make queries provides an opportunity for the judge to collect payments
for his services even if no actual disputes arise. As applied to the Champagne
Fairs, the local lord or his agents could appoint honest judges, register transac-
tions, and tax them.
In section 4, we make a brief digression to assess how efficiently the system
of private judges accomplishes its task. We argue that no system can restore the
effectiveness of the community reputation mechanism without incurring costs
that are qualitatively similar to those incurred by the system of private judges,
and moreover that the latter system seems to have been designed in a way that
kept these transaction costs low.
Our analysis in section 3 gives the judge a passive role only. In section 5,
we study the possibility that the judge may threaten to sully the reputations of
honest traders unless they pay bribes. We show how the system can survive
some such threats, though we do not attempt a comprehensive evaluation of all
the kinds of bribes and extortion that might be tried in such a system.
Concluding remarks, relating our model to a broader institutional perspec-
tive, are given in section 6.
 The Role of Institutions in the Revival of Trade 605

1. The Medieval Law Merchant

The history of long-distance trade in medieval and early modem Europe is the
story of sequentially more complex organization that eventually led to the “Rise
of the Western World.” In order to capture the gains associated with geographic
specialization, a system had to be established that lowered information costs
and provided for the enforcement of agreements across space and time. Prior
to the revival of trade in the Early Middle Ages, few institutions underpinned
commercial activity; there was no state to enforce contracts, let alone to protect
merchants from pirates and brigands. In contrast, modern Western economies
possess highly specialized systems of enforcing contracts and protecting
merchants, resulting in widespread geographic specialization and impersonal
exchange. The story of this evolution has been told elsewhere (e.g., Lopez,
1976; North and Thomas, 1973). Our purpose in this section is to suggest the
outlines of an important step in this evolution, namely the early development
of commercial law prior to the rise of large-scale third-party enforcement of
legal codes by the nation-state.
A large number of problems had to be resolved in order to support the ex-
pansion of trade. First, as trading communities grew larger, it became harder
within each community for merchants to monitor one another’s behavior. New
institutions were required to mitigate the types of cheating afforded by the
new situation. Second, as trade grew among different regions, institutions were
needed to prevent reneging by merchants who might cheat in one location,
never to be seen again.
In response to these problems, a host of institutions arose and evolved over
time. Towns with their own governments became homes for merchants who
developed their own law separate from the traditional feudal order (Pirenne,
1925; Rorig, 1967). Merchant gilds arose to provide protection to foreign mer-
chants away from their homes, but also protection to local merchants against
fly-by-night foreign merchants who might never be seen again (DeRoover,
1963; Thrupp, 1948). Key to understanding the ability of merchants from
widely varying regions to enforce contracts was the evolution of the Lex Mer-
catoria or Law Merchant—the legal codes governing commercial transactions
and administered by private judges drawn from the commercial ranks. While
practice varied across time and space, by the end of the 11th century, the Law
Merchant came to govern most commercial transactions in Europe, providing
a uniform set of standards across large numbers of locations (Benson, 1989). It
thereby provided a means for reducing the uncertainty associated with variations
in local practices and limited the ability of localities to discriminate against
alien merchants (Berman, 1983; Trakman, 1983). Thus, “commercial law can
be conceived of as coordinating the self-interested actions of merchants, but
perhaps an equally valuable insight is gained by viewing it as coordinating the
actions of people with limited knowledge and trust” (Benson, 1989, p. 648,
emphasis added).
606 Anarchy and the Law

While the governments of towns supported the development of markets and

were intimately involved in developing merchant law (Pirenne, 1925; Roria,
1967), they often could not provide merchants protection outside their immediate
area.2 Nor could they enforce judgments against foreign merchants who had left
town prior to a case being heard. Thus, merchant law developed prior to the rise
of a geographically extensive nation-state. But this raises a key problem in the
theory of enforcement, for what made these judgments credible if they were not
backed up by the state? Ostracism played an important role here, for merchants
that failed to abide by the decisions of the judges would not be merchants for
long (Benson, 1989; DeRoover, 1963; Trakman, 1983).
The Law Merchant and related legal codes evolved considerably over time. In
addition to providing a court of law especially suited for merchants, it fostered
significant legal developments that reduced the transaction costs of exchange
(North, 1989, ch. 13). As agency relationships became common—whether
between partners on different locations or between a sedentary merchant who
financed a traveling one—a new set of rules governing these agreements and
insurance. Here, we note the development of law covering agency relations
(DeRoover, 1963; Greif, 1989), bills of exchange, and insurance (North, 1989,
ch. 13).
The benefits of all these developments, however, could only be enjoyed as
long as merchants obeyed the Law Merchant. Moreover, since disputes arise
even among honest merchants, there needed to be a system for hearing and
settling these disputes. To see how these feats of coordination might have been
accomplished, we developed a game theoretic model of the judicial enforce-
ment system—a model inspired by the Law Merchant and by the Champagne
Fairs. The latter played a central role in trade in the 12th and 13th centuries
(DeRoover, 1963; North and Thomas, 1973; Verlinden, 1963), and included a
legal system in which merchants could bring grievances against their trading
partners. However, it is not clear why such a system would be effective. What
prevents a merchant from cheating by supplying lower quality goods than prom-
ised, and then leaving the fairs before being detected? In these circumstances the
cheated merchant might be able to get a judgment against his supplier, but what
good would it do if the supplier never returned to the Fairs? Perhaps ostracism
by the other merchants might be an effective way to enforce the payment of
judgments. However, if that is so, why was a legal system needed at all?
Another part of the inspiration for our formal model is the system of notaries
that was widely used to register the existence of certain types of contracts and
obligations. Typically, notaries were used for long-tern contracts such as those
for apprenticeships, sales of land, and partnerships (Lopez and Raymond, 1955).
The extensive use of notaries in certain areas to register agreements suggests that
reputation via word of mouth alone was insufficient to support honest behavior
and that a third party without any binding authority to enforce obligations was
nonetheless quite valuable for promoting honest exchange.
 The Role of Institutions in the Revival of Trade 607

2. Community Enforcement without Institutions

With the exception of barter transactions, in which physical commodities are
exchanged on the spot, virtually all economic transactions leave open the pos-
sibility of cheating. In the Champagne Fairs, where merchants brought samples
of their goods to trade, the quantities they brought were not always sufficient
to supply all the potential demand. Then, the merchants sometimes exchanged
promises—to deliver goods of like quality at a particular time and place, or to
make payment in a certain form. Promises, however, can be broken.
To represent the idea that cheating may be profitable in a simple exchange,
we use the Prisoners’ Dilemma (PD) game as our model of a single exchange
transaction. Although this PD model is too simple to portray “the richness of
even simple contracts, it has the advantage” that it is very well known and its
characteristics in the absence of institutions have been thoroughly studied, so
that the incremental contribution made by the Law Merchant system will be
quite clear. Moreover, the PD game represents in an uncluttered way the basic
facts that traders have opportunities and temptations to cheat and that there are
gains possible if the traders can suppress these temptations and find a way to
cooperate.
The Prisoners’ Dilemma game that we employ is shown below, where α >
1 and α ß < 2.
Honest Cheat
Honest Honest Cheat
Honest 1,11
1, – ß, a ß,
Cheat
Cheat α a, ß– ß 0, 0 0, 0

Each player can choose to play one of two strategies: Honest or Cheat. As is
well known, honest behavior maximizes the total profits of the two parties. How-
ever, a trader profits by cheating an honest partner (a > 1) even though cheating
imposes still a still larger loss on his honest partner (1 – (– ß) > – 1).
It is clear that if this game is played only once, it is in each player’s separate
interest to play Cheat, since that play maximizes the player’s individual utility
regardless of the play chosen by the competitor. Consequently, the only Nash
equilibrium of the game is for both to play Cheat. Then both are worse off than
if they could somehow agree to play Honest.
Now suppose that the players trade repeatedly. Let αit represent the action
taken by player i in period t; let πι (a1t, a2t) represent the resulting payoff earned
by player i in period t; and let δ be the discount factor applied to compute the
present value of a stream of payoffs. If trade is frequent, then δ is close to one;
if trade occurs only once (or is quite infrequent), then δ is (close to) zero. A
player’s time weighted average payoff over the whole sequence of trades is
given by:
∞

i ∑
π = (1 − δ ) δ t π (a , a )
t =0
i 1t 2t
(1)
608 Anarchy and the Law

In this repeated trading relationship, if the players can condition their actions in
each period on what has transpired in the past, then they have an instrument to
reward past honest behavior and to punish cheating. For the PD game, Axelrod
(1984) has shown that for δ close enough to 1 there is a Nash equilibrium in
which each player adopts the Tit-for-Tat (TFT) strategy—according to which
that player chooses Honest play at t = 0 and for any later t plays whatever his
partner played in the immediately preceding period (that is, at t – 1).
To see this, suppose that there are N traders and that there is some rule M
that matches them at each stage. Let ht be the history of trade through date t and
let M(ht,,i) be the identity of the trader who is matched with trader i at date t +
1 at history ht. Consider the Adjusted Tit-for-Tat (ATFT) strategy according to
which player i plays Honest at date 0 and then plays Cheat at date t + 1 if two
conditions hold: (1) i made the play at date t that was specified by his equilib-
rium strategy and (2) M(ht, i ) did not make the play at date t that was specified
by his equilibrium strategy. If either condition fails, then the ATFT strategy
calls for i to play Honest. The ATFT strategy formalizes the idea that a trader
who cheats will be punished by the next merchant he meets if that merchant is
honest, even if that merchant is not one who was cheated.
One might wonder what reason the merchant who was not cheated has to
carry out the punishment. Within the PD model, the answer is twofold: First,
punishing the cheater is directly profitable, because the punishment is deliv-
ered by playing Cheat. Second—and this is the reason that applies even in
more general models—a merchant who fails to deliver a punishment, say by
participating in a boycott, when he is supposed to do so is himself subject to
punishment by the community of merchants. The community, in its turn, will
carry out the punishment for the very same reasons. Theorem 1 below verifies
that this system is in fact sometimes an equilibrium, that is, no merchant could
gain at any time by deviating from its rules provided he expects other merchants
to adhere to the rules in all future play.
Theorem 1. For δ near enough to one—specifically if
δ > Max [ß/(1 + ß), (α – 1)/(1 + ß)] (2)
—the adjusted Tit-for-Tat strategies are a subgame perfect equilibrium in the
community trading game for any matching rule M.
Proof. By the Optimality Principle of dynamic programming, it suffices to show
that there is no point at which player i can make a one-time play different from
the equilibrium play that raises his total payoff. By inspection of the strategies,
it is clear that the player may face one of four decision situations according to
whether condition (1) only is satisfied, condition (2) only is satisfied, or both or
neither of (1) and (2) are satisfied. If just condition (1) or condition (2) (not both)
is satisfied, then a current period of deviation by player i is unprofitable if:
(1 – δ)[α – δß] + δ2 .1 < (1 – δ) . 1 + δ . 1 (3)
 The Role of Institutions in the Revival of Trade 609

which holds if and only if δ > (α – 1)/(1 + ß). If (1) and (2) are both satisfied,
deviation is unprofitable if:
(1 – δ)[0 – δß] + δ2 .1 < (1 –δ) .1 + δ .1 (4)

and this is satisfied for all δ > 0. If neither (1) nor (2) is satisfied, then deviation
is unprofitable if:
(1 – δ)[0 – δß] + δ2 .1 < (1 –δ) . ß + δ .1 (5)
which only holds if and only if δ > ß(1 + ß).
Our formal analysis verifies that it is not necessary for any pair of traders to
interact frequently—that is, for traders to establish client relationships—in order
for the boycott mechanism to be effective. However, that simple conclusion relies
on the condition that the members of the community are well enough informed
to know whom to boycott. This condition is probably satisfied in some commu-
nities, but it is more problematical in others. For example, merchants engaged
in long-distance trade could not be expected to know, of their own knowledge,
whether another pair of merchants had honored their mutual obligations. Unless
social and economic institutions developed to fill in the knowledge gap or unless
other means of enforcement were established, honest behavior in a community
of self-interested traders could not be maintained. Our model in the next section
shows how a particular institution could have resolved this problem.
3. The Law Merchant Enforcement System
We now consider in more detail a model of trade in which outsiders cannot
readily observe what has transpired in a given bilateral trade. While “disputes”
may arise in which one party accuses the other of cheating, none of the other
players have a method of freely verifying the parties’ claims. Even if the dispute
itself can be observed by others, they cannot costlessly determine whether
cheating by one has actually occurred or whether the other is opportunistically
claiming that it did.
In our model, we suppose that choices in each bilateral exchange are known
only to the trading pair, so that each individual possesses direct information
solely about his own past trading experiences.3 To capture the idea that traders
know little of their partners’ past trading behavior, we use an extreme model
of matching due to Townsend (1981). In Townsend’s matching model, there
is an infinity of traders indexed by ij where i = l or 2 and j is an integer which
may be positive or negative. At period t, trader 1, j is matched with trader 2,
j + t.4 In particular no two traders ever meet twice and no trader’s behavior can
directly or indirectly influence the behavior of his future trading partners. In
the absence of institutions, players possess no information about their current
partner’s past behavior.
Under these conditions, the opportunities available to a player in any period
cannot depend in any way on his past behavior. Strategies such as TFT and ATFT
610 Anarchy and the Law

become ineffective. So, in our Prisoners’ Dilemma game, it can never be in the
players’ interest to be honest. We have established the following:
Theorem 2. In the incomplete information Prisoners’ Dilemma with the
Townsend matching rule, the outcome at any Nash equilibrium is that each
trader plays Cheat at every opportunity.5
With limited information about the past behavior of trading partners and
no institution to compensate, there are no incentives for honest behavior. It is
evident that incentives could be restored by introducing an institution that pro-
vides full information to each trader about how each other has behaved. Such an
institution, however, would be costly to operate. Moreover, efficient trade does
not require that every trader know the full history of the behavior of each other
trader. For example, in the ATFT strategy considered in the preceding section,
a trader need only know his own history of behavior and whether his partner
has defected in the immediately preceding period to determine his own current
behavior. One part of the problem is to arrange that the traders are adequately
well informed so that they can sanction a Cheater when that is required.
However, there is a second problem that the institutions must overcome:
Traders may not find it in their individual interests to participate in punishing
those who cheat. As one simple example, if trade is expected to be profitable,
a trader will be reluctant to engage in a trade boycott. The institutions must be
designed both to keep the traders adequately informed of their responsibilities
and to motivate them to do their duties.
In the model we develop below, this second problem has multiple aspects.
First, traders must be motivated to execute sanctions against Cheaters when that
is a personally costly activity. Second, traders must be motivated to keep well
enough informed to know when sanctions are required, even though information
gathering activities may be personally costly and difficult to monitor. In effect,
one who keeps informed about who should be punished for past transgressions
is supplying a public good; he deters the traders from cheating against others.
Moreover, in our model, no other trader except his current partner will ever
know if a trader does not check his partner’s past history, so the trader could
avoid supplying the public good without facing any sanction from future traders.
Third, traders who are cheated must be motivated to document the episode, even
though providing documentation may be personally costly. After all, from the
cheated trader’s perspective, what’s lost is lost, and there may be little point in
“throwing good money after bad.” But if players who are cheated are unwilling
to invest in informing their neighbors, then, just as surely as if the neighbors are
unwilling to invest in being informed, the Cheater will profit from his action
and Honest trade will suffer. These are the problems that the trading institution
in our model must solve.
The institution that we model as the resolution of these problems is based
on the presence of a specialized actor—a “judge” or “law merchant” (LM) who
serves both as a repository of information and as an adjudicator of disputes.
 The Role of Institutions in the Revival of Trade 611

The core version of our model is based on the following assumptions. After
any exchange, each party can accuse the other of cheating and appeal to the
LM. Any dispute appealed to the LM is perfectly and honestly adjudicated
at cost C to the plaintiff. (We consider the case of a dishonest LM later.) The
LM’s pronouncements include the ability to award damages if the defendant
is found to have cheated the plaintiff. However, payment of the damage award
is voluntary in the sense that there is no state to enforce payment. Finally, we
assume that any party can visit the LM prior to finalizing a contract. At that
time, for a cost of Q, the party can query the LM for the records of previous
judgments about any other player. Without querying the LM, players have no
information about their current partners’ trading history.
By structuring this sequence of events around the basic trade transaction, we
create an “extended” state game called the LM system game with the following
sequence of play:
(a) Players may query the LM about their current partner at utility cost Q > 0.
In response to a query, the LM reports to the traders whether a party has any
“unpaid judgments.” Whatever transpires at this stage becomes common
knowledge among the LM and the two partners.
(b) The two traders play the (Prisoners’ Dilemma) game and learn the out-
come.
(c) Either may appeal to the LM at personal cost C > 0, but only if he has
queried the LM.
(d) If either party makes an appeal, then the LM awards a judgment, J, to the
plaintiff if he has been Honest and his trading partner has Cheated (we call
this a valid appeal); otherwise, no award is made.
(e) If a judgment J is awarded, the defendant may pay it, at personal cost f(J),or
he may refuse to pay, at cost zero.
(f) Any unpaid judgments are recorded by the LM and become part of the LM’s
permanent record.
The players’ utilities for the extended stage game are determined as the sum
of the payments received less those made. For example, a player who queries,
plays Honest, is Cheated, and appeals, receives –Q – β + CJ if the other party
pays the judgment and –Q – β – C if he does not.
The function f: < R+ – < R+ represents the utility cost of paying a given
judgment. We naturally assume that f is increasing and continuous. Thus, the
greater the size of the judgment, the greater the cost to the defendant. We also
assume that f(x) ≥ x: The cost of paying a judgment is never less than the judg-
ment itself. This excludes the possibility that the payment of judgments adds
to the total utility of the players. The desired behavior of the parties in various
contingencies under the Law Merchant system is fully described by the Law
Merchant System Strategy (LMSS) as follows.
At substage (a), a trader queries the Law Merchant if he has no unpaid judg-
ments on record, but not otherwise.
612 Anarchy and the Law

At substage (b), if either player has failed to query the Law Merchant or if
the query establishes that at least one player has an outstanding judgment, then
both traders play Cheat (which we may interpret as a refusal by the honest trader
to trade); otherwise, both play Honest.
At substage (c), if both parties queried at substage (a) and exactly one of
the two players Cheated at substage (b), then the victim appeals to the LM;
otherwise, no appeal is filed.
At substage (d), if a valid appeal was filed, the LM awards damages of J to
the aggrieved party.
At substage (e), the defendant pays the judgment J if and only if he has no
other outstanding judgments.
Theorem 3. The Law Merchant System Strategy is a symmetric sequential
equilibrium strategy of the LM system game if and only if the following in-
equality holds:
(1 – Q)δ/ (1 – δ) > f(J) > max[(α – I), f(C)] (6)
If this condition is satisfied, then the average payoff per period for each player
(at the equilibrium) is 1 – Q.
Remark. The condition in Theorem 3 can be satisfied only if 1 – Q is positive
(because the right-hand-side is at least α – 1 > 0).
Proof. To establish that the LMSS is a symmetric sequential equilibrium strategy,
we again appeal to the Optimality Principle of Dynamic Programming. If we
show that there is no point at which a single change in the trader’s current action
only (followed by later adherence to the LMSS) can raise the trader’s expected
payoff at that point, then there is no point at which some more complicated
deviation can be profitable, either.
In evaluating his expected payoffs, the player must make certain conjectures
about what other players have done in the past in order to forecast what they
will do in the future. To verify the equilibrium, we may assume that the trader
believes that all other traders have played according to the LMSS in all past
plays except those where the trader has actually observed a deviation. We may
also assume that the trader believes that all others will adhere to the LMSS in all
future plays. To derive the conditions under which the LMSS is an equilibrium
strategy, we work backward through a typical extended stage game.
First, we check when it “pays to pay judgments,” that is, under what condi-
tions a player will find it more profitable to pay any judgment rendered against
him than to refuse to pay. (We ignore the sunk portion of the payoff which is
unaffected by later behavior.) Paying the judgment J yields an additional pay-
off of –f(J) in the current period. In future periods, the player will spend Q to
query the LM and earn a trading payoff of 1, for a total of 1 – Q. In terms of
lifetime average payoff, paying the judgment leads to –(1 – δ)f(J) + δ (1 – Q).
If the trader refuses to pay the judgment, then his current period payoff is zero
and, given the system, his payoff is about zero in every subsequent period.
 The Role of Institutions in the Revival of Trade 613

Therefore, it “pays to pay judgments” is and only if –(1– δ)f(J) +δ(1 – Q) > 0,
or equivalently,
f(J) (1 – Q)δ/(1 – δ). (7)
Second, does it pay the victim to appeal to substage (c), incurring personal
cost C? Given the strategies, the trader expects the judgment to be paid. So he
will appeal if and only if J > C. It is convenient to write this condition as:
f(J) > f (c). (8)
If there are no unpaid judgments and the LM has been queried, does it pay
the trader to play Honest? If he does, then his current period payoff will be 1
– Q. If he Cheats, and later adheres to the strategy (which entails paying the
judgment), then his payoff will be –Q + α – f(J). Equilibrium requires that the
former is larger, that is:
f(J) > α – 1. (9)
Does it pay the trader otherwise to play Cheat? With the given strategy, his
future opportunities do not depend on his play in this case, and Cheat always
maximizes the payoffs for the current period, so the answer is that it does pay,
regardless of parameter values.
Does it pay the players to query the LM if neither has an outstanding judg-
ment? If a player does so, his current period payoff is expected to be 1 – Q. If
not, it will be zero. In both cases, his payoffs per periods for subsequent periods
are expected to be 1 – Q. So it pays off only if
Q < 1. (10)
However, condition (10) is redundant in view of conditions (7) and (9).
Does it pay a party with an outstanding judgment to query? No, because the
party’s expected payoff is –Q if he queries and 0 if he does not.
Thus, regardless of the circumstances wrought by past play, there is no situ-
ation in which a one-time deviation from the Law Merchant System Strategy
that is profitable for a trader provided that conditions (7)-(9) hold. These are
the conditions summarized in formula (6).
Corollary. There is a judgment amount J which makes the LMSS a symmetric
sequential equilibrium strategy (that is, satisfying formula (6)) if and only if
(1– Q)δ/(1 – δ) > max[α – 1, f(C)]. (11)
Conditions (7)-(10) show the relationship among various parameters for the
LM system to support the efficient cooperation. Each corresponds to one of the
problems we described in introducing the model. Condition (7) requires that
Cheating and then paying a judgment not be profitable; put simply, the judgment
must be large enough to deter Cheating. Condition (8) requires that judgments
excess the cost of an appeal, that is, the judgment must also be large enough to
encourage the injured party to appeal. Otherwise, information about Cheating
will never reach the LM and Cheating will go unpunished. The two previous
conditions require that the judgment be large enough, but condition (9) requires
that it not be so large that the Cheater would refuse to pay, for then the injured
party would not expect to collect, and so would find it unprofitable to appeal.
Notice that the feasibility of satisfying all these conditions simultaneously
614 Anarchy and the Law

depends on the technology of wealth transfer summarized by f. If the traders

live at great distances from one another and if their principle asset holdings are
illiquid (such as land and fixed capital, or reputation and family connections),
then wealth transfers may be quite costly, (f(J)/J may be large) and the fines
required by the LM system then will not work.
Finally, condition (10) requires that it be worthwhile for the traders to query
the LM. In our model, this condition is implied by the others, but that need not
be true for extension of the model. If traders do not query the LM, then they
will have insufficient information to administer punishments, so once again
Cheating will go unpunished. The LM institution encourages queries by making
them a condition for appealing the LM, and, as we have seen, querying deters
Cheating. At equilibrium, traders who fail to query are constantly cheated by
their trading partners.
If condition (6) fails, then the LMSS is not an equilibrium strategy. How-
ever, the condition is satisfied for a wide range of plausible parameter values.
Table 1 below gives some acceptable values for the parameters. In it, we as-
sume that f(x) = x/(1 – p) where p is the percentage of value that is lost when
assets are transferred. The LMSS is an equilibrium strategy for some J with the
given combinations of parameters and for any other combination with lower
transaction costs (lower p, Q and C), less temptation to cheat (lower α) and
more frequent trade (higher δ). In the table, J = C/(1 – p) = α –1 is the judg-
ment which is just sufficient to provide the incentives for not cheating and for
complaining about being cheated.
For example, in the last line of Table 1, Cheating is seven times more profit-
able than playing Honest at each current round, the cost of querying the LM
consumes one-third of the profits of Honest venturers, the cost of complaining
is three times the profits of the venture, and half of any assets transferred in
settlement of a judgment are lost. The judgment itself is six times what the
Cheater could expect to earn from Honest trade with his next partner (nine
times net of transaction costs). Nevertheless, if the inter-trade discount factor
is at least 0.9, the LM system is in equilibrium and supports honest behavior,
filing valid complaints, and payment of judgments.
4. Minimizing Transaction Costs
Theorem 3 shows that the LM system restores cooperation even when the
players know little about their partners’ histories. There are transaction costs
necessary to maintain this system, however: That the average payoff per period
is 1 – Q reflects the transaction cost of Q per period incurred by each trader to
support the Law Merchant system.
Notice that the costs, C, of making and investigating a claim and cost f(J) – J
of making the transfer do not appear in the expression of the average payoff.
These costs appear in condition (6): The Law Merchant system is not viable if
the cost of making and investigating a claim or the cost of paying a judgment is
too high, for then the traders cannot reasonably expect that the others will make
 The Role of Institutions in the Revival of Trade 615

Table 1
Sample Parameters for Which the Law Merchant
Strategy is a Sequential Equilibrium Strategy
Transaction Costs Tempted to Discount Penalty or
Parameters Cheat Factor Judgement
Q C p a d J
0.50 0.5 50% 2.0 0.67 1.0
0.50 1.0 50% 3.0 0.80 2.0
0.33 3.0 50% 7.0 0.90 6.0

claims and pay judgments when they should. However, once these costs are low
enough that the threat to file claims with the Law Merchant is credible, they
act only as a deterrent: These costs are never actually incurred at equilibrium
in our model of the Law Merchant system.
Is the Law Merchant system the least expensive way to induce Honest
behavior from traditional traders at every stage? Theoretically, any institution
that restores incentives for honest trading by restoring the effectiveness of de-
centralized enforcement must inform a player when his partner has cheated in
the past. If the temptation to Cheat is small and the value of continued trading
is high, then this information need not be perfect, as in our model. So it may be
possible to induce honest behavior using a less costly information system—one
that costs only q < Q to inform a trader adequately well—and correspondingly
to increase the traders’ average payoffs from 1 – Q to 1 – q.6 However, using
imperfect information to economize on information costs calls merely for a
refinement of the Law Merchant system—not for something fundamentally
different. It is not possible to provide correct incentives without incurring some
information cost of this kind and, as we have seen, the LM system avoids the
unnecessary costs of dispute resolution and loss on transfers.
In operation, the Law Merchant system would appear to be a low cost way
to disseminate information, for two reasons. First, the LM system centralizes
the information system so that, for information about any partner, a player
need only go to one place. He need not incur costs trying (i) to establish who
was his current partner’s previous partner, and (ii) to find the partner to make
the relevant inquiry. Second, for the Prisoners’ Dilemma, it is not sufficient to
know only one period’s history, but several.7 The LM system not only central-
izes this information but provides it in a very simple form: all that needs to be
communicated is whether there are any outstanding judgments. For large com-
munities, locating each of one’s partner’s previous partners and asking them for
information is likely to be more expensive than the centralized record-keeping
system of the Law Merchant.
Given the lack of quantitative evidence about the full costs of running dif-
ferent kinds of institutions, it is not possible to write down a convincing formal
model to establish that the LM system minimizes costs in the class of feasible
616 Anarchy and the Law

institutions. What we can say confidently is that the kind of costs incurred by
the LM system are inevitable if Honest trade is to be sustained in the face of
self-interested behavior and that the system seems well designed to keep those
costs as low as possible.
5. Dishonest Law Merchants
Our analysis in section 2 proceeded on the assumption that the Law Merchant
has no independent interest in the outcome of his decision. In addition, he is
diligent, honest, and fair.
One need not look far in history (or, for that matter, in the modem world)
to see that judges are not always so perfect. Within our model, there are many
small amendments that could be made to insert opportunities for bribery and
extortion. Although we do not provide a systematic treatment of these, we shall
give a brief development of one of them to emphasize the simple idea that the
Law Merchant business is itself valuable and that LMs may wish to maintain
their reputation for honesty and diligence in order to keep the business active.
The most obvious problem with this reputation based account is that it seems
to presume that a trader who is extorted by the Law Merchant can somehow
make his injury widely known to the community of traders. It might be that
the Law Merchant is a more sedentary merchant than the long-distance traders
whom he serves, so that idea is perhaps not so far-fetched. Nevertheless, we
shall argue that even if, in the spirit of our earlier analysis, there is no way for
the trader to inform others about his injury, it may still be an equilibrium for the
LM to behave honestly, due to the “client” incentives in the long-term relation-
ship between the LM and each individual trader. More precisely, we will show
that there is an equilibrium of the system in which every trader expects that
if he pays a bribe he will be subjected to repeated attempts at extortion in the
future; this dissuades the trader from paying any bribe. Then, a Law Merchant
who commits to his threat to damage the reputation of a trader succeeds only
in losing business, so he does not profit from making the threat.
To set the context for the formal extension, we modify the Law Merchant
system stage game to regard the Law Merchant as a player. In the original ver-
sion, the LM was allowed no choices, but let us nevertheless suppose that the
LM earned a payoff of 2e > 0 per contract, which is paid for as part of the 2Q
that the parties spend to query the LM.
Next, we create a Modified Law Merchant System game in which our basic
model is altered to allow the LM to solicit bribes. Initially, we consider only
one kind of bribe that extorted from a trader with no unpaid judgments by an
LM who threatens to report falsely that there are unpaid judgments. Thus, we
assume that before the traders make their queries, the LM may demand that one
of the traders who has no unpaid judgment pay a bribe, B > O. The amount B
demanded is chosen by the LM. If the bribe is not paid and the query is made,
the LM is committed to report falsely that the trader has an unpaid judgment.8
 The Role of Institutions in the Revival of Trade 617

The trader next decides whether to pay the bribe. The stage game then continues
as previously described. When a bribe of B is paid, the LM’s payoff is increased
by B and the victim’s payoff is reduced by an equal amount.9
Now consider the following variation of the Law Merchant System Strategy
for the traders. If a player has no unpaid judgments and no bribe is solicited from
him at the current stage, then he plays the LMSS as previously described. If the
player has never before paid a bribe and a bribe is solicited, then he refuses to
pay the bribe and does not query the LM in the current period. If the player has
ever before paid a bribe, then he pays any bribe up to α – Q that is demanded of
him. A player who has paid a bribe at the current round plays Cheat at that round
and refuses to pay any judgment made against him. We call this specification
the Extended Law Merchant System Strategy (ELMSS).
The Law Merchant’s expected behavior is specified by the LM’s Bribe So-
licitation Strategy (BSS). If one of the present traders has no unpaid judgment
but has previously paid a bribe, then the LM demands a payment of α – Q.
Otherwise, the LM does not demand any payment.
Theorem 4. If condition (6) holds and, in addition,
α < 1 + (1 – Q)(2δ – 1)/(1 – δ)
then there is a sequential equilibrium of the Modified Law Merchant System
game in which each trader adopts the strategy ELMSS and the Law Merchant
adopts the strategy BSS.
Proof. Once again, we check that there is no contingency after which a onetime
deviation by any player is profitable, when each player expects that the oth-
ers have adhered to the strategy except where deviations have been explicitly
observed, and each expects that all will adhere to it in the future. As before, we
begin again from the last stage and work forward.
Consider a trader who has paid a bribe and cheated, and been assessed a
judgment of J > 0. He expects a zero future payoff in each future period if he
pays the judgment (because he will be extorted again and again). He expects
the same zero payoff if he does not pay, since he will then have an unpaid judg-
ment on his record. Since –f(J) < 0, he will find it most profitable to refuse to
pay the judgment.
Having paid a bribe B, a trader expects to earn α this period and zero in the
future if he cheats today, or 1 this period and zero in the future in he does not.
Since α > 1, cheating is most profitable.
Given that a player has paid a bribe before, if a bribe B is demanded today,
then the profits from playing the bribe, querying, and cheating are expected to
be α – Q – B; not paying leads to profits of zero. Hence, it is at least as profit-
able to pay the bribe whenever B < α – Q.
If a trader has paid a bribe before, the strategy specifies that he will pay any
bribe up to α – Q in the current period. In this case, according to the strategies,
no trader’s play in future periods will depend on whether the LM demands a bribe
or on the amount of the bribe, so his most profitable play is to demand α – Q.
618 Anarchy and the Law

Suppose a trader has not paid a bribe before and a bribe, B, is demanded
currently. If the trader pays the bribe then, according to the strategy, he will
cheat and refuse to pay the judgment. The resulting payoff is α –B – Q in the
current period and, as a trader with an unpaid judgment, zero in future periods.
If he refuses to pay the bribe, then his expected payoff is zero in the current
period and 1 – Q in subsequent periods. So, it is most profitable for him to
refuse to pay if
(1 – δ) (α – B – Q) + δ · 0 < (1 – δ) · 0 + δ · (1 – Q),
which is equivalent to condition (12).
Finally, when facing a trader who has never before paid a bribe, the LM
expects that any demand for a bribe will be refused and that the trader will
also not query in the current period, leading to a loss of revenues of e, with no
effect on play in future periods. Hence, it is most profitable for the LM not to
demand any bribe in this case.
Theorem 4 pertains to a model in which only one kind of dishonest behavior
by the LM is possible. The problem of discouraging other kinds of dishonest
behavior may require other strategies. From our preliminary analysis, it appears
that the most difficult problem is to deter the LM from soliciting or accepting
bribes from traders who have an unpaid judgment but wish to conceal that fact.
By concealing the judgment, cheating, and refusing to pay the new judgment,
the trader could “earn” α – Q and a portion of that might be offered as a bribe
to the LM. As we add richness to the possibilities for cheating, it is natural to
expect that the necessary institutions and strategies must respond in a corre-
spondingly rich way.
6. Conclusion
We began our analysis by studying an environment in which private infor-
mation about behavior in exchanges is a potential impediment to trade. Under
complete information, even if meetings among particular pairs of traders are
infrequent, informal norms of behavior are theoretically sufficient to police
deviations. But when information is costly, the equilibrium may potentially
break down and informal means may not be sufficient to police deviations.
The Law Merchant enforcement system that we have studied restores the
equilibrium status of Honest behavior. It succeeds even though there is no state
with police power and authority over a wide geographical realm to enforce con-
tracts. Instead, the system works by making the reputation system of enforcement
work better. The institutions we have studied provide people with the information
they need to recognize those who have cheated, and it provides incentives for
those who have been cheated to provide evidence of their injuries. Then, the
reputation system itself provides the incentives for honest behavior and for pay-
ment by those who are found to have violated the code, and it encourages traders
to boycott those who have flouted the system. Neither the reputation mechanism
nor the institutions can be effective by themselves. They are complementary parts
of a total system that works together to enforce honest behavior.
 The Role of Institutions in the Revival of Trade 619

Our account of the Law Merchant system is, of course, incomplete. Once
disputes came to be resolved in a centralized way, the merchants in Western
Europe enhanced and refined their private legal code to serve the needs of
the merchant trade—all prior to the rise of the nation-state. Without this
code and the system for enforcement, trade among virtual strangers would
have been much more cumbersome, or even impossible.10 Remarkably, the
Law Merchant institution appears to have been structured to support trade
in a way that minimizes transaction costs, or at least incurs costs only in
categories that are indispensable to any system that relies on boycotts as
sanctions.
Our model is a stylization, not set in a particular locality at a particular date.
Necessarily, then, it omits many important elements that some historians will
argue are essential to understanding the institutions that are found there and
then. However, our core contention that institutions sometimes arise to make
reputation mechanisms more effective by communicating information seems
almost beyond dispute. The Mishipora, described in the Hebrew Talmud, ac-
cording to which those who failed to keep promises were punished by being
publicly denounced; the use of the “hue and cry” to identify cheaters in medieval
England; the famed “Scarlet Letter,” described in Hawthorne’s famous story;
and the public stocks and pillories of 17th century New England, which were
sometimes used to punish errant local merchants, are all examples of institu-
tions and practices in which a principal aim is to convey information to the
community about who has violated its norms.
It is our contention that an enduring pattern of trade over a wide geographical
area cannot be sustained if it is profitable for merchants to renege on promises or
repudiate agreements. In the larger trading towns and cities of northern Europe
in the 10th through 13th centuries, it was not possible for every merchant to
know the reputations of all others, so extensive trade required the development
of some system like the Law Merchant system to fill in the gap.
Many of the key characteristics of our model correspond to practices found
at the Champagne Fairs. While merchants at the Fairs were not required to
query prior to any contract, the institutions of the Fair provided this informa-
tion in another manner. As noted above, the Fairs closely controlled entry and
exit. A merchant could not enter the Fair without being in good standing with
those who controlled entry, and any merchant caught cheating at the Fair would
be incarcerated and brought to justice under the rules of the Fair. So anyone
a merchant met at the Fair could be presumed to have a “good reputation” in
precisely the sense of our model. It did not indicate that all free merchants had
never cheated in the past; but it did indicate that anyone who had been convicted
of cheating had made good on the judgment against him. Moreover, because
merchants might disappear rather than pay their judgments, judges at the Fairs
had to balance the size of their judgment so that the value of being able to at-
tend future Fairs exceeded the award.
620 Anarchy and the Law

According to Verlinden (1963, p. 132): “At the end of the 12th century and
during the first half of the 13th, the Champagne Fairs were indeed the centre
of international commercial activity of the western world.” This is a long time
for a single fair to maintain such dominance, but the Champagne Fair had two
advantages over its potential competitors. First, it had an effective system for
enforcing exchange contracts. Second, as we observed earlier, there are impor-
tant economies of scope and scale in reputation mechanisms. Other, smaller
fairs that tried to compete with the Champagne Fairs on an equal footing would
have to contend with merchants who participated only long enough to make a
profitable cheating transaction and then return to the Champagne Fairs where
their participation rights were intact.
Despite this observation, it must be counted a weakness of the model that it
does not fully account for trade outside of a single trading center. Even if the
Law Merchant and related systems were effective underpinnings for local trade,
how was information about a trader’s dishonesty in one location transmitted
to another? The model in this paper is too simple to handle this problem, but
we hope to extend our approach to the institutions that developed during the
Middle Ages to protect against the added problems raised by spatial separation.
This includes the merchant gilds in northern Europe, the consulates of the Ital-
ian city-states, and the organization of alien merchants into colonies (like the
Steelyard in medieval London) with local privileges and duties. These institu-
tions can also be understood from the perspective developed in this paper—they
are designed to reinforce reputation mechanisms that alone are insufficient to
support trade.
The Law Merchant system of judges and reputations was eventually replaced
by a system of state enforcement, typically in the late Middle Ages or the early
modern era in Western Europe. Enforcement of the private codes by the state
added a new dimension to enforcement, especially in later periods when na-
tion-states exercised extensive geographic control. Rather than depend for
punishment upon the decentralized behavior of merchants, state enforcement
could seize the property of individuals who resisted paying judgments, or
put them into jail. If judgments could be enforced this way, then, in prin-
ciple, the costs of keeping the merchants well informed about one another’s
past behavior could be saved. To the extent that the costs of running state
adjudication and enforcement were roughly similar to the costs of running
the private system and to the extent that taxes can be efficiently collected, a
comprehensive state-run system would have the advantage that it eliminates
the need for each individual to pay Q each period. As the volume of trade
increased in the late Middle Ages, the cost saving from that source would
have been substantial.11 Thus our approach suggests that the importance of the
role of the state enforcement of contracts was not that it provided a means of
enforcing contracts where one previously did not exist. Rather, it was to reduce
the transaction costs of policing exchange.12
 The Role of Institutions in the Revival of Trade 621

In closing, we return to the broader implications of our work for the study
of institutions. In complete information settings, institutions are frequently un-
necessary because decentralized enforcement is sufficient to police deviations.
However, this conclusion fails in environments where information is incomplete
or costly. In the context of our model, the Adjusted Tit-for-Tat strategy requires
that a trader know his current partner’s previous history. When such informa-
tion is difficult or costly to obtain, decentralized enforcement mechanisms
break down. Institutions like those of the Law Merchant system resolve the
fundamental problems of restoring the information that underpins an effective
reputation system while both economizing on information and overcoming a
whole array of incentive problems that obstruct the gathering and dissemina-
tion of that information.
Notes
1. Either by facilitation coordination (Banks and Calvert, 1989) or by preventing
reneging on agreements (Weingast and Marshall, 1988).
2. Of course, considerable variation existed across locations, especially between
northern and southern Europe. In the latter area, city-states arose, providing law
and protection beyond the immediate area of the city. Further, over time, as the
nature of governments changed, so too did their involvement in the legal enforce-
ment process.
3. This is also the premise of the game-theoretic analysis of Kandori (1989).
4. This matching rule is often called the “Townsend Turnpike,” for Townsend sug-
gested that one way to think of it is as two infinitely long sets of traders moving in
opposite directions.
5. Kandori (1989) has shown that there exist other matching rules for which, despite
the absence of sufficient bilateral trade and each player’s ignorance about what
has happened in trades among other players, there may nevertheless be a cue of
behavior that supports efficient exchange. However, as Kandori argues, the resulting
system is “brittle” and leads to a breakdown of honest trade when there are even
minor disturbances to the system. Both Kandori (1989) and Okuno-Fujiwara and
Postlewaite (1989) consider other institutional solutions to this problem.
6. And, given that our model has a fixed starting state, there is really nothing to be
learned from the initial query, so that could be eliminated with some small cost
savings. However, this is just an artifact of our desire for modeling simplicity and
not an inherent extra cost of the system.
7. Kandori (1989) shows that in the repeated Prisoners’ Dilemma, players must know
at least two periods of history for each partner to sustain an equilibrium with Honest
behavior.
8. If the Law Merchant cannot commit to this action, then it is easy to show that there
is an equilibrium in which the trader ignores the threat and the LM does not carry
it out. It is no doubt true that some threats are disposed of in just this way—the
victim simply calls the LM’s bluff. We are interested in showing that the reputation
mechanism can sometimes function even when the LM’s threat must be taken at
face value.
9. If we assumed that transfers are costly here, as in the case of judgments, then the
victim would become more reluctant to pay and bribery would be less likely to
succeed.
10. Of course, merchants could and did communicate extensively, writing letters,
engaging in trial relations, and checking the credentials of their trading partners.
622 Anarchy and the Law

Where possible, they also relied on family members and client relationships to
provide reliable services. But with geographic specialization in production, these
devices alone could not allow merchants to escape the need to rely on the promises
of individuals with whom they were not well acquainted.
11. Historically, the successful state enforcement came in a series of stages. As sug-
gested above, state enforcement began with the adoption of the legal codes by a
wide range of cities and towns. Some of these evolved over time into large city-
states (e.g., Venice or Genoa) or, later, became part of a larger nation-state (e.g.,
London). For a discussion of the evolution of legal codes underpinning merchant
trade, see North (1989).
12. As we emphasized in section 4, however, a full evaluation of state enforcement
must also assess the potential for corruption in the enforcement mechanisms of
state enforcement.
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cal Science Review 80, 1095-1111.
Banks, Jeffrey and Randall Calvert, 1989, “Equilibria in Coordination,” Garnes, MS,
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bridge University Press, Cambridge.
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Empires,” in James Tracey (ed.), The Economics of the Rise of Merchant Empires,
Vol. 2.
 The Role of Institutions in the Revival of Trade 623

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Quarterly Journal of Economics 98(4), 659-679.
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Discipline Device,” American Economic Review 74(3), 433-444.
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Press, Chicago.
Townsend, Robert M., 1981, “Models of Money with Spatially Separated Agents,” in
J. H. Kareken and Neil Wallace (eds.), Models of Monetary Economies, Federal
Reserve Bank, Minneapolis.
Trakman, L, 1983. The Law Merchant, Littleton, Rothman and Co.
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gress: or Why Legislatures, like Firms, are not Organized as Markets,” Journal of
Political Economy 96, 132-163.
 38
Legal Evolution in Primitive Societies
Bruce Benson
The anthropological literature on primitive legal systems has attracted consid-
erable attention from economists in recent years. These systems are of interest
because they apparently represent examples of law and order without a state
government (Posner 1980, 1981). Economic theory explains human behavior
by considering how individuals react to incentives and constraints in various
institutional settings, and the following examination will emphasize institutions
and incentives which influence legal evolution. Such an economic perspective
has been applied to primitive legal systems by Demsetz (1967) who explained
the incentives to establish property rights and applied his analysis with examples
from American Indian history. Johnsen (1986) explored the consequences of
such incentives for the formation and protection of property rights among the
Kwakiutl Indians. Similarly, Baden et al. (1981) examined the resource man-
agement incentives of various American Indian tribes. The presentation below
extends these studies by emphasizing the process and institutions of legal change
(property right formation and change) in order to focus on an argument recently
resurrected by Posner (1980, 1981). Posner clearly demonstrated that examina-
tion of primitive legal systems from the perspective provided by the economic
approach reveals that formal institutions of government are not needed in order
to have a system of effective law and law enforcement. However, he emphasized
the “customary” character of primitive law and described it as a “complex, slowly
changing system of exact rules” (1981, p. 178). Indeed, Posner maintained that
primitive law had no means of changing rules quickly.
Posner is not, by any means, the only legal scholar to express the opinion
that primitive law lacked a method of rapid legal change. In fact, this opinion
is frequently traced to Sir Henry Maine (1864). Maine wrote that “the rigidity
of primitive law…has chained down the mass of the human race to those views
of life and conduct which they entertained at the time when their usages were
first consolidated into a systematic form” (1864, p. 74). Yet, anthropologist E.
A. Hoebel proposed that, “If ever Sir Henry Maine fixed an erroneous notion
on modern legal historians, it was the idea that primitive law, once formulated,
is stiff and ritualistic” (1954, p. 283). Similarly, Popisil (1971, pp. 194 and 206)
argued that those who view primitive law as static have simply “assumed” that
tribal laws have existed forever. He suggested that most anthropologists have
just not been interested in studying legal change, but when they do the process
of change is easy to detect.

624
 Legal Evolution in Primitive Societies 625

The presentation which follows will provide a theoretical description of the

process of legal evolution in the absence of government legislation by pulling
together the insights of economists (e.g., Smith, Hayek) and legal theorists
(e.g., Fuller). The implications of the theory will then be illustrated with a brief
description of examples of legal change among the Kapauka Papuans of West
New Guinea, who were extensively observed by Popisil (1971).
1. Evolution of Customary Law
Malinowski (1926) defined law from an anthropologist’s perspective as
“the rules which curb human inclinations, passions or instinctive drives; rules
which protect the rights of one citizen against the concupiscence, cupidity or
malice of the other.” This definition suggests that a society in which customs
and social mores are widely accepted and obeyed has a legal system even with
no state government, written constitution or codes. “Morality” and law would
appear to be synonymous. Legal theorist Lon Fuller, however, differentiated
between these concepts:
Morality, too, is concerned with controlling human conduct by rules…how, when
we are confronted with a system of rules, [do] we decide whether the system as a
whole shall be called a system of law or a system of morality. The only answer to that
question ventured here is that contained in the word “enterprise” when I have asserted
that law, viewed as a direction of purposive human effort, consists in the “enterprise
of subjecting human conduct to the governance of rules.” (Fuller 1964, p. 130)
Thus, Fuller’s definition of law includes more than simply the existence of
“social mores” defining rules of behavior. There must be an “enterprise,” and
it is “precisely because law is a purposeful enterprise that it displays structural
constancies…” (Fuller 1964, p. 151) The enterprise of law generates the mecha-
nisms of enforcement, dispute resolution, and change.1
In the absence of the coercive power of government, customary law must
take its “authority” from another source. In this regard, Hayek explained that
law can be articulated through dispute resolution by arbitrators who have no
state backed coercive authority. In such cases:
The questions which they will have to decide will not be whether the parties have
abused anybody’s will, but whether their actions have conformed to expectations
which other parties had reasonably formed because they correspond to the practices
on which the everyday conduct of the members of the group was based. The sig-
nificance of customs here is that they give rise to expectations that guide people’s
actions, and what will be regarded as binding will therefore be those practices that
everybody counts on being observed and which thereby condition the success of
most activities. (Hayek 1973, pp. 96-97)
This view of “authority” also characterizes Fuller’s concept of law since he
wrote “there is no doubt that a legal system derives its ultimate support from a
sense of its being ‘right’…this sense, deriving as it does from tacit expectations
and acceptances…” (1964, p. 138)
626 Anarchy and the Law

Primitive cultures generally had clearly determined systems of private prop-

erty (e.g., see Goldschmidt 1951; Popisil 1971; Benson 1990). The emphasis
on private property may seem surprising to some who think of tribal society as
some sort of socialist or communal system. On the contrary, however, private
property rights are a common characteristics of primitive societies—they con-
stitute the most important primary rules of conduct.2 After all, the authority of
customary law arose through voluntary recognition, and enforcement involved
voluntary reciprocal arrangements for adjudication and ostracism sanctions
(e.g., see Goldschmidt 1951; Popisil 1971; Barton 1967; Hoebel 1954; Popisil
1971; Benson 1990). Voluntary recognition of laws and participation in their
enforcement is likely to arise only when substantial benefits from doing so can
be internalized by each individual. That is, individuals require incentives to
become involved in the legal process. Incentives can involve rewards (personal
benefits) or punishment. Punishment is frequently the threat which induces
recognition of law established by a coercive government, but when there is no
government, incentives are largely positive. Individuals must expect to gain as
much or more than the costs they bear from voluntary involvement in the legal
system. Protection of their personal property and individual rights was appar-
ently a sufficiently attractive benefit to induce voluntary participation among
primitive societies.
Laws and procedures for adjudication and enforcement among primitive
groups have been well documented, but actual examples of changes in such law
aren’t nearly so well documented. Popisil explained that, “Since many societies
have been studied for a relatively brief period (one or two consecutive years),
and since many investigators have been heavily influenced by the early socio-
logical dogma that divorces the individual from the ‘social process,’ it follows
that there are very few accounts of volitional innovations [in primitive law]”
(1971, p. 215). However, existence of rules of adjudication, in turn, implies
rules of change, since adjudication of a dispute often leads to articulation of a
new law, or at least clarification of existing unwritten law in the context of an
unanticipated circumstance. As Fuller explained:
Even in the absence of any formalized doctrine of state decisis or res judicata, an
adjudicative determination will normally enter in some degree into litigants’ future
relations and into the future relations of other parties who see themselves as possible
litigants before the same tribunal. Even if there is no statement by the tribunal of the
reasons for its decision, some reason will be perceived or guessed at, and the parties
will tend to govern their conduct accordingly. (Fuller 1981, p. 90)
Arbitrators or mediators in primitive societies were likely to, on occasion, make
new rules just as today’s judges set precedents that become part of the law.
There is, in fact, a more fundamental reason to expect that the laws of primi-
tive groups could and did change. After all, those laws were not imposed on
these societies by some sovereign. They developed or evolved internally and
were accepted voluntarily. Clearly most primitive societies consisted of very
 Legal Evolution in Primitive Societies 627

homogeneous groups by the time their laws and legal procedures had advanced
to the level observed by anthropologists, but this homogeneity had to develop in
conjunction with an evolving process of interaction and reciprocity facilitated
by customary law. Law had to come from some place. Carl Menger (1963)
proposed that the origin, formation and the ultimate process of all social insti-
tutions including law is essentially the same as the spontaneous order Adam
Smith (1776) described for markets. Social institutions coordinate interactions.
Markets do this and so does law, as Fuller (1981, p. 213) stressed. Indeed, he
described customary law as a “language of interaction.” Social institutions such
as customary law develop the way they do because, perhaps through a process
of trial and error, it is found that the actions they are intended to coordinate are
performed more effectively under one system or process than under another.
The more effective institutional arrangement replaces the less effective.
Under customary law, traditions and habits evolve to produce the observed
“spontaneous order,” to use Hayek’s term. As Hayek (1967, p. 101) explained,
however, while Smith’s and Menger’s insights regarding the evolution of social
order “appear to firmly establish themselves [in several of the social sciences]
another branch of knowledge of much greater influence, jurisprudence, is still
almost wholly unaffected by it.” In particular, the legal positivist view holds that
law is the product of deliberate design rather than an evolutionary undersigned
outcome of a process of spontaneous growth.
In the case of primitive societies, the earliest kinship groups probably proved
to be an effective social arrangement for internalizing reciprocal benefits from
legal, religious and external protection arrangements relative to previously
existing arrangements. Others saw those benefits and either joined existing
groups or copied their successful characteristics and formed new groups. In the
process the arrangements may have been improved upon, becoming more formal
(contractual) and effective. It is perfectly conceivable that neither members of
the earliest groups nor those which followed even understood what particular
aspect of the contract actually facilitated interactions that led to an improved
social order—they may have viewed a religious function to be their main pur-
pose and paid little attention to the consequence of their legal functions, for
instance. At any rate, customary law and society develop coterminously. Those
customs and legal institutions that survived were relatively efficient because the
evolutionary process is one of “natural selection” where laws or procedures that
serve social interaction relatively poorly are ultimately replaced by improved
laws and procedures.
Many legal scholars and economists have described the growth of judge-made
common law in much the same way (Landes and Posner 1979; Leoni 1961;
Rubin 1977, 1980, 1982; Priest 1977; Hayek 1973). Indeed, the replacement
of relatively poor rules with relatively superior ones is the characteristic of
common law that such theorists have found to be desirable. They attribute this
characteristic, in large part, to the fact that common law is judge-made law. But
628 Anarchy and the Law

common law, assuming away legislative interference by non-judges (e.g., kings,

legislators, bureaucratic administrators) and outright authoritarian legislation
discretionarily imposed by judges themselves, would grow and develop in a
fashion similar to the way customary law grows and develops. In particular,
it would grow as a consequence of the mutual consent of the parties affected.
Suppose, for example, that a dispute arises between two members of a primitive
kinship group. The parties agree to call upon a recognized arbitrator (e.g., see
Goldsmidt 1951; Popisil 1971) or mediator (e.g. see Barton 1967; Hoebel 1954)
to help lead them to a solution and avoid a violent confrontation (Benson 1990).
The solution only affects those parties in the dispute, but if it turns out to be
an effective one and the same type of conflict arises for these parties or others
within their kinship group, it will be voluntarily adopted by others. In this way
it becomes part of customary law and the customary law grows. In effect, the
private arbitrator/mediator has no authority over anyone beyond what individuals
voluntarily give them by requesting a particular decision and adopting it after
it is made. The decision carries no weight for others unless it is a good one in
the sense that it facilitates interaction, and it is likely to be perceived as useful
only if it fits well within previously accepted customary law.3
This process of growth may be one reason for widespread belief that primitive
law was largely stagnant. Since many anthropological studies have involved
only one or two years of observation, the evolving rules of customary law may
have been difficult to recognize. (Of course, when a new rule proved especially
beneficial it could be adopted very quickly,4 but since most primitive societies
were quite stable, the likelihood of observing rapid legal changes was probably
quite small.) Contrast this with the way that government made law grows, for
instance. Legislation imposed by a coercive authority (king, legislature, bureau-
cracy, supreme court) can make major alterations in law, rather than extensions
which fit well within existing expectations, because the coercive authority does
not require the voluntary consent of all parties affected. It becomes enforceable
law for everyone in the society whether it is a useful law or not, and it takes effect
immediately.5 Thus, legal change as perceived in modem nation-states is very
different than legal change under customary law. It is obviously much easier to
observe, and beyond that, when researchers’ expectations are conditioned on the
rapid application of legal change arising from the modern legislative process,
it is not surprising that they might fail to observe the relatively gradual spread
of new law as it becomes applicable in evolving customary law.6
In order to illustrate the basic process of legal change in customary primi-
tive law, let us briefly consider two examples from Popisil’s (1974) detailed
study of the Kapauka Papuans, in which he explicitly discussed the process of
legal change.
2. Evolutionary Law: The Kapauku Papuans of West New Guinea
The Kapauku Papuans were a primitive linguistic group of about 45,000
individuals living by means of horticulture in the western part of the central
 Legal Evolution in Primitive Societies 629

highlands of West New Guinea well past the middle of this century. Certain
basic characteristics of the society require mention before the process of legal
change can be discussed. The Kapauku’s reciprocal arrangements for support
and protection were based on kinship. However, members of two or more
patrilineages typically joined together for defensive and legal purposes, even
though they often belonged to different sibs. These “confederations” often
encompassed from three to nine villages with each village consisting of about
fifteen households.
The Kapauku had no formal government with coercive power. Most ob-
servers have concluded that there was a virtual lack of leadership among these
people. One Dutch administrator noted, however, that “there is a man who
seems to have some influence upon the others. He is referred to by the name
tonowi which means ‘the rich one.’ Nevertheless, I would hesitate to call him
a chief or a leader at all; primus interpares (the first among equals) would be a
more proper designation for him” (quoted in Popisil (1971, p. 65). In order to
understand the role and prestige of the tonowi one must recognize two “basic
values” of the Kapauku: an emphasis upon 1) individualism, and 2) physical
freedom (Popisil 1971, p. 65). The emphasis on individualism manifested itself
in several ways. For instance, a detailed system of private property rights was
evident. In fact, there was absolutely no common ownership. “A house, boat,
bow and arrows, field, crops, patches of second-growth forest, or even a meal
shared by a family or household is always owned by one person. Individual
ownership…is so extensive in the Kamu Valley that we find the virgin forests
divided into tracts which belong to single individuals. Relatives, husbands
and wives do not own anything in common. Even an eleven-year-old boy can
own his field and his money and play the role of debtor and creditor as well”
(Popisil 1971, p. 66).
The paramount role of individual rights also was evident in the position of
the tonowi as a person who had earned the admiration and respect of others in
the society. He was typically “a healthy man in the prime of life” who had ac-
cumulated a good deal of wealth (Popsil 1971, p. 67). The wealth accumulated
by an individual in Kapauku society almost always depended on that individual’s
work effort and skill, so anyone who had acquired sufficient property to reach
the status of tonowi was generally a mature, skilled individual with considerable
physical ability and intellectual experience. However, not all tonowi (wealthy
men) achieved respect that would induce others to rely upon them for leadership.
“The way in which capital is acquired and how it is used makes a great differ-
ence; the natives favor rich candidates who are generous and honest. These two
attributes are greatly valued by the culture” (Popisil 1971, p. 67).7 Generosity
was a major criterion for acceptance of a particular tonowi in a leadership role
because, in large part, followers were obtained through contract.
Each individual in the society could choose to align himself with any avail-
able tonowi and then contract with that chosen tonowi. Typically followers
630 Anarchy and the Law

would become debtors to a maagodo tonowi (a “really rich man”) who was
considered to be generous and honest. In exchange for the loan the individual
agreed to perform certain duties in support of the tonowi. The followers got
much more than a loan, however:

It is good for a Kapauku to have a close relative as headman because he can then
depend upon his help in economic, political, and legal matters. The expectation of
future favors and advantages is probably the most potent motivation for most of
the headman’s followers. Strangers who know about the generosity of a headman
try to please him, and people from his own political unit attend to his desires. Even
individuals from neighboring confederations may yield to the wishes of a tonowi in
case his help may be needed in the future. (Popisil 1971, pp. 68-69)
Tonowi authority was given, not taken. This leadership reflected, to a great
extent, an ability to “persuade the unit to support a man in a dispute or to fight
for his cause” (Popisil 1971, pp. 69-70). Thus, the tonowi position of “author-
ity” was not, in any way, a position of absolute sovereignty. It was achieved
through reciprocal exchange of support between a tonowi and his followers,
support that could be freely withdrawn by either party (e.g., upon payment of
debt, or demand for repayment).8
What happened if a tonowi proved to be ineffective or dishonest in his
leadership role? First of all, honesty and generosity were prerequisites for a
tonowi to gather a following. However, if someone managed to do so and then
proceeded to be a bad “leader” he simply lost his following. In legal matters,
for instance, “Passive resistance and refusal of the followers to support him
is…the result of a decision [considered unjust]” (Popisil 1971, p. 94). Clearly,
change in the legal authority was possible; indeed; one purpose of Kapauku
legal procedure discussed below, which involved articulation of relevant laws
by the tonowi, was to achieve public acceptance of his ruling. As Fuller noted,
one source of “the affinity between legality and justice consisted simply in
the fact that a rule articulated and made known permits the public to judge its
fairness” (1964, p. 159).
The informal and contractual characteristics of Kapuku leadership led many
western observers to conclude that Kapauku society lacked law, but clear evi-
dence of recognized rules of obligation, as well as procedures for enforcement,
adjudication, and change can be demonstrated within the Kapauku’s legal
system. A “mental codification of abstract rules” existed for the Kapauku Pap-
uans, so that legal decisions were part of a “going order” (Popisil 1971, p. 80).
Recognition of law was based on kinship and contractual reciprocities motivated
by individual rights and private property. Grammatical phrases and/or refer-
ences to specific customs, precedents or rules were present in all adjudication
decisions Popisil observed during his several years of studying the Kapauku. He
concluded that, “not only does a legal decision solve a specific case, but it also
formulates an ideal—a solution intended to be utilized in a similar situation in
the future. The ideal component binds all other members of the group who did
 Legal Evolution in Primitive Societies 631

not participate in the case under consideration. The authority himself turns to
his previous decisions for consistency” (Popisil 1971, p. 80). The authority of
the law is obvious in this statement, as is the drive for legal uniformity. Legal
decisions had the status of modern legal precedents.

Adjudication Procedures and Sanctions

The Kapauku “process of law” appears to have been highly standardized
almost to the point of ritual (but standardized, ritualistic procedure does not
imply static, unchanging law, as explained below). It typically started with a loud
quarrel where the plaintiff accused the defendant of committing some harmful
act while the defendant responded with denials or justification. The quarrel
involved loud shouting for the purpose of attracting other people, including
one or more tonowi. The close relatives and friends of those involved in the
dispute would take sides, presenting opinions and testimony in loud emotional
speeches. The tonowi generally simply listened until the exchange of opinion
approached the point of violence, whereupon he stepped in and began his argu-
ment. If he waited too long an outbreak of “stick fighting” or even feuds could
occur, but this was rare. Popisil (1971, p. 36) observed 176 dispute resolutions
involving “difficult cases”; only five led to stick fights and one resulted in a
feud. The tonowi began his presentation by “admonishing” the disputants to
have patience and then proceeded to question various witnesses. He would
search the scene of the offense and/or the defendant’s house for evidence if it
was appropriate. “Having secured the evidence and made up his mind about
the factual background of the dispute, the authority starts the activity called by
natives boko duwai, the process of making a decision and inducing the parties
to the dispute to follow it” (Popisil 1971, p. 36). The tonowi would make a long
speech, summing up the evidence, appealing to the relevant rules and precedents,
and suggesting what should be done to end the dispute.9
When judged to be guilty a Kapauku was punished. The specific sanction
for a case was suggested by the tonowi if the dispute required his intervention,
and if the dispute was settled it meant the guilty offender agreed to accept that
sanction. Sanctions in this society varied considerably depending on the offense.
They included economic restitution and various forms of physical punishment.
Despite the use of a wide array of sanctions, however, the Kapauku’s para-
mount concern for individual freedom precluded certain types of widely used
punishments in western societies. There was no such thing as imprisonment,
for instance, and neither torture nor physical maiming were permitted (both
have been common in western nation-states, of course—see Benson [1990,
chapter 11]). Moreover, capital punishment was not the normal sanction for
even violent crimes: “Economic sanctions are by far the most preferred ones
among the Kapauku” (Popisil 1971, p. 93). Restitution was the most important
sanction among the Kapauku, as in fact it was in primitive societies in general
(e.g., Benson 1990; Barton 1967; Goldsmidt 1951; Hoebel 1954, 1967).
632 Anarchy and the Law

The Kapauku did resort to physical punishment at times, nonetheless. In

fact, defendants often had a choice between an economic sanction or a physical
sanction, frequently choosing the latter. Nonetheless, an offense was occasion-
ally considered too severe to warrant economic payment. “A heinous criminal
or a captured enemy would be killed but never tortured or deprived of liberty”
(Popisil 1971, p. 65). In keeping with the emphasis on individual freedom, for
instance, the killing generally took place through an ambush with bow and ar-
row: “A culprit…would always have the chance to run or fight back” (Popisil
1973, p. 65).10
A third type of sanction was also applied by the Kapauku—psychologi-
cal sanctions. “The most dreaded and feared of the psychological and social
sanctions of the Kapauku is the public reprimand… The Kapauku regard this
psychological punishment as the most effective of their entire inventory of
sanctions” (Popisil 1971, p. 93).11 Furthermore, punishment by sorcery or
through the shaman’s helping spirits was also employed when the offender
was strong enough to resist a tonowi’s decisions. “Disease and death are the
ultimate [psychosomatic] effect of this ‘supernatural’ punishment” (Popisil
1971, p. 94).
This suggests one solution to the problem that might arise when a defen-
dant refused to submit to the sanction proposed by a tonowi, an infrequent
but possible outcome of the Kapauku legal process (and, of course, a possible
outcome of any legal system—resisting arrest, refusal to cooperate during a
trial, attempted prison breaks, etc. are common today). As Fuller (1964, pp.
143-144) explained, one form of punishment in primitive societies has often
been “an exercise of magical powers on the offender to purge to community of
uncleanliness. A similar purging was accomplished through the generous use
of ostracism.” In fact then, the use of magic was simply one form of ostracism,
and another, the most important in primitive societies, was ostracism by all
members of a confederation.12
Legal Change
Popisil documented two ways that Kapauku law could change. First, very
simply, as custom changed, new law could become articulated through the
dispute resolution process. One example of such an occurrence had to do with
the Kapauku adultery laws. It was customary up until a few years prior to
1954 that an adulterous woman would be executed by her husband. However,
men, and particularly relatively poor men, came to realize that such a sanction
was too costly because of the high price paid for a wife. As a result, some
individuals wished to change the punishment to beating or perhaps wound-
ing the adulteress. Punishment had to be approved through the formal dispute
resolution process and when the less harsh (more economical) punishment
was proposed by relatively poor men it was initially resisted by rich Kapauku.
However, the new customary sanction was upheld by tonowi in four adultery
 Legal Evolution in Primitive Societies 633

cases observed by Popisil during the 1954-55 period. Thus, the new sanctions
became part of customary law (Popisil 1971, p. 205). In a similar fashion, of
course, a law which at one time is applied can loose its popular support and
effectively be abolished.
A second procedure for legal change was also observed among the Kapauku.
A change in one lineage’s laws of incest resulted from “successful legislation”
by a sublineage tonowi: “He succeeded in changing an old rule of sib exogamy
into a new law that permitted intrasib marriages as close as between second
cousins” (Popisil 1971, p. 110). This legislation was not authoritarian in the
sense that its passage forced compliance by others, of course. Rather, its accep-
tance spread through voluntary recognition. First it was adopted by the tonowi,
then by more and more young men in his sublineage, and ultimately by tonowi
of other sublineages within the same lineage. The head of the confederacy, a
member of that lineage, also ultimately accepted the new law, but other lineages
in the same confederacy did not. Thus, incest laws varied across lineages within
the same confederacy.13 The characteristic that distinguishes this legal change
from the previous one is that it was an intentional legal innovation initiated by
a leader rather than developing as a result of dispute resolution. Its adoption
was still voluntary, however. Popisil obtained descriptions of the legal change
that was initiated in 1935, and observed its subsequent and considerable effects
on Kapauku society over a nine-year period from 1954 to 1963.
Awiitigaaj, a sublineage tonowi, wished to marry his third paternal parallel
cousin who belonged to his own sib. Kapauku law was quite explicit regarding
incest, holding that “to marry one’s sibmate is tabooed.” Nonetheless, Awiitigaaj
broke taboo and eloped with the girl. Relatives pursued the couple and the girl’s
father, Ugataga, also a tonowi, proposed that both be executed in accordance
with Kapauku law. Awiitigaaj intended to purposefully challenge the law. Thus,
he hid in the forest expecting that family members and the girl’s father would
soon tire of the search, and that the father might, once his temper cooled, be
willing to forgo the physical punishment in exchange for a high bride price.
After all, the personal disadvantages of killing his daughter and forfeiting a
bride price made it likely that Ugataga would show great anger in public and
make numerous expeditions into the forest, but eventually he would accept the
inevitable, after preserving the public’s opinion of his morality, and seek an
unusually large bride price.
The role of “public opinion” was important to the outcome. The ultimate
outcome had to be generally acceptable. Thus, the family members put up a
pretense of searching until the tonowi of the two noninvolved confederacy
lineages called for a peace settlement Then, at the suggestion of Awiitigaaj’s
maternal relatives who acted as go-betweens, Ugataga very reluctantly gave
in to “the public pressure” and asked Awiitigaaj’s paternal relatives for a bride
price. This action constituted an implicit recognition of this particular incestu-
ous marriage as legal. However, Awiitigaaj could not afford to be regarded as
634 Anarchy and the Law

a lawbreaker, so he promulgated a new law, making it permissible to marry

within the same sib, lineage, and even sublineage, as long as the couples were
at least second cousins.
This new law was actually a fairly easy one to establish and understand, since
similar legal precedent applied to nonsib marriage. Kapauku law prohibited
marriage between first cousins even when they belonged to different sibs, so
this new “legislation” simply made the same rule apply within a sib. Over the
course of the next twenty years Awiitigaaj married three second paternal parallel
cousins and eighteen other marriages in his sublineage involved what would
have previously been incestuous unions. Furthermore, one such marriage took
place in another sublineage within the confederacy. Ultimately the new law was
accepted in three of the confederacy’s sublineages.
These changes in the law of incest had a substantial impact on the Kapauku
lifestyle beyond marriage relationships. As intrasib marriages became more
prevalent, Awiitigaaj’s village was divided into two halves, consisting of those
who were related as first cousins or closer. Marriage then could only occur
“across the line” which divided the village. Prior to this the village was
simply a loose, irregular cluster of houses. As the incest boundary devel-
oped, the village began to take on a lineal form with houses in single lines
divided by the boundary. Dutch pacification of the area in 1956 occurred
before the lineal pattern was completely adopted, however. Other changes
in Kapauku society due to this legal change also were on the horizon at
the time of pacification. The status of women, for instance, was being
elevated due to more intravillage marriages. Prior to this, all marriages
involved women from other villages who would, after the marriage, have no
immediate support from local relatives. As intravillage marriages became
prevalent, local support for women’s legal rights developed. Such develop-
ments were not intended consequences of the new law of incest, of course,
but rather, an example of the evolutionary nature of customary law. Law and
its impacts were constantly evolving among the Kapauku just as culture itself
was evolving and changing. The same is true of primitive systems in general
(Popisil 1971, p. 348).
Conclusions
One might argue that the evolutionary process of the customary law of primi-
tive society has no relevance today, since the simple procedures described above
could never be effective in a more complex society. Even if this argument is
true, however, there are some very significant reasons to study primitive systems
of governmentless law and order. As Lon Fuller explained, for instance, “if we
look closely among the varying social contexts presented by our own society we
shall find analogs of almost every phenomenon thought to characterize primitive
law” (1981, p. 243). An understanding of these relatively simple systems may
lead us to a clearer understanding of our own.
 Legal Evolution in Primitive Societies 635

Furthermore, by studying the incentives and institutions of primitive law,

including the process of legal evolution, it becomes evident that precisely the
same kinds of governmentless legal systems have existed in considerably more
“advanced,” complex societies, ranging from Medieval Iceland (Friedman 1979),
Ireland (Peden 1977; Rothbard 1973) and Anglo-Saxon England (Benson 1990
and references cited therein) to the development of the Medieval Law Merchant
and its evolution into modern international commercial law (Benson 1989,
1990; Trackman 1983; and references cited in each) and even to the western
frontier of the United States during the 1800s (Anderson and Hill 1979; Um-
beck 1981; Benson 1986, 1990). The fact is that much of the law that guides
today’s modern complex American society actually evolved from or is simply
a reflection of precisely the same customary law sources as those underlying
primitive legal systems.
Notes
1. Fuller’s concept of law corresponds more closely to the view of law from the
anthropology literature proposed by Redfield, for example, than to Malinowski.
Redfield defined law as “a system of principles and of restraints of action with
accompanying paraphernalia of enforcement” (1967, p. 3). The “paraphernalia”
Redford referred to clearly constitutes the “structural constancies” that are the
manifestations of Fuller’s legal enterprise.
2. Hayek explained that it is an “erroneous idea that property had at some late stage
been ‘invented’ and that before these had existed an early state of primitive com-
munism. This myth has been completely refuted by anthropological research.
There can be no question now that the recognition of property preceded the rise of
even the most primitive cultures, and that certainly all that we call civilization has
grown up on the basis of that spontaneous order of actions which is made possible
by the delimination of protected domains of individuals and groups. Although the
socialist thinking of our time has succeeded in bringing this insight under suspicion
of being ideologically inspired, it is well demonstrated a scientific truth as any we
have attainted in this field” (1973, p. 108).
3. Fuller explained the procedure of such changes in customary law, as follows, noting
that change like this is quite common, and can occur quite quickly:
“Where by his actions toward B, A has (whatever his actual intentions may have
been) given B reasonably to understand that he (A) wil1in the future in similar
situations act in a similar manner, and B has, in some substantial way, prudently
adjusted his affairs to the expectation that A will act in accordance with this expec-
tation, then A is bound to follow the pattern set by his past actions toward B. This
creates an obligation by A to B. If the pattern of interaction followed by A and B
then spreads through the relevant community, a rule of general customary law has
been created. This rule will normally become part of a larger system, which will
involve a complex network of reciprocal expectations. Absorption of the new rule
into the larger system will, of course, be facilitated by the fact that the interactions
that gave rise to it took place within limits set by the system and derived a part of
their meaning for the parties from the wider interactional context within which it
occurred.
Where customary law does in fact spread we must not be mislead as to the pro-
cess by which this extension takes place. It has sometimes been thought of as if it
involved a kind of inarticulate expression of group will; the members of group B
636 Anarchy and the Law

perceive that the rules governing group A would furnish an apt law for them; they
therefore take over those rules by an act of tacit collective adoption. This kind of
explanation abstracts from the interactional process underlying customary law
and ignores their ever-present communicative aspect… Generally we may say that
where A and B have become familiar with a practice obtaining between C and D,
A is likely to adopt this pattern in his actions toward B, not simply or necessarily
because it has any special aptness for their situations, but because he knows B will
understand the meaning of his behavior and will know how to react to it” (Fuller
1981, pp. 227-228).
4. As Fuller explained, the view that customary law changes very slowly is “too
simple a view of the matter…in part because of mistaken implications read into
the word customary, and in part because it is true that normally it takes some time
for reciprocal interactional expectations to “jell.” But these are circumstances in
which customary law (or a phenomenon for which we have no other name) can
develop almost overnight” (1981, p. 229). See Benson (1989), for example, where
the rapid evolution of customary commercial law during the medieval period is
discussed.
5. The same is true of judge-made common law precedent. These precedents are
backed by the coercive power of the state, and therefore, they take on the same
authority as statute law whether they are good laws or not.
6. The fact that customary law changes relatively slowly as compared to state-made
law is not an indication of relative inefficiency of customary law, by the way. In
fact, precisely the opposite applies. When authoritarian legislation makes a major
change in property rights assignments that affect many parties, negative externali-
ties are generated. Leoni (1961, p. 17) explained it well when he noted:
“Legislation may have and actually has in many cases today a negative effect on
the very efficacy of the rules and on the homogeneity of the feelings and convic-
tions already prevailing in a given society. For legislation may also deliberately or
accidentally disrupt homogeneity by destroying established rules and by nullifying
existing conventions and agreements that have hitherto been voluntarily accepted
and kept. Even more disruptive is the fact that the very possibility of nullifying
agreements and conventions through supervening legislation tends in the long run
to induce people to fail to rely on any existing conventions or to keep any accepted
agreements. On the other hand, the continual change of rules brought about by
inflated legislation prevents it from replacing successful and enduringly the set of
nonlegslative rules (usages, conventions, agreements) that happen to be destroyed
in the process.”
“Inflated legislation” tends to destroy the respect for law in general, besides creat-
ing considerable uncertainty about the permanence of property rights. When negative
externalities arise in the process of production of some good or service, too much
of the good or service is being produced. This is true of legislation as well.
7. Other criteria were important as well, including the ability and willingness to speak
in public (Popsil 1971, p. 67).
8. One group of a tonowi’s followers was especially faithful and dependable, as well
as always being available when a need for support arose. They were called ani
jokaani or “my boys,” and consisted of a group of young men who were “adopted”
by the tonowi and became his “students.” They come to live with the rich man to
learn especially how he transacted business, to secure his protection, to share his
food, and, finally, to be granted a substantial loan for buying a wife. In return they
offer their labor in the fields and around the house, their support in legal and other
disputes, and their lives in case of war. The boys may be from different sibs and
 Legal Evolution in Primitive Societies 637

confederacies, or they may be relatives: “However, this contractual association is

quite loose. Both parties are free to terminate it at any time and the boy is never
treated as an inferior by the rich man” (Popisil 1971, p. 69).
9. Rules of adjudication among the Kapauku were much more detailed than sug-
gested in this brief discussion. For instance, there were clearly specified, detailed
jurisdictional delineations (Popisil 1971, p. 111; Benson 1990).
10. Interestingly, in many of these cases “the punishment was carried out by a close
patrilineal relative of the culprit… Employment of patrilineal relatives to partici-
pate in the killing was a clever cultural device to prevent internal strain and feuds”
(Popisil 1971, p. 92). Another form of physical sanction was beating the head and
shoulders of the offender with a stick. Again the individual was not constrained
so he could fight back, but in each instance observed by Popisil they submitted
without raising a defense. Individual defendants apparently chose to submit to the
beating rather than make a payment to the victim.
11. Other psychological sanctions were also employed. A private warning given by a
tonowi for a minor violation of a taboo or for lying would cause the guilty party to
suffer “a loss of face once it becomes known that he was punished in such a way”
(Popisil 1971, p. 93).
12. Primitive societies’ laws were enforceable because there was an effective threat
of total ostracism by the entire community—an extreme form of a boycott sanc-
tion (e.g., see Goldsmidt 1951; Barton 1967; Hoebel 1954, 1967; Benson 1990).
If someone refused to submit to arbitration/meditation, or refused to accept what
was perceived to be an appropriate judgment, be became an outcast or “outlaw,”
which meant that anyone could kill him without any liability for the killing. The
community at large recognized and backed such threats through various personal
benefits of such arrangements because: 1) individuals recognized the potential per-
sonal benefits of such arrangements (e.g., the potential future need for justice and
the similar support of the rest of the community), and 2) individuals and families
realized that if the system failed, violent forms of dispute resolution would probably
arise and such violence tended to spread to families and neighbors—violence is a
costly form of dispute resolution which members of primitive communities tried
to avoid (Benson 1990).
13. This was possible due to the detailed jurisdictional rules that applied in Kapauku
law (see note 9).
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Law and Warfare, Garden City, NY.
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———. (1981), The Principles of Social Order, Durham, N.C.

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 39
An American Experiment in Anarcho-
Capitalism: The Not So Wild, Wild West
Terry L. Anderson and P. J. Hill
The growth of government during this century has attracted the attention of
many scholars interested in explaining that growth and in proposing ways to
limit it. As a result of this attention, the public choice literature has experienced
an upsurge in the interest in anarchy and its implications for social organiza-
tion. The work of Rawls and Nozick, two volumes edited by Gordon Tullock,
Explorations in the Theory of Anarchy, and a book by David Friedman, The
Machinery of Freedom, provide examples. The goals of the literature have
varied from providing a conceptual framework for comparing Leviathan and its
opposite extreme to presenting a formula for the operation of society in a state
of anarchy. But nearly all of this work has one common aspect; it explores the
“theory of anarchy.” The purpose of this paper is to take us from the theoretical
world of anarchy to a case study of its application. To accomplish our task we
will first discuss what is meant by “anarcho-capitalism” and present several
hypotheses relating to the nature of social organization in this world. These
hypotheses will then be tested in the context of the American West during its
earliest settlement. We propose to examine property rights formulation and
protection under voluntary organizations such as private protection agencies,
vigilantes, wagon trains, and early mining camps. Although the early West was
not completely anarchistic, we believe that government as a legitimate agency
of coercion was absent for a long enough period to provide insights into the
operation and viability of property rights in the absence of a formal state. The
nature of contracts for the provision of “public goods” and the evolution of
western “laws” for the period from 1830 to 1900 will provide the data for this
case study.
The West during this time often is perceived as a place of great chaos, with
little respect for property or life. Our research indicates that this was not the
case; property rights were protected and civil order prevailed. Private agen-
cies provided the necessary basis for an orderly society in which property was
protected and conflicts were resolved. These agencies often did not qualify as
governments because they did not have a legal monopoly on “keeping order.”
They soon discovered that “warfare” was a costly way of resolving disputes
and lower cost methods of settlement (arbitration, courts, etc.) resulted. In sum-

639
640 Anarchy and the Law

mary, this paper argues that a characterization of the American West as chaotic
would appear to be incorrect.
Anarchy: Order or Chaos?
Though the first dictionary definition of anarchy is “the state of having no
government,” many people believe that the third definition, “confusion or chaos
generally,” is more appropriate since it is a necessary result of the first. If we
were to engage seriously in the task of dismantling the government as it ex-
ists in the U.S., the political economist would find no scarcity of programs to
eliminate. However, as the dismantling continued, the decisions would become
more and more difficult, with the last “public goods” to be dealt with probably
being programs designed to define and enforce property rights. Consider the
following two categories of responses to this problem:
1) The first school we shall represent as the “constitutionalist” or “social
contractarian” school. For this group the important question is “how do rights
re-emerge and come to command respect? How do ‘laws’ emerge that carry
with them general respect for their ‘legitimacy’?”1 This position does not al-
low us to “‘jump over’ the whole set of issues involved in defining the rights
of persons in the first place.”2 Here collective action is taken as a necessary
step in the establishment of a social contract or constitutional contract which
specifies these rights. To the extent that rights could be perfectly defined, the
only role for the state would be in the protection of those rights since the law
designed for that protection is the only public good. If rights cannot be perfectly
well defined, a productive role for the state will arise. The greater the degree to
which private rights cannot be perfectly defined, the more the collective action
will be plunged into the “eternal dilemma of democratic government,” which is
“how can government, itself the reflection of interests, establish the legitimate
boundaries of self-interest, and how can it, conversely carve out those areas
of intervention that will be socially protective and collectively useful?”3 The
contractarian solution to this dilemma is the establishment of a rule of higher
law or a constitution which specifies the protective and productive roles of
the government. Since the productive role, because of the free rider problem,
necessarily requires coercion, the government will be given a monopoly on the
use of force. Were this not the case, some individuals would choose not to pay
for services from which they derive benefits.
2) The second school can be labeled “anarcho-capitalist” or “private prop-
erty anarchist.” In its extreme form this school would advocate eliminating all
forms of collective action since all functions of government can be replaced by
individuals possessing private rights exchangeable in the market place. Under
this system all transactions would be voluntary except insofar as the protection
of individual rights and enforcement of contracts required coercion. The es-
sential question facing this school is how can law and order, which do require
some coercion, be supplied without ultimately resulting in one provider of
those services holding a monopoly on coercion, i.e., government. If a dominant
 An American Experiment in Anarcho-Capitalism 641

protective firm or association emerges after exchanges take place, we will have
the minimal state as defined by Nozick and will have lapsed back into the world
of the “constitutionalist.” The private property anarchist’s view that markets
can provide protection services is summarized as follows:
The profit motive will then see to it that the most efficient providers of high quality
arbitration rise to the top and that inefficient and graft-oriented police lose their jobs.
In short, the market is capable of providing justice at the cheapest price. According
to Rothbard, to claim that these services are “public goods” and cannot be sold to
individuals in varying amounts is to make a claim which actually has little basis in
fact.4
Hence, the anarcho-capitalists place faith in the profit-seeking entrepreneurs to
find the optimal size and type of protective services and faith in competition to
prevent the establishment of a monopoly in the provision of these services.
There are essentially two differences between the two schools discussed
above. First, there is the empirical question of whether competition can actu-
ally provide the protection services. On the anarcho-capitalist side, there is the
belief that it can. On the constitutionalist or “minimal state” side, there is the
following argument.
Conflicts may occur, and one agency will win. Persons who have previously been
clients of losing agencies will desert and commence purchasing their protection
from winning agencies. In this manner a single protective agency or association
will eventually come to dominate the market for policing services over a territory.
Independent persons who refuse to purchase protection from anyone may remain
outside the scope of the dominant agency, but such independents cannot be allowed
to punish clients of the agency on their own. They must be coerced into not punish-
ing. In order to legitimize their coercion, these persons must be compensated, but
only to the extent that their deprivation warrants.5
The second issue is more conceptual than empirical, and hence, cannot be
entirely resolved through observation. This issue centers on the question of how
rights are determined in the first place; how do we get a starting point with all
its status quo characteristics from which the game can be played. Buchanan, a
leading constitutionalist, criticizes Friedman and Rothbard, two leading private
property anarchists, because “they simply ‘jump over’ the whole set of issues in-
volved in defining the rights of persons in the first place.”6 To the constitutionalist
the Lockean concept of mixing labor with resources to arrive at “natural rights”
is not sufficient. The contractarian approach suggests that the starting point is
determined by the initial bargaining process which results in the constitutional
contract. Debate over this issue will undoubtedly continue, but even Buchanan
agrees that “if the distribution or imputation of the rights of persons (rights to
do things, both with respect to other persons and to physical things) is settled,
then away we go. And aside from differences on certain specifics (which may
be important but relatively amenable to analysis, e.g., the efficacy of market-like
arrangements for internal and external peace-keeping), I should accept many of
the detailed reforms that these passionate advocates propose.”7
642 Anarchy and the Law

Our purpose in this paper is to discuss, in a historical context, some of the

important issues that Buchanan says are amenable to analysis. We do not plan
to debate the issue of the starting point, but will be looking at the “efficacy of
market-like arrangements for internal…peacekeeping.”8 It does seem, for the
time period and the geographical area which we are examining, that there was
a distribution of rights which was accepted either because of general agreement
to some basic precepts of natural law or because the inhabitants of the American
West came out of a society in which certain rights were defined and enforced.
Such a starting point is referred to as a Schelling point, a point of commonality
that exists in the minds of the participants in some social situation.9 Even in the
absence of any enforcement mechanism, most members of the western society
agreed that certain rights to use and control property existed. Thus when a miner
argued that a placer claim was his because he “was there first,” that claim carried
more weight than if he claimed it simply because he was most powerful. Tastes,
culture, ethics, and numerous other influences give Schelling point characteris-
tics to some claims but not to others. The long period of conflicts between the
Indians and the settlers can be attributed to a lack of any such Schelling points.
We concentrate, however, on arrangements for peacekeeping and enforcement
that existed among the non-indigenous, white population.
In the following pages we describe the private enforcement of rights in the
West between the period of 1830 and 1900. This description does allow one to
test, in a limited fashion, some of the hypotheses put forth about how anarcho-
capitalism might function. We qualify the test with “limited” because a necessary
feature of such a system is the absence of a monopoly on coercion.10 Various
coercive agencies would exist but none would have a legitimized monopoly on
the use of such coercion. The difficulty of dealing with this proposition in the
American West is obvious. Although for much of the period formal government
agencies for the protection of rights were not present, such agencies were always
lurking in the background. Therefore, none of the private enforcement means
operated entirely independent of government influence. Also, one has to be care-
ful in always describing private agencies as “non-government” because, to the
extent that they develop and become the agency of legitimized coercion, they
also qualify as “government.” Although numerous descriptions of such private
agencies exist, it is oftentimes difficult to determine when they are enhancing
competition and when they are reducing it.
Despite the above caveats, the West is a useful testing ground for several
of the specific hypotheses about how anarcho-capitalism might work. We use
David Friedman’s The Machinery of Freedom as our basis for the formulation
of hypotheses about the working of anarcho-capitalism because it is decidedly
non-utopian and it does set out, in a fairly specific form, the actual mechanisms
under which a system of non-government protective agencies would operate.
The major propositions are:
1) Anarcho-capitalism is not chaos. Property rights will be protected and civil
order will prevail.
 An American Experiment in Anarcho-Capitalism 643

2) Private agencies will provide the necessary functions for preservation of an

orderly society.
3) Private protection agencies will soon discover that “warfare” is a costly way
of resolving disputes and lower-cost methods of settlement (arbitration,
courts, etc.) will result.
4) The concept of “justice” is not an immutable one that only needs to be dis-
covered. Preferences do vary across individuals as to the rules they prefer
to live under and the price they are willing to pay for such rules. Therefore,
significant differences in rules might exist in various societies under anar-
cho-capitalism.
5) There are not significant enough economies of scale in crime so that major
“mafia” organizations evolve and dominate society.
6) Competition among protective agencies and adjudication bodies will serve
as healthy checks on undesirable behavior. Consumers have better informa-
tion than under government and will use it in judging these agencies.
Cases From the West
Before turning to specific examples of anarcho-capitalistic institutions in
the American West, it is useful to examine the legendary characterization of
the “wild, wild West.” The potential for chaos is a major objection to trust in
the market for enforcement of rights and many histories of the West seem to
substantiate this argument. These histories describe the era and area as char-
acterized by gunfights, horse-thievery, and general disrespect for basic human
rights. The taste for the dramatic in literature and other entertainment forms
has led to concentration on the seeming disparity between the westerners’ de-
sire for order and the prevailing disorder. If the Hollywood image of the West
were not enough to taint our view, scholars of violence contributed with quotes
such as the following: “We can report with some assurance that compared to
frontier days there has been a significant decrease in crimes of violence in the
United States.”11
Recently, however, more careful examinations of the conditions that ex-
isted cause one to doubt the accuracy of this perception. In his book, Frontier
Violence: Another Look, W. Eugene Hollon stated that the he believed “that
the Western frontier was a far more civilized, more peaceful, and safer place
than American society is today.”12 The legend of the “wild, wild West” lives on
despite Robert Dykstra’s finding that in five of the major cattle towns (Abilene,
Ellsworth, Wichita, Dodge City, and Caldwell) for the years from 1870 to
1885, only 45 homicides were reported—an average of 1.5 per cattle-trading
season.13 In Abilene, supposedly one of the wildest of the cow towns, “nobody
was killed in 1869 or 1870. In fact, nobody was killed until the advent of of-
ficers of the law, employed to prevent killings.”14 Only two towns, Ellsworth
in 1873 and Dodge City in 1876, ever had five killings in any one year.15 Frank
Prassel states in his book subtitled “A Legacy of Law and Order,” that “if any
conclusion can be drawn from recent crime statistics, it must be that this last
frontier left no significant heritage of offenses against the person, relative to
644 Anarchy and the Law

other sections of the country.”16 Moreover, even if crime rates were higher, it
should be remembered that the preference for order can differ across time and
people. To show that the West was more “lawless” than our present day society
tells one very little unless some measure of the “demand for law and order”
is available. “While the frontier society may appear to have functioned with
many violations of formal law, it sometimes more truly reflected community
customs in conflict with superficial and at times alien standards.”17 The vigilance
committees which sprang up in many of the mining towns of the West provide
excellent examples of this conflict. In most instances these committees arose
after civil government was organized. They proved that competition was useful
in cases where government was ineffective, as in the case of San Francisco in
the 1850s,18 or where government became the province of criminals who used
the legal monopoly on coercion to further their own ends, as in Virginia City,
Montana Territory in the 1860s.19 Even in these cases, however, violence was
not the standard modus operandi. When the San Francisco vigilante commit-
tee was reconstituted in 1856, “the group remained in action for three months,
swelling its membership to more than eight thousand. During this period, San
Francisco had only two murders, compared with more than a hundred in the
six month before the committee was formed.”20
To understand how law and order were provided in the American West, we
now turn to four examples of institutions which approximated anarcho-capital-
ism. These case studies of land claims clubs, cattlemens’ associations, mining
camps, and wagon trains provide support for the hypotheses presented above
and suggest that private rights were enforced and that chaos did not reign.
a. Land Clubs
For the pioneer settlers who often moved into the public domain before it
was surveyed or open for sale by the federal government, definition and enforce-
ment of property rights in the land they claimed was always a problem. “These
marginal or frontier settlers (squatters as they were called) were beyond the pale
of constitutional government. No statute of Congress protected them in their
rights to the claims they had chosen and the improvements they had made. In
law they were trespassers; in fact they were honest farmers.”21 The result was the
formation of “extra-legal” organizations for protection and justice. These land
clubs or claims associations, as the extra-legal associations came to be known,
were found throughout the Middle West with the Iowa variety receiving the
most attention. Benjamin F. Shambaugh suggests that we view these clubs “as
an illustrative type of frontier extra-legal, extra-constitutional political organiza-
tion in which are reflected certain principles of American life and character.”22
To Frederick Jackson Turner these squatters’ associations provided an excellent
example of the “power of the newly arrived pioneers to join together for a com-
mon end without the intervention of governmental institutions…”23
Each claims association adopted its own constitution and by-laws, elected
officers for the operation of the organization, established rules for adjudicat-
 An American Experiment in Anarcho-Capitalism 645

ing disputes, and established the procedure for the registration and protection
of claims. The constitution of the Claim Association of Johnson County, Iowa
offers one of the few records of club operation. In addition to president, vice
president, and clerk and record, that constitution provided for the election of
seven judges, any five of whom could compose a court to settle disputes, and
for the election of two marshals charged with enforcing rules of the associa-
tion. The constitution specified the procedure whereby property rights in land
would be defined as well as the procedure for arbitrating claims disputes. User
charges were utilized for defraying arbitration expenses.
In such case of the place and time of holding such court and summons all witnesses
that either of the parties may require the court made previous to their proceeding to
investigate any case require the plaintiff and defendant to deposit a sufficient sum
of money in their hands to defray the expenses of said suit or the costs of said suit.
And should either party refuse to deposit such sum of money the court may render
judgment against such person refusing to do…24
As a sanction against those who would not follow the rules of the association,
violence was an option, but the following resolution suggests that less violent
means were also used.
Resolved, that more effectually to sustain settlers in their just claims according to
the custom of the neighborhood and to prevent difficulty and discord in society that
we mutually pledge our honors to observe the following resolutions rigidly. That we
will not associate nor countenance those who do not respect the claims of settlers
and further that we will neither neighbor with them… Trade barter deal with them
in any way whatever….25
That the constitutions, by-laws, and resolutions of all claims clubs were
not alike suggests that preferences among the squatters did vary and that there
were alternative forms of protection and justice available. The most common
justification for the clubs was stated as follows: “Whereas it has become a
custom in the western states, as soon as the Indian title to the public lands has
been extinguished by the General Government for the citizens of the United
States to settle upon and improve said lands, and heretofore the improvement
and claim of the settler to the extent of 320 acres, has been respected by both
the citizens and laws of Iowa….”26 Other justification “emphasized the need
of protection against ‘reckless claim jumpers and invidious wolves in human
form,’ or the need ‘for better security against foreign as well as domestic ag-
gression.’”27 Some associations were formed specifically for the purpose of
opposing “speculators” who were attempting to obtain title to the land. The
constitutions of these clubs as evidenced by the Johnson County document
specifically regulated the amount of improvements which had to be made on
the claim. Other associations, however, encouraged speculation by making no
such requirements. These voluntary, extra-legal associations provided protection
and justice without apparent violence and developed rules consistent with the
preferences, goals, and endowments of the participants.
646 Anarchy and the Law

b. Cattlemen’s Associations
Early settlement of the cattle frontier created few property conflicts, but as
land became more scarce, private, voluntary enforcement mechanisms evolved.
Initially “there was room enough for all, and when a cattleman rode up some
likely valley or across some well-grazed divide and found cattle thereon, he
looked elsewhere for range.”28 But even “as early as 1868, two years after the
first drive, small groups of owners were organizing themselves into protective
associations and hiring stock detectives.”29 The place of these associations in
the formation of “frontier law” is described by Louis Pelzer.
From successive frontiers of our American history have developed needed customs,
laws, and organizations. The era of fur-trading produced its hunters, its barter, and
the great fur companies; on the mining frontier came the staked claims and the vigi-
lance committees; the camp meeting and the circuit rider were heard on the religious
outposts; on the margins of settlement the claim clubs protected the rights of the
squatter farmers; on the ranchmen’s frontier the millions of cattle, the vast ranges,
the ranches, and the cattle companies produced pools and local, district, territorial
and national cattle associations.30
As Ernest Staples Osgood tells us, it was “the failure of the police power in the
frontier communities to protect property and preserve order,” which “resulted
over and over again in groups who represented the will of the law-abiding part
of the community dealing out summary justice to offenders.”31
Like the claims associations, the cattlemen’s associations drew up formal
rules governing the group, but their means of enforcing private rights was often
more violent than the trade sanctions specified by the claims associations. These
private protection agencies were quite clearly a market response to existing
demands for enforcement of rights.
Expert gunmen—professional killers—had an economic place in the frontier West.
They turned up wherever there was trouble… Like all mercenaries, they espoused
the side which made them the first or best offer….32
Just why, when, and how he hooked up with the cattlemen around Fort Maginnis,
instead of with the rustlers, is a trifle obscure, but Bill became Montana’s first stock
detective. Raconteurs of the period seem agreed that Bill’s choice was not dictated by
ethics, but by the prospect of compensation. At any rate, he became a hired defender
of property rights, and he executed his assignments—as well as his quarry—with
thoroughness and dispatch.33
The market-based enforcement agencies of the cattlemen’s frontier were
different from modern private enforcement firms in that the earlier versions
evidently enforced their own laws much of the time rather than serving as sim-
ply an extension of the government’s police force. An often expressed concern
about this type of enforcement is that 1) the enforcement will be ineffective or
2) the enforcement agencies will themselves become large-scale organizations
that use their power to infringe upon individual rights. We have argued above
that there is little reason to believe that the first concern is justified.
 An American Experiment in Anarcho-Capitalism 647

It also appears that the second concern is not supported by the experience
of the American West. Major economies of scale did not seem to exist in either
enforcement or crime. Although there are numerous records of gunslingers
making themselves available for hire, we find no record of these gunslingers
discovering that it was even more profitable to band together and form a super-
defense agency that sold protection and rode roughshod over private property
rights. Some of the individuals did drift in and out of a life of crime and some-
times did form loose criminal associations. However, these associations did
not seem to be encouraged by the market form of peace keeping, and in fact,
seemed to be dealt with more quickly and more severely under private property
protective associations than under government organization.
There were a few large private enforcement organizations, in particular the
Pinkerton Agency and Wells Fargo, but these agencies seemed to serve mainly
as adjuncts to government and were largely used in enforcing state and national
laws. Other large-scale associations, e.g., the Rocky Mountain Detective As-
sociation and the Anti-Horse Thief Association, were loose information provid-
ing and coordination services, and rarely provided on-the-spot enforcement of
private rules.34
c. Mining Camps
As the population of the U.S. grew, westward expansion was inevitable, but
there can be little doubt that the discovery of gold in California in 1848 rapidly
increased the rate of expansion. Thousands of Easterners rushed to the most
westward frontier in search of the precious metal, leaving behind their civilized
world. Later the same experience occurred in Colorado, Montana, and Idaho
and, in each case, the first to arrive were forced into a situation where they had
to write the rules of the game.
There was no constitutional authority in the country, and neither judge nor officer
within five hundred miles. The invaders were remitted to the primal law of nature,
with, perhaps, the inherent rights of American citizenship. Every gulch was filling
with red-hot treasure hunters; every bar was pock-marked with “prospect holes”;
timber, water-rights, and town-lots were soon to be valuable, and government was
an imperative necessity. Here was a fine field for theorists to test their views as to
the origin of civil law.35
The early civil law which evolved from this process approximated anarcho-
capitalism as closely as any other experience in the U.S.
In the absence of a formal structure for the definition and enforcement of
individual rights, many of the groups of associates who came seeking their for-
tunes organized and made their rules for operation before they left their homes.
Much the same as company charters today, these voluntary contracts entered into
by the miners specified financing for the operation as well as the nature of the
relationship between individuals. These rules applied only to the miners in the
company and did not recognize any outside arbitrator of disputes; they did not
“recognize any higher court than the law of the majority of the company.”36
648 Anarchy and the Law

As Friedman’s theory predicts, the rules under which the companies were
organized varied according to tastes and needs of the company. “When we
compare the rules of different companies organized to go to the mines, we find
considerable variation.”37 In addition to the rules listed above, company consti-
tutions often specified arrangements for payments to be used for caring for the
sick and unfortunate, rules for personal conduct including the use of alcoholic
spirits, and fines which could be imposed for misconduct, to mention a few.38
In the truest nature of the social contract, the governing rules of the company
were negotiated, and as in all market transactions unanimity prevailed. Those
who wished to purchase other “bundles of goods” or other sets of rules had
that alternative.
Once the mining companies arrived at the potential gold sites, the rules were
useful only insofar as questions of rights involved members of the company;
when other individuals were confronted in the mining camps, additional negotia-
tion was necessary. Of course, the first issues to arise concerned the ownership
of mining claims. When the groups were small and homogeneous, dividing up
the gulch was an easy task. But when the numbers moving to the gold country
reached the thousands, the problems increased. The general solution was to hold
a mass meeting and appoint committees assigned to drafting the laws. Gregory
Gulch in Colorado provides an example.
A mass meeting of miners was held June 8, 1859, and a committee appointed to
draft a code of laws. This committee laid out boundaries for the district, and their
civil code, after some discussion and amendment, was unanimously adopted in mass
meeting, July 16. 1859. The example was rapidly followed in other districts, and the
whole Territory was soon divided between a score of local sovereignties.39
The camps could not live in complete isolation from the established forms of
government, but there is evidence that they were able to maintain their autonomy.
In California, military posts were established to take care of Indian troubles, but
these governmental enforcement organizations did not exercise any authority
over the mining camps. General Riley in an 1849 visit to a California camp
told the miners that “all questions touching the temporary right of individuals
to work in particular localities of which they were in possession, should be left
to the decision of the local authorities.”40
No alcalde, no council, no justice of the peace, was ever forced upon a district by an
outside power. The district was the unit of political organization, in many regions,
long after the creation of the state; and delegates from adjoining districts often met
in consultation regarding boundaries, or matters of local government, and reported
to their respective constituencies in open-air meeting, on hillside or river-bank.41
Moreover, the services of trained lawyers were not welcomed in many of the
campus and even forbidden in districts such as the Union Mining District.
Resolved, that no lawyer be permitted to practice law in this district, under penalty
of not more than fifty nor less than twenty lashes, and be forever banished from this
district.42
 An American Experiment in Anarcho-Capitalism 649

In this way, the local camps were able to agree upon rules or individual rights and
upon methods for enforcement thereof without coercion from U.S. authorities.
When outside laws were imposed upon the camps, there is some evidence that they
increased rather than decreased crime. One early Californian writes, “We needed
no law until the lawyers came,” and another adds, “There were few crimes until
the courts with their delays and technicalities took the place of miners’ law.43
While the mining camps did not have private courts where individuals could
take their disputes and pay for arbitration, they did develop a system of justice
through the miners’ courts. These courts seldom had permanent officers, although
there were instances of justices of the peace. The folk-moot system was common
in California. By this method a group of citizens was summoned to try a case.
From their midst they would elect a presiding officer or judge and select six or
twelve persons to serve as the jury. Most often their rulings were not disputed,
but there was recourse when disputes arose. For example, in one case involving
two partners, after a ruling by the miners’ court, the losing partner called a mass
meeting of the camp to plead his case and the decision was reversed.44 And if a
larger group of miners was dissatisfied with the general rulings regarding camp
boundaries or individual claim disputes, notices were posted in several places
calling a meeting of those wishing a division of the territory. “If a majority fa-
vored such action, the district was set apart and named. The old district was not
consulted on the subject, but received a verbal notice of the new organization.
Local conditions, making different regulations regarding claims desirable, were
the chief causes of such separations.”45 “The work of mining, and its environment
and conditions, were so different in different places, that the laws and customs
of the miners had to vary even in adjoining districts.”46 When disputes did arise
and court sessions were called, any man in the camp might be called upon to
be the executive officer. Furthermore, any one who was a law-abiding citizen
might be considered for prosecutor or defender for the accused.
In Colorado there is some evidence of competition among the courts for
business, and hence, an added guarantee that justice prevailed.
The civil courts promptly assumed criminal jurisdiction, and the year 1860 opened
with four governments in full blast. The miners’ courts, people’s courts, and “provi-
sional government” (a new name for “Jefferson”) divided jurisdiction in the moun-
tains; while Kansas and the provisional government ran concurrent in Denver and
the valley. Such as felt friendly to either jurisdiction patronized it with their business.
Appeals were taken from one to the other, papers certified up or down and over, and
recognized, criminals delivered and judgments accepted from one court by another,
with a happy informality which it is pleasant to read of. And here we are confronted
by an awkward fact: there was undoubtedly much less crime in the two years this
arrangement lasted than in the two which followed the territorial organization and
regular government.47
This evidence is consistent with Friedman’s hypothesis that when competition
exists, courts will be responsible for mistakes and the desire for repeat business
will serve as an effective check on “unjust” decisions.
650 Anarchy and the Law

d. Wagon Trails
Perhaps the best example of private property anarchism in the American
West was the organization of the wagon trains as they moved across the plains
in search of California gold. The region west of Missouri and Iowa was unor-
ganized, unpatrolled, and beyond the jurisdiction of the United States law. But
to use the old trapper saying that there was “no law west of Leavenworth” to
describe the trains would be inappropriate. “Realizing that they were passing
beyond the pale of the law, and aware that the tedious journey and the constant
tensions of the trail brought out the worst in human character, the pioneers…cre-
ated their own law-making and law-enforcing machinery before they started.”48
Like their fellow travelers on the ocean, the pioneers in their prairie schooners
negotiated a “plains law” much like their counterparts’ “sea law.”49 The result
of this negotiation in many cases was the adoption of a formal constitution
patterned after that of the U.S. The preamble of the constitution of the Green
and Jersey County Company provides an example.
We, the members of the Green and Jersey County Company of Emigrants to Cali-
fornia, for the purpose of effectually protecting our persons and property, and as the
best means of ensuring an expeditious and easy journey do ordain and establish the
following constitution.50
From this and the other constitutions which have survived it is clear that these
moving communities did have a basic set of rules defining how “the game would
be played” during their journey. Like the rules of the mining camps, the wagon
train constitutions varied according to the tastes and needs of each organization,
but several general tendencies do emerge. Most often the groups waited until
after they have been on the trail for a few days and out of the jurisdiction of the
United States. One of the first tasks was to select officers who would be respon-
sible for enforcing the rules. For the Green and Jersey County Company, which
was not atypical, the officers included a Captain, Assistant Captain, Treasurer,
Secretary, and an Officer of the Guard. The constitutions also included eligibility
for voting and decision rules for amendment, banishment of individuals from
the group, and dissolution of the company. Duties for each officer were often
well specified as in the case of the Charleston, Virginia, Mining Company.51 In
addition to these general rules, specific laws were enacted. Again, the introduc-
tion of the Green and Jersey County Company is illustrative.
We, citizens and inhabitants of the United States, and members of the Green and Jersey
County Company of Emigrants to California; about starting on a journey through
a territory where the laws of our common country do not extend their protection,
deem it necessary, for the preservation of our rights, to establish certain wholesome
rules and regulations. We, therefore, having first organized a constitution of govern-
ment, for ourselves, do now proceed to enact and ordain the following laws; and in
so doing we disclaim all desire or intention of violating or treating with disrespect,
the laws of our country.52
 An American Experiment in Anarcho-Capitalism 651

The specific rules included organization of jury trials; regulation of Sabbath-

breaking, gambling and intoxication; and penalties for failing to perform chores,
especially guard duty. In certain cases there were even provisions for the repair
of road, building bridges, and protection of other “public goods.”53
It has been argued that “these ordinances or constitutions…may be of in-
terest as guides to pioneers’ philosophies about law and social organization,
[but] they do not help answer the more essential question of how, in fact, not
in theory, did the overland pioneer face problems of social disorder, crime, and
private conflict.”54 Nonetheless, it is clear that the travelers did negotiate from
Schelling points to social contracts without relying upon the coercive powers
of government. And these voluntary contracts did provide the basis for social
organization.
The Schelling points from which the individuals negotiated included a very
well accepted set of private rights especially with regard to property. One might
expect that upon leaving the legal jurisdiction of the U.S. with its many laws
governing private property that the immigrants would have less respect for oth-
ers’ rights. Moreover, since the constitutions and by-laws seldom specifically
mentioned individual property rights, we might infer that these were of little
concern to the overlanders. In his article, “Paying for the Elephant: Property
Rights and Civil Order on the Overland Trail,” John Phillip Reid convincingly
argues that respect for property rights was paramount. Even when food became
so scarce that starvation was a distinct possibility, there are few examples where
the pioneers resorted to violence.
Indeed, it is no exaggeration to say that the emigrants who traveled America’s overland
trail gave little thought to solving their problems by violence or theft. We know that
some ate the flesh of dead oxen or beef with maggots while surrounded by healthy
animals they could have shot. Those who suffered losses early in the trip and were
able to go back, did so. The disappointment and embarrassment for some must have
been extremely bitter, but hundreds returned. They did not use weapons to force their
way through. While a few of those who were destitute may have employed tricks
to obtain food, most begged, and those who were “too proud to beg” got along the
best they could or employed someone to beg for them. If they could not beg, they
borrowed, and when they could not borrow they depended on their credit.55
The emigrants were property minded. The fact that the constitution contained
few references to individual property rights may well reflect the significance
of private property Schelling points.
When crimes against property or person did occur, the judicial system which
was specified in the contracts was brought into play. “The rules of a traveling
company organized at Kanesville, Iowa, provided: ‘Resolved, that in case of any
dispute arising between any members of the Company, they shall be referred
to three arbiters, one chosen by each party, and one by the two chosen, whose
decision shall be final.’”56 The methods of settling disputes varied among the
companies, but in nearly all cases some means of arbitration were specified to
insure “that the rights of each emigrant are protected and enforced.”57
652 Anarchy and the Law

In addition to the definition and enforcement of individual rights, the over-

landers also were faced with the question of how to solve disputes involving
contractual relations for business purposes. For all of the same reasons that firms
exist for the production of goods and services, individuals crossing the plains
had incentives to organize into “firms” with one another. Scale economies in
the production of goods such as meals and services such as herding and in the
provision of protection from Indians provided for gains from voluntary and
collective action. Again markets seemed to function well in providing several
types of contractual arrangements for this production and protection.
A common form of organization on the overland trail was the “mess.” Similar
to share-cropping arrangements in agriculture, the mess allowed individuals to
contribute inputs such as food, oxen, wagons, labor, etc. for the joint production
of travel or meals. In this way, the mess, which allowed the property to remain
privately owned, differed from the partnership where property was concurrently
owned. Since mess property was available for use by all members of the mess,
the potential for conflict was great. When the conflicts occurred, renegotiation
of the contract was sometimes necessary. When new agreements could not be
reached, the mess would have to be dissolved and property returned to individual
owners. Since ownership remained private, division was not difficult. More-
over, since there were gains from trade to be obtained from combining inputs,
it was usually possible to renegotiate when violations in the contract occurred.
There were, however, cases where renegotiation seemed impossible, as in the
following example of a mess which found one of its members unwilling to do
his share of the chores.
[W]e concluded the best thing we could do was to buy him out and let him go which
accordingly we did by paying him one hundred doll[ar]s. He shoulder[ed] his gun,
carpet bag, and blanket and took the track to the prairie without saying good by to
one of us.58
While other cases of dissolution of messes occurred, there is no evidence that
coercive power was used to take property from rightful owners. If an individual
left one mess he could usually join another.
The other common type of organization on the overland routes was the joint
stock company. In this organization members contributed capital and other
property which was held concurrently. The Charlestown, Virginia, Mining
Company provides an example of such a company and its constitution attests
to the establishment of rules governing use of concurrent property.59 Again it
should be emphasized that these rules were voluntary though coercion was used
within the organization to enforce them.
Like the mess, when disagreements occurred within the joint stock company,
renegotiation was necessary. However, since the property was held concurrently
this process was more complicated. In the first place, an individual could not
simply leave the company. Most often withdrawal could only occur with the
consent of a percentage of other members. But even then withdrawal was com-
 An American Experiment in Anarcho-Capitalism 653

plicated by the need to divide the property. In at least one case this problem was
solved by dividing all of the property and reorganizing into messes.
When the original joint stock company of sixty men dissolved, there was no men-
tion of individual ownership. The property was parceled by assigning it to traveling
units already in existence. However, in executing the second division, the smaller
group found it possible—perhaps even necessary—to utilize the concept of personal
property. In order to accomplish their purpose, the men first transmuted the com-
mon stock from “company” or partnership property into private property. Then, by
negotiating contracts, goods they briefly had held as individuals, were converted
back into partnership or mess property.60

All of this occurred in the absence of coercion.

Perhaps an even more revealing example of anarcho-capitalism at work
is found in the dissolution of the Boone County Company. When the eight
members of the company fell into rival factions of 3 and 5, dissolution became
imminent. Negotiations continued for some time until all the company property
(note that none of the private property was divided) was divided between the two
groups. When negotiations appeared at an impasse because of the indivisibility
of units and differences in quality, prices were assigned to units and the groups
resolved the issue by trade. However, a $75 claim of the majority group proved
even harder to resolve. The claim resulted from the fact that a passenger who
owned two mules and a horse and who had been traveling with the company
chose to take his property and go with the minority. The disadvantaged majority
demanded compensation. Unable to settle the dispute, arbitration came from
a “private court” consisting of “3 disinterested men,” one chosen by each side
and a third chosen by the two. Their decision follows.
[W]e can see no just cause why the mess of 3 men should pay anything to the mess of 5
men. It being…a mutual and simultaneous agreement to dissolve the original contract.
The fact that Abbott joins in with the 3 men does not alter in our opinion the matter
of the case—for the dissolution being mutually agreed upon, all the parties stand in
the same relation to each other which they did, before any contract was entered into.
And Abbott might or not just as he chose unite with either party. If he chose to unite
with neither party, then clearly neither could claim of the other. If he united with a
foreign party then who could think of claiming anything of such a party.61
The important point of this example is that when the Boone County Company
could not renegotiate its initial contract the members did not resort to force, but
chose private arbitration instead. The many companies which crossed the plains
“were experiments in democracy and while some proved inadequate to meet all
emergencies, the very ease with which the members could dissolve their bonds
and form new associations without lawlessness and disorder proves the true
democratic spirit among the American frontiersmen rather than the opposite.”62
Competition rather than coercion insured justice.
While the above evidence suggests that the wagon trains were guided by
anarcho-capitalism, it should be noted that their unique characteristics may have
contributed to the efficacy of the system. First, the demand for public goods was
654 Anarchy and the Law

probably not as great as found in more permanent communities. If nothing else,

the transient nature of these moving communities meant that schools, roads, and
other goods which are publicly provided in our society were not needed, hence
there was no demand for a government to form for this purpose. Secondly, the
short-term nature of the organization meant that there was not a very long time
for groups to organize to use coercion. These were “governments” of neces-
sity rather than ambition. Nonetheless, the wagon trains on the overland trails
did provide protection and justice without a monopoly on coercion, did allow
competition to produce rules, and did not result in the lawless disorder gener-
ally associated with anarchy.
Concluding Remarks
From the above descriptions of the experience of the American West, several
conclusions consistent with Friedman’s hypotheses appear.
1) The West, although often dependent upon market peacekeeping agencies,
was, for the most part, orderly.
2) Different standards of justice did prevail and various preferences for rules
were expressed through the market place.
3) Competition in defending and adjudicating rights does have beneficial ef-
fects. Market agencies provided useful ways of measuring the efficiency of
government alternatives. The fact that government’s monopoly on coercion
was not taken as seriously as at present meant that when that monopoly was
poorly used market alternatives arose. Even when these market alternatives
did become “governments” in the sense of having a virtual monopoly on
coercion, the fact that such firms were usually quite small provided signifi-
cant checks on their behavior. Clients could leave or originate protective
agencies on their own. Without formal legal sanctions, the private agencies
did face a “market test” and the rate of survival of such agencies was much
less than under government.
The above evidence points to the overall conclusion that competition was very
effective in solving the “public goods” problem of law and order in the American
West. However, this does not mean that there were no disputes that would cause
one to doubt the efficacy of such arrangements. Two examples of civil disorder
are often mentioned in Western history and they must be dealt with.
The first is the very bitter feud between the Regulators and the Moderators
in the Republic of Texas in the 1840s.63 What started as a disagreement between
two individuals in Shelby County escalated until it involved a significant number
of people in a large area of east Texas. In 1839 a loosely organized band, later
to be known as the Moderators, was issuing bogus land papers, stealing horses,
murdering, and generally breaking the “law” of Shelby County, Texas. To coun-
ter this lawlessness a vigilance committee was formed under the name of Regu-
lators. Unfortunately, “bad elements soon infiltrated the Regulators, and their
excesses in crime later rivaled those of the Moderators. The situation evolved
into a complexity of personal and family feuds, and complete anarchy existed
until 1844.”64 One citizen described the situation in a letter to a friend:
 An American Experiment in Anarcho-Capitalism 655

Civil war, with all its horror, has been raging in this community. The citizens of the
county are about equally divided into two parties, the Regulators and Moderators.
It is no uncommon sight to see brothers opposed to each other. Every man’s interest
in this county is seriously affected.65
During the period eighteen men were murdered and many more wounded. Only
when President Sam Houston called out the militia in 1844 did the feuding
stop. Thus, for whatever reasons, in this case it appears that dependence upon
non-governmental forms of organization was not successful.
Another major civil disruption that should be considered is the Johnson
County War in Northern Wyoming in 1892. A group of stockgrowers and their
hired guns entered Johnson County with the express purpose of wiping out the
rustlers they believed to be prevalent there. The citizens of the county, feeling
they were being invaded by a foreign army, responded en masse and for a short
period of time a “war” did result. However, in this case the disorder seems to
have been more a battle between two “legitimized” agencies of coercion, the state
and the local government, than between strictly private enforcement agencies.
The invaders, while ostensibly acting as a private party, had the tacit approval
of the state government and used that approval to thwart several attempts by the
local authorities to secure state or federal intervention. Those who responded to
the invasion were under the leadership of the Johnson County sheriff and felt
very much that they were acting appropriately under the existing laws of that
time.66 Thus this incident sheds little light on the efficacy of market arrange-
ments for maintaining order.
In conclusion, it appears in the absence of formal government, that the
western frontier was not as wild as legend would have us believe. The market
did provide protection and arbitration agencies that functioned very effectively,
either as a complete replacement for formal government or as a supplement to
that government. However, the same desire for power that creates problems in
government also seemed to create difficulties at times in the West. All was not
peaceful. Especially when Schelling points were lacking, disorder and chaos re-
sulted, lending support to Buchanan’s contention that agreement on initial rights
is important to anarcho-capitalism. When this agreement existed, however, we
have presented evidence that anarcho-capitalism was viable on the frontier.
Notes
1. James M. Buchanan, “Before Public Choice,” in G. Tullock, ed., Explorations in
the Theory of Anarchy (Blacksburg, Va.: Center for the Study of Public Choice,
1972), p. 37.
2. James M. Buchanan, “Review of David Friedman, The Machinery of Freedom:
Guide to Radical Capitalism,” The Journal of Economic Literature, Vol. XII, No.
3 (1974), p. 915.
3. E.A.J. Johnson, The Foundations of American Economic Freedom (Minneapolis:
University of Minnesota Press, 1973), p. 305.
4. Laurence S. Moss, “Private Property Anarchism: An American Variant,” in G. Tull-
ock, ed., Further Explorations in the Theory of Anarchy (Blacksburg, Va.: Center
for the Study of Public Choice, 1974), p. 26.
656 Anarchy and the Law

5. James M. Buchanan, Freedom in Constitutional Contract (College Sta., Tex.: Texas

A&M University Press, 1977), p. 52.
6. Buchanan, “Review of Machinery of Freedom,” p. 915.
7. Ibid., emphasis added.
8. Ibid.
9. For a longer discussion of Schelling points, see Thomas C. Schelling, The Strategy
of Conflict (Cambridge: Harvard University Press, l960), pp. 54-58; Buchanan,
“Review of Machinery of Freedom,” p. 914; and David Friedman, “Schelling Points,
Self-Enforcing Contracts, and the Paradox of Order” (unpub. Ms., Center for the
Study of Public Choice, Virginia Polytechnic Institute).
10. David Friedman, The Machinery of Freedom: Guide to Radical Capitalism (New
York: Harper & Row, 1973), p. 152.
11. Gilbert Geis, “Violence in American Society,” Current History, Vol. LII (1976), p.
357.
12. Eugene W. Hollon, Frontier Vio1ence; Another Look (New York: Oxford University
Press, 1974), p. x.
13. Robert A. Dykstra. The Cattle Towns (New York: Alfred A. Knopf, 1968), p.
144.
14. Paul I. Wellman, The Trampling Herd (New York: Carrick and Evans, 1939), p.
159.
15. Hollon, Frontier Violence, p. 200.
16. Frank Prassel, The Western Peace Officer (Norman, Okla.: University of Oklahoma
Press, 1937), pp. 16-17.
17. Ibid., p. 7.
18. See George R. Stewart, Committee on Vigilance (Boston: Houghton Mifflin Co.,
1964); and Alan Valentine, Vigilante Justice (New York: Reynal and Co., 1956).
19. Thomas J, Dimsdale, The Vigilantes of Montana (Norman, Okla.: University of
Oklahoma Press, 1953).
20. Wayne Gard, Frontier Justice (Norman, Okla.: University of Oklahoma Press,
1949), p. 165.
21. Benjamin F. Shambaugh, “Frontier Land Clubs, or Claim Associations,” Annual
Report of the American Historical Association (1900), p. 71.
22. Ibid., p. 69.
23. Frederick Jackson Turner, The Frontier in American History (New York: Henry
Holt and Co., 1920), p. 343.
24. Shambaugh, “Frontier Land Clubs,” p. 77.
25. Ibid., pp. 77-78.
26. Quoted in Allan Bogue, “The Iowa Claim Clubs: Symbol and Substance,” in V.
Carstensen, ed., The Public Lands (Madison, Wisc.: University of Wisconsin Press,
1963), p. 50.
27. Ibid.
28. Ernest Staples Osgood, The Day of the Cattleman (Minneapolis: University of
Minnesota Press, 1929), p. 182.
29. Ibid., p. 118.
30. Louis Pelzer, The Cattlemen’s Frontier (Glendale, Calif.: A.H. Clark, 1936), p.
87.
31. Osgood, Day of the Cattleman, p. 157.
32. Wellman, Trampling Herd, p. 157.
33. Robert H. Fletcher, Free Grass to Fences: The Montana Range Story (New York:
University Publishers, 1960), p. 65.
34. Prassel, Western Peace Officer, pp. 134-141.
 An American Experiment in Anarcho-Capitalism 657

35. J. H. Beadle, Western Wilds and the Men Who Redeem Them (Cincinnati: Jones
Brothers, 1882), p. 476.
36. Charles Howard Shinn, Mining Camps: A Study in American Frontier Government
(New York: Alfred A. Knopf, 1948), p. 107.
37. Ibid.
38. John Phillip Reid, “Prosecuting the Elephant: Trials and Judicial Behavior on the
Overland Trail,” BYU Law Review, Vol. 77, No. 2 (1977), pp. 335-336.
39. Beadle, Western Wilds, p. 477, emphasis added.
40. Quoted in Shinn, Mining Camps, p. 111.
41. Ibid., p. 168.
42. Quoted in Beadle, Western Wilds, p. 478.
43. Quoted in Shinn, Mining Camps, p. 113.
44. Marvin Lewis, ed., The Mining Frontier (Norman, Okla.: University of Oklahoma
Press, 1967), pp. 10-18.
45. Shinn, Mining Camps, p. 118.
46. Ibid., p. 159.
47. Beadle, Western Wilds, p. 477.
48. Ray Allen Billington, The Far Western Frontier, 1830-1860 (New York: Harper &
Bros., 1956), p. 99.
49. David Morris Potter, ed., Trail to California (New Haven: Yale University Press,
1945), pp. 16-17.
50. Reprinted in Elizabeth Page, Wagon West (New York: Farrar & Rinehart, 1930),
Appendix C.
51. Constitution reprinted in Potter, Trail to California, Appendix A.
52. Page, Wagon West, p. 183.
53. Ibid., p. 119.
54. David J. Langum, “Pioneer Justice on the Overland Trail,” Western Historical
Quarterly, Vol. 5, No. 3 (1974), p. 424, fn. 12.
55. John Phillip Reid, “Paying for the Elephant: Property Rights and Civil Order on
the Overland Trail,” The Huntington Library Quarterly, Vol. XLI, No. 1 (1977),
pp. 50-51.
56. Reid, “Prosecuting the Elephant,” p. 330.
57. Quoted in Reid, “Prosecuting the Elephant,” p. 330.
58. Quoted in John Phillip Reid, “Dividing the Elephant: The Separation of Mess and
Joint Stock Property on the Overland Trail,” Hastings Law Journal, Vol. 28, No. 1
(1976), p. 77.
59. See Potter, Trail to California, Appendix A.
60. Reid, “Dividing the Elephant,” p. 85.
61. Quoted in Reid, “Dividing the Elephant,” p. 85.
62. Owen Cochran Coy, The Great Trek (San Francisco: Powell Pub. Co., 1931), p.
117.
63. See Gard, Frontier Justice; Hollon, Frontier Violence; and Hugh David Graham
and Ted Robert Gurr, eds., The History of Violence in America: Historical and
Comparative Perspectives (New York: Prager, 1969).
64. Hollon, Frontier Violence, p. 53.
65. Quoted in Gard, Frontier Justice, pp. 35-36.
66. See Helen Huntington Smith, The War on the Powder River: The History of an
Insurrection (Lincoln, Neb.: University of Nebraska Press, 1966).
 40
Order without Law:
How Neighbors Settle Disputes (excerpt)
Robert C. Ellickson
The Resolution of Cattle-Trespass Disputes
Trespass by cattle, the subject of Coase’s Parable of the Farmer and the
Rancher, is a common event in ranching country. A complex body of law, much
of it of unusually ancient lineage, formally applies to these occurrences. In
Shasta County, the rules of trespass law vary between open- and closed-range
districts, and the location of district boundaries has been the focus of intense
political controversy. Nevertheless, it turns out, perhaps counter-intuitively,
that legal rules hardly ever influence the settlement of cattle-trespass disputes
in Shasta County.1
Animal Trespass Incidents
Each of the twenty-eight landowners interviewed, including each of the thir-
teen ranchette owners, reported at least one instance in which his lands had been
invaded by someone else’s livestock. Hay farmers grow what cattle especially
like to eat and can thus expect frequent trespasses. For example, John Wood-
bury, an alfalfa grower, suffered almost weekly incursions in 1973. Woodbury’s
situation later improved when many traditionalist cattlemen declined to renew
their grazing leases on mountain forest,2 but he was still experiencing a couple
of cattle trespasses a year in the early 1980s. Another hay farmer, Phil Ritchie,
could identify six neighbors whose cattle had trespassed on his lands in recent
years. Owners of large ranches are also frequent trespass victims because they
cannot keep their many miles of aging perimeter fence cattle-tight. Thus, when
a rancher gathers his animals on his fenced pastures each spring, he is hardly
startled to find a few head carrying a neighbor’s brand.
Because beef cattle eat feed equal to about 2 ½ percent of their body weight
each day,3 a trespass victim’s vegetation is always at risk. Nevertheless, a victim
usually regards the loss of grass as trivial, provided that the animals are easy to
corral and the owner removes them within a day or two. Trespassing livestock
occasionally do cause more than nominal damage. Several ranchette owners re-
ported incidents in which wayward cattle had damaged their fences and vegetable
gardens; one farmer told of the ravaging of some of his ornamental trees.

658
 Order without Law: How Neighbors Settle Disputes (excerpt) 659

The most serious trespasses reported were ones involving at-large cattle or
bulls. A ranchette owner described how mountain cattle had once invaded his
house construction site, broken the windows, and contaminated the creek. The
part-time horse breeder Larry Brennan told of buying seven tons of hay and
stacking it on an unfenced portion of his fifty-acre ranchette, where it was then
eaten by cattle that Frank Ellis had let roam free.
Rural residents especially fear trespasses by bulls. In a modern beef cattle
herd, roughly one animal in twenty-five is a bull, whose principal function is
to impregnate cows during their brief periods in heat.4 Bulls are not only much
more ornery but also much larger than other herd animals. A Hereford bull has a
mature weight of 2000 pounds. By contrast, a mature Hereford cow weighs only
1100-1200 pounds, and Hereford steers (castrated males) are typically slaugh-
tered when they weigh between 1000 and 1150 pounds.5 Several ranchers who
were interviewed had vivid memories of bull trespasses. A farmer who owned
irrigated pasture was amazed at the depth of the hoof marks that an entering
bull had made. A ranchette owner and a rancher told of barely escaping goring
while attempting to corral invading bulls.6 Because an alien bull often enters
in pursuit of cows in heat, owners of female animals fear illicit couplings that
might produce offspring of an undesired pedigree. Although no cow owner
reported actual damages from misbreeding, several mentioned that this risk
especially worried them.
Animal Trespass Law
One of the most venerable English common law rules of strict liability in
torts is the rule that an owner of domestic livestock is liable, even in the absence
of negligence, for property damage that his animals cause while trespassing. In
the memorable words of Judge Blackburn:
The case that has most commonly occurred, and which is most frequently to be found
in the books, is as to the obligation of the owner of cattle which he has brought on
his land, to prevent their escaping and doing mischief. The law as to them seems to
be perfectly settled from early times; the owner must keep them in at his peril, or he
will be answerable for the natural consequences of their escape; that is with regard
to tame beasts, for the grass they eat and trample upon, though not for any injury to
the person of others, for our ancestors have settled that it is not the general nature of
horses to kick, or bulls to gore; but if the owner knows that the beast has a vicious
propensity to attack man, he will be answerable for that too.7
This traditional English rule formally prevails in the closed-range areas of
Shasta County.8 In the open-range areas of the county—that is, in the great
bulk of its rural territory—the English rule has been rejected in favor of the
pro-cattleman “fencing-out” rule that many grazing states adopted during the
nineteenth century.9
In 1850, just after California attained statehood, an open-range rule was
adopted for the entire state. In that year the legislature enacted a statute that
entitled a victim of animal trespass to recover damages only when the victim
660 Anarchy and the Law

had protected his lands with a “lawful fence.”10 This pro-cattleman policy grew
increasingly controversial as California became more settled and field crops
became more common. During the latter part of the nineteenth century, the
California legislature enacted a series of statutes effectively closing the range
in designated counties, thereby granting more protection to farmers who had
not built fences.11
The closed-range exceptions eventually began to swamp California’s tra-
ditional open-range rule and triggered a comprehensive legislative response.
In the Estray Act of 1915,12 the legislature adopted for most of California the
traditional English rule that the owner of livestock is strictly liable for trespass
damage.13 This statute, however, retained the open-range rule in six counties in
the lightly populated northern part of the state, where the tradition of running
cattle at large remained strong, The six counties were Shasta, Del Norte, Las-
sen, Modoc, Siskiyou, and Trinity.14
In 1945 the legislature enacted two amendments that dealt exclusively with
Shasta County, the least rural of the six exempt counties. The first stated that
a prime agricultural area just south of Redding was “not…devoted, chiefly to
grazing”—a declaration that the legislature had decided to close the range in
that small area of the county.15 The second amendment empowered the Board of
Supervisors of Shasta County to adopt ordinances designating additional areas
of the county as places no longer devoted chiefly to grazing. A board action of
this sort would make cattlemen strictly liable for trespass damage occurring
in those locations.16 Between 1945 and 1974 Shasta was the only California
county to possess this special authority,17 As a result Shasta County today has
a crazy quilt of open- and closed-range areas that no other California county
can match.18
The distinction between open range and closed range has formal legal sig-
nificance in Shasta County trespass disputes. In closed range, the English rule
governs and an animal owner is strictly liable for trespass damage to property.19
In open-range areas, by in contrast, even a livestock owner20 who has negligently
managed his animals is generally not liable for trespass damage to the lands21
of a neighbor.
Even in open range in Shasta County, however, an animal owner is legally
liable for animal-trespass damages of three significant sorts. First, owners of
goats, swine, and vicious dogs are strictly liable for trespass throughout Shasta
County.22 Second, when a cattleman’s livestock have trespassed in the face of
a “lawful fence” that entirely enclosed the victim’s open-range premises, the
cattleman is also strictly liable.23 (A California statute, unamended since 1915,
defines the technological standard that a fence must meet to be “lawful.”)24 Third,
common law decisions make a livestock owner liable for intentional open-range
trespasses. Thus when Frank Ellis actively herded his cattle across the unfenced
lands of his neighbors, he was legally liable for trespass. According to some
precedents, he would also have been liable had he merely placed his cattle on
 Order without Law: How Neighbors Settle Disputes (excerpt) 661

his own lands in a way that would make it substantially certain that they would
venture onto his neighbor’s pastures.25
When the law of either open or closed range entitles a trespass victim to
relief, the standard legal remedy is an award of compensatory damages.26 (In part
because evidence of damage to forage is fleeting, some states, although currently
not California, authorize the appointment of disinterested residents of the area
to serve as “fence viewers” to assess the amount of the damages.)27A plaintiff
who has suffered from continuing wrongful trespasses may also be entitled to
an injunction against future incursions.28 California’s Estray Act additionally
entitles a landowner whose premises have been wrongly invaded by cattle to
seize the animals as security for a claim to recover boarding costs and other
damages. A trespass victim who invokes this procedure must provide proper
notice to the state director of agriculture; if certain statutory requirements are
met, the animals can be sold to satisfy the claim.29
The formal law provides trespass victims with only limited self-help rem-
edies. A victim can use reasonable force to drive the animals off his land,30 and is
arguably privileged to herd them to a remote location he knows is inconvenient
for their owner.31 In addition, as just noted, a trespass victim willing to give
the animals proper care can seize strays and bill the costs of their care to their
owner. But a victim is generally not entitled to kill or wound the offending
animals. For example, a fruit grower in Mendocino County (a closed-range
county) was convicted in 1973 for malicious maiming of animals when, without
prior warning to the livestock owner, he shot and killed livestock trespassing in
his unfenced orchard.32 In this respect, as we shall see, Shasta County mores
diverge from the formal law.
The distinction between open range and closed range has formal relevance
in public as well as private trespass law. Shasta County’s law enforcement of-
ficials are entitled to impound cattle found running at large in closed range, but
not those found in open range.33 Brad Bogue, the county animal control officer,
relies primarily on warnings when responding to reports of loose animals. Re-
gardless of whether a trespass has occurred in open or closed range, Bogue’s
prime goal is to locate the owner of the livestock and urge the prompt removal
of the offending animals. When talking to animal owners, he stresses that it is
in the owner’s self-interest to take better care of the livestock. When talking
to ranchette owners living in open range who have called to complain about
trespassing mountain cattle, Bogue informs them of the cattleman’s open range
rights. He asserts that this sort of mediation is all that is required in the usual
case. In most years, Bogue’s office does not impound a single head of cattle34
or issue a single criminal citation for failure to prevent cattle trespass.35
Knowledge of Animal Trespass Law
The Shasta County landowners interviewed were quizzed about their knowl-
edge of the complex legal rules of animal trespass law reviewed above. The
662 Anarchy and the Law

extent of their knowledge is relevant for at least two reasons. First, Coase’s
parable is set in a world of zero transaction costs, where everyone has perfect
knowledge of legal rules. In reality, legal knowledge is imperfect because legal
research is costly and human cognitive capacities are limited. The following
overview of the working legal knowledge of Shasta County residents provides
a glimpse of people’s behavior in the face of these constraints. Data of this sort
have implications for the design of legal rules to achieve specific instrumental
goals, because rules cannot have instrumental effects unless they are commu-
nicated to the relevant actors. Second, my research revealed that most residents
resolve trespass disputes not according to formal law but rather according to
workaday norms that are consistent with an overarching norm of cooperation
among neighbors. How notable this finding is depends in part on how many
residents know that their trespass norms might be inconsistent legal rules.
Lay Knowledge of Trespass Law
To apply formal legal rules to a specific trespass incident, a Shasta County
resident would first have to know whether it had occurred in an open-range
or closed-range area of the county. Ideally, the resident would either have or
know how to locate the map of closed-range areas published by the county’s
Department of Public Works. Second, a legally sophisticated person would
have a working command of the rules of trespass law, including how they vary
from open to closed range.
I found no one in Shasta County—whether an ordinary person or a legal
specialist such as an attorney, judge, or insurance adjuster—with a complete
working knowledge of the formal trespass rules just described. The persons best
informed are, interestingly enough, two public officials without legal training:
Brad Bogue, the animal control officer, and Bruce Jordan, the brand inspector.
Their jobs require them to deal with stray livestock on almost a daily basis. Both
have striven to learn applicable legal rules, and both sometimes invoke formal
law when mediating disputes between county residents. Both Bogue and Jordan
possess copies of the closed-range map and relevant provisions of the California
Code. What they do not know is the decisional law; for example, neither is aware
of the rule that an intentional trespass is always tortious, even in open range.
Nevertheless, Bogue and Jordan, both familiar figures to the cattlemen and (to
a lesser extent) to the ranchette owners of rural Shasta County, have done more
than anyone else to educate the populace about formal trespass law.
What do ordinary rural residents know of that law? To a remarkable degree the
landowners interviewed did know whether their own lands were within open or
closed range. Of the twenty-five landowners asked to identify whether they lived
in open or closed range, twenty-one provided the correct answer, including two
who were fully aware that they owned land in both.36 This level of knowledge
is probably atypically high.37 Most of the landowner interviews were conducted
in the Round Mountain and Oak Run areas. The former was the site in 1973 of
 Order without Law: How Neighbors Settle Disputes (excerpt) 663

the Caton’s Folly closed-range battle. More important, Frank Ellis’ aggressive
herding had provoked a furious closed-range battle in the Oak Run area just
six months before the landowner interviews were conducted. Two well-placed
sources—the Oak Run postmaster and the proprietor of the Oak Run general
store—estimated that this political storm had caught the attention of perhaps
80 percent of the area’s adult residents. In the summer of 1982, probably no
populace in the United States was more alert to the legal distinction between
open and closed range than were the inhabitants of the Oak Run area.38
What do laymen know of the substantive rules of trespass law? In particular,
what do they know of how the rules vary from open to closed range? Individu-
als who are not legal specialists tend to conceive of these legal rules in black-
and-white terms: either the livestock owners or the trespass victims “have the
rights.” We have seen, however, that the law of animal trespass is quite esoteric.
An animal owner in open range, for example, is liable for intentional trespass,
trespass through a lawful fence, or trespass by a goat. Only a few rural residents
of Shasta County know anything of these subtleties. “Estray” and “lawful fence,”
central terms in the law of animal trespass, are not words in the cattlemen’s
everyday vocabulary. Neither of the two most sophisticated open-range ranch-
ers interviewed was aware that enclosure by a lawful fence elevates a farmer’s
rights to recover for trespass. A traditionalist, whose cattle had often caused
mischief in the Northeastern Sector foothills, thought estrays could never be
seized in open range, although a lawful fence gives a trespass victim exactly
that entitlement. No interviewee was aware that Ellis’ intentional herding on his
neighbors’ lands in open range had been in excess of his legal rights.
As most laymen in rural Shasta County see it, trespass law is clear and simple.
In closed range, an animal owner is strictly liable for trespass damages. (They
of course never used, and would not recognize, the phrase “strict liability,”
which in the law of torts denotes liability even in the absence of negligence.)
In open range, their basic premise is that an animal owner is never liable. When
I posed hypothetical fact situations designed to put their rules under stress, the
lay respondents sometimes backpedaled a bit, but they ultimately stuck to the
notion that cattlemen have the rights in open range and trespass victims the
rights in closed range.
Legal Specialists’ Knowledge of Trespass Law
The laymen’s penchant for simplicity enabled them to identify correctly
the substance of the English strict-liability rule on cattle trespass that formally
applies in closed range. In that regard, the laymen outperformed the judges,
attorneys, and insurance adjusters who were interviewed. In two important
respects the legal specialists had a poorer working knowledge of trespass and
estray rules in Shasta County than did the lay landowners.39 First, in contrast to
the landowners, the legal specialists immediately invoked negligence principles
when asked to analyze rights in trespass cases. In general, they thought that a
664 Anarchy and the Law

cattleman would not be liable for trespass in open range (although about half
seemed aware that this result would be affected by the presence of a lawful
fence), and that he would be liable in closed range only when negligent. The
negligence approach has so dominated American tort law during this century
that legal specialists—insurance adjusters in particular—may fail to identify
narrow pockets where strict liability rules, such as the English rule on cattle
trespass, formally apply.40
Second, unlike the lay rural residents, the legal specialists knew almost
nothing about the location of the closed-range districts in the county.41 For
example, two lawyers who lived in rural Shasta County and raised livestock as
a sideline were ignorant of these boundaries; one incorrectly identified the kind
of range in which he lived, and the other admitted he did not know what areas
were open or closed. The latter added that this did not concern him because he
would fence his lands under either legal regime.
Four insurance adjusters who settle trespass-damage claims in Shasta County
were interviewed. These adjusters had little working knowledge of the location
of closed-range and open-range areas or of the legal significance of those des-
ignations. One incorrectly identified Shasta County as an entirely closed-range
jurisdiction. Another confused the legal designation “closed range” with the
husbandry technique of keeping livestock behind fences; he stated that he did
not keep up with the closed range situation because the fence situation changes
too rapidly to be worth following. The other two adjusters knew a bit more about
the legal situation. Although neither possessed a closed-range map, each was
able to guess how to locate one. However, both implied that they would not
bother to find out whether a trespass incident had occurred in open or closed
range before settling a claim. The liability rules that these adjusters apply to
routine trespass claims seemed largely independent of formal law.42
The Settlement of Trespass Disputes
If Shasta County residents were to act like the farmer and the rancher in
Coase’s parable, they would settle their trespass problems in the following way.43
First, they would look to the formal law to determine who had what entitle-
ments. They would regard those substantive rules as beyond their influence (as
“exogenous,” to use the economists’ adjective). When they faced a potentially
costly interaction, such as a trespass risk to crops, they would resolve it “in
the shadow of”44 the formal legal rules. Because transactions would be cost-
less, enforcement would be complete: no violation of an entitlement would be
ignored. For the same reason, two neighbors who interacted on a number of
fronts would resolve their disputes front by front, rather than globally.
The field evidence casts doubt on the realism of each of these literal features
of the parable. Because Coase himself was fully aware that transactions are
costly and thus that the parable was no more than an abstraction, the contrary
evidence in no way diminishes his monumental contribution in “The Problem
 Order without Law: How Neighbors Settle Disputes (excerpt) 665

of Social Cost.” Indeed the evidence is fully consistent with Coase’s central
idea that, regardless of the content of law, people tend to structure their affairs
to their mutual advantage. Nevertheless, the findings reported here may serve as
a caution to law-and-economics scholars who have underestimated the impact
of transaction costs on how the world works.45
Norms, Not Legal Rules, Are the Basic Sources of Entitlements
In rural Shasta County, where transaction costs are assuredly not zero, tres-
pass conflicts are generally resolved not in “the shadow of the law” but, rather,
beyond that shadow. Most rural residents are consciously committees to an
overarching norm of cooperation among neighbors.46 In trespass situations, their
applicable particularized norm, adhered to by all but a few deviants, is that an
owner of livestock is responsible for the acts of his animals. Allegiance to this
norm seems wholly independent of normal legal entitlements. Most cattlemen
believe that a rancher should keep his animals from eating a neighbor’s grass,
regardless of whether the range is open or closed. Cattlemen typically couch
their justifications for the norm in moral terms. Marty Fancher: “Suppose I sat
down [uninvited] to a dinner your wife had cooked?” Dick Coombs: It “isn’t
right” to get free pasturage at the expense of one’s neighbors. Owen Shellworth:
“[My cattle] don’t belong [in my neighbor’s field].” Attorney-rancher Pete
Schultz: A cattleman is “morally obligated to fence” to protect his neighbor’s
crops, even in open range.
The remainder of this chapter describes in greater detail how the norms of
neighborliness operate and how deviants who violate these norms are informally
controlled. The discussion also identifies another set of deviants: trespass victims
who actually invoke their formal legal rights.
Incomplete Enforcement: The Live-and-Let-Live Philosophy
The norm that an animal owner should control his stock is modified by an-
other norm that holds that a rural resident should put up with (“lump”) minor
damage stemming from isolated trespass incidents. The neighborly response to
an isolated infraction is an exchange of civilities. A trespass victim should notify
the animal owner that the trespass has occurred and assist the owner in retrieving
the stray stock. Virtually all residents have telephones, the standard means of
communication. A telephone report is usually couched not as a complaint but
rather as a service to the animal owner, who, after all, has a valuable asset on the
loose. Upon receiving a telephone report, a cattleman who is a good neighbor
will quickly retrieve the animals (by truck if necessary), apologize for the oc-
currence, and thank the caller. The Mortons and the Shellworths, two ranching
families in the Oak Run area particularly esteemed for their neighborliness,
have a policy of promptly and apologetically responding to their neighbors’
notification of trespass.47
Several realities of country life in Shasta County help explain why residents
are expected to put up with trespass losses. First, it is common for a rural
666 Anarchy and the Law

landowner to lose a bit of forage or to suffer minor fence damage. The area
northeast of Redding lies on a deer migration route. During the late winter and
early spring thousands of deer and elk move through the area, easily jumping
the barbed-wire fences.48 Because wild animals trespass so often, most rural
residents come to regard minor damage from alien animals not as an injurious
event but as an inevitable part of life.
Second, most residents expect to be on both the giving and the receiving
ends of trespass incidents. Even the ranchette owners have, if not a few hobby
livestock, at least several dogs, which they keep for companionship, security,
and pest control. Unlike cattle, dogs that trespass may harass, or even kill,
other farm animals. If trespass risks are symmetrical, and if victims bear all
trespass losses, accounts balance in the long run. Under these conditions, the
advantage of reciprocal lumping is that no one has to expend time or money
to settle disputes.
The norm of reciprocal restraint that underlies the “live-and-let-live” philoso-
phy also calls for ranchers to swallow the costs of boarding another person’s
animal, even for months at a time. A cattleman often finds in his herd an animal
wearing someone else’s brand. If he recognizes the brand he will customarily
inform its owner, but the two will often agree that the simplest solution is for
the animal to stay put until the trespass victim next gathers his animals, an event
that may be weeks or months away. The cost of “cutting” a single animal from
a larger herd seems to underlie this custom. Thus, ranchers often consciously
provide other people’s cattle with feed worth perhaps as much as $10 to $100
per animal. Although Shasta County ranchers tend to regard themselves as
financially pinched, even ranchers who know that they are legally entitled to
recover feeding costs virtually never seek monetary compensation for board-
ing estrays. The largest ranchers northeast of Redding who were interviewed
reported that they had never charged anyone or been charged by anyone for
costs of that sort. Even when they do not know to whom a stray animal belongs,
they put the animal in their truck the next time they take a load of animals to
the auction yard at Cottonwood and drop it off without charge so that the brand
inspector can locate the owner.49
Mental Accounting of Interneighbor Debts
Residents who own only a few animals may of course be unable to see
any average reciprocity of advantage in a live-and-let-live approach to animal
trespass incidents. This would be true, for example, of a farmer whose fields
frequently suffered minor damage from incursions by a particular rancher’s
livestock. Shasta County norms entitle a farmer in that situation to keep track
of those minor losses in a mental account, and eventually to act to remedy the
imbalance.
A fundamental feature of rural society makes this enforcement system
feasible: Rural residents deal with one another on a large number of fronts,
 Order without Law: How Neighbors Settle Disputes (excerpt) 667

and most residents expect those interactions to continue far into the future.
In sociological terms, their relationships are “multiplex,” not “simplex.”50 In
game-theoretic terms, they are engaged in iterated, not single-shot, play.51 They
interact on water supply, controlled burns, fence repairs, social events, staffing
the volunteer fire department, and so on. Where population densities are low,
each neighbor looms larger. Thus any trespass dispute with a neighbor is almost
certain to be but one thread in the rich fabric of a continuing relationship.
A person in a multiplex relationship can keep a rough mental account of
the outstanding credits and debits in each aspect of that relationship.52 Should
the aggregate account fall out of balance, tension may mount because the net
creditor may begin to perceive the net debtor as an overreacher. But as long
as the aggregate account is in balance, neither party need be concerned that
particular subaccounts are not. For example, if a rancher were to owe a farmer
in the trespass subaccount, the farmer could be expected to remain content
if that imbalance were to be offset by a debt he owed the rancher in, say, the
water-supply subaccount.53
The live-and-let-live norm also suggests that neighbors should put up with
minor imbalances in their aggregate accounts, especially when they perceive
that their future interactions will provide adequate opportunities for settling old
scores. Creditors may actually prefer having others in their debt. For example,
when Larry Brennan lost seven tons of baled hay to Frank Ellis’ cattle in open
range, Brennan (although he did not know it) had a strong legal claim against
Ellis for intentional trespass. Brennan estimated his loss at between $300 and
$500, hardly a trivial amount. When Ellis learned of Brennan’s loss he told Bren-
nan to “come down and take some hay” from Ellis’ barn. Brennan reported that
he declined this offer of compensation, partly because he thought he should not
have piled the bales in an unfenced area, but also because he would rather have
Ellis in debt to him than be in debt to Ellis. Brennan was willing to let Ellis run
up a deficit in their aggregate interpersonal accounts because he thought that as
a creditor he would have more leverage over Ellis’ future behavior.
The Control of Deviants: The Key Role of Self-Help
The rural Shasta County population includes deviants who do not adequately
control their livestock and run up excessive debts in their informal accounts
with their neighbors. Frank Ellis, for example, was notoriously indifferent about
his reputation among his neighbors. In general, the traditionalists who let their
animals loose in the mountains during the summer are less scrupulous than the
modernists are in honoring the norms of neighborliness. This is likely due to the
fact that traditionalists have less complex, and shorter-lived, interrelationships
with the individuals who encounter their range cattle.
To discipline deviants, the residents of rural Shasta County use the following
four types of countermeasures, listed in escalating order of seriousness: (1) self-
help retaliation; (2) reports to county authorities; (3) claims for compensation
668 Anarchy and the Law

informally submitted without the help of attorneys; and (4) attorney-assisted

claims for compensation. The law starts to gain bite as one moves down this
list.
Self-help. Not only are most trespass disputes in Shasta County resolved
according to extralegal rules, but most enforcement actions are also extralegal.
A measured amount of self-help—an amount that would serve to even up ac-
counts54—is the predominant and ethically preferred response to someone who
has not taken adequate steps to prevent his animals from trespassing.
The mildest form of self-help is truthful negative gossip. This usually works
because only the extreme deviants are immune from the general obsession with
neighborliness. Although the Oak Run-Round Mountain area is undergoing a
rapid increase in population, it remains distinctly rural in atmosphere. People
tend to know one another, and they value their reputations in the community.
Some ranching families have lived in the area for several generations and in-
clude members who plan to stay indefinitely. Members of these families seem
particularly intent on maintaining their reputations as good neighbors. Should
one of them not promptly and courteously retrieve a stray, he might fear that
any resulting gossip would permanently besmirch the family name.
Residents of the Northeastern Sector foothills seem quite conscious of the role
of gossip in their system of social control. One longtime resident, who had also
lived for many years in a suburb of a major California urban area, observed that
people in the Oak Run area “gossip all the time” much more than in the urban
area. Another reported intentionally using gossip to sanction a traditionalist
who had been “impolite” when coming to pick up some stray mountain cattle;
he reported that application of this self-help device produced an apology, an
outcome itself presumably circulated through the gossip system.
The furor over Frank Ellis’ loose cattle in the Oak Run area induced area
residents to try a sophisticated variation of the gossip sanction. The ranchette
residents who were particularly bothered by Ellis’ cattle could see that he was
utterly indifferent to his reputation among them. They thought, however, that
as a major rancher, Ellis would worry about his reputation among the large
cattle operators in the county. They therefore reported Ellis’ activities to the
Board of Directors of the Shasta County Cattlemen’s Association. This move
proved unrewarding, for Ellis was also surprisingly indifferent to his reputation
among the cattlemen.55
When milder measures such as gossip fail, a person is regarded as being
justified in threatening to use, and perhaps even actually using, tougher self-help
sanctions. Particularly in unfenced country, a victim may respond to repeated
cattle trespasses by herding the offending animals to a location extremely in-
convenient for their owner.56 Another common response to repeated trespasses is
to threaten to kill a responsible animal should it ever enter again. Although the
killing of trespassing livestock is a crime in California,57 six landowners—not
noticeably less civilized than the others—unhesitatingly volunteered that they
 Order without Law: How Neighbors Settle Disputes (excerpt) 669

had issued death threats of this sort. These threats are credible in Shasta County
because victims of recurring trespasses, particularly if they have first issued a
warning, feel justified in killing or injuring the mischievous animals.58 Despite
the criminality of the conduct (a fact not necessarily known to the respondents),
I learned the identity of two persons who had shot trespassing cattle. Another
landowner told of running the steer of an uncooperative neighbor into a fence.
The most intriguing report came from a rancher who had had recurrent problems
with a trespassing bull many years before. This rancher told a key law enforce-
ment official that he wanted to castrate the bull—“to turn it into a steer.” The
official replied that he would turn a deaf ear if that were to occur. The rancher
asserted that he then carried out his threat.
It is difficult to estimate how frequently rural residents actually resort to
violent self-help. Nevertheless, fear of physical retaliation is undoubtedly one
of the major incentives for order in rural Shasta County. Ranchers who run herds
at large freely admit that they worry that their trespassing cattle might meet
with violence. One traditionalist reported that he is responsive to complaints
from ranchette owners because he fears they will poison or shoot his stock. A
judge for a rural district of the county asserted that a vicious animal is likely
to “disappear” if its owner does not control it. A resident of the Oak Run area
stated that some area residents responded to Frank Ellis’ practice of running
herds at large by rustling Ellis’ cattle. He suggested that Ellis print tee shirts
with the inscription: “Eat Ellis Beef. Everyone in Oak Run Does!”
Complaints to public officials. The longtime ranchers of Shasta County
pride themselves on being able to resolve their problems on their own. Except
when they lose animals to rustlers, they do not seek help from public officials.
Although ranchette owners also use the self-help remedies of gossip and vio-
lence, they, unlike the cattlemen, sometimes respond to a trespass incident by
contacting a county official who they think will remedy the problem.59 These
calls are usually funneled to the animal control officer or brand inspector, who
both report that most callers are ranchette owners with limited rural experi-
ence. As already discussed, these calls do produce results. The county officials
typically contact the owner of the animal, who then arranges for its removal.
Brad Bogue, the animal control officer, reported that in half the cases the caller
knows whose animal it is. This suggests that callers often think that requests for
removal have more effect when issued by someone in authority.
Mere removal of an animal may provide only temporary relief when its owner
is a mountain lessee whose cattle have repeatedly descended upon the ranchettes.
County officials therefore use mild threats to caution repeat offenders. In closed
range, they may mention both their power to impound the estrays and the risk
of criminal prosecution. These threats appear to be bluffs; as noted, the county
never impounds stray cattle when it can locate an owner, and it rarely prosecutes
cattlemen (and then only when their animals have posed risks to motorists).
In open range, county officials may deliver a more subtle threat: not that they
670 Anarchy and the Law

will initiate a prosecution, but that, if the owner does not mend his ways, the
Board of Supervisors may face insuperable pressure to close the range in the
relevant area. Because cattlemen perceive that a closure significantly diminishes
their legal entitlements in situations where motorists have collided with their
livestock, this threat can catch their attention.60
A trespass victim’s most effective official protest is one delivered directly to
his elected county supervisor—the person best situated to change stray-cattle
liability rules. Many Shasta County residents are aware that traditionalist cattle-
men fear the supervisors more than they fear law enforcement authorities.
Thus in 1973 the alfalfa farmer John Woodbury made his repeated phone
calls about mountain cattle not to Brad Bogue but to Supervisor John Ca-
ton. When a supervisor receives many calls from trespass victims, his first
instinct is to mediate the crisis. Supervisor Norman Wagoner’s standard
procedure was to assemble the ranchers in the area and advise them to put
pressure on the offender or else risk the closure of the range. Wagoner’s
successor, Supervisor John Caton, similarly told Frank Ellis that he would
support a closure at Oak Run unless Ellis built three miles of fence along the
Oak Run Road. If a supervisor is not responsive to a constituent’s complaint,
the constituent may respond by circulating a closure petition, as Doug Heinz
eventually did in Oak Run.
The rarity of claims for monetary relief. Because Shasta County residents
tend to settle their trespass disputes beyond the shadow of the law, one might
suspect that the norms of neighborliness include a norm against the invocation
of formal legal rights. And this norm is indeed entrenched.61 Owen Shellworth:
“I don’t believe in lawyers [because there are] always hard feelings [when you
litigate].” Tony Morton: “[I never press a monetary claim because] I try to be a
good neighbor.” Norman Wagoner: “Being good neighbors means no lawsuits.”
Although trespasses are frequent, Shasta County’s rural residents virtually never
file formal trespass actions against one another. John Woodbury, for example,
made dozens of phone calls to Supervisor John Caton, but never sought monetary
compensation from the traditionalists whose cattle had repeatedly marauded
his alfalfa field. Court records and conversations with court clerks indicate that
in most years not a single private lawsuit seeking damages for either trespass
by livestock or the expense of boarding estrays is filed in the county’s courts.62
Not only do the residents of the Northeastern Sector foothills refrain from fil-
ing formal lawsuits, but they are also strongly disinclined to submit informal
monetary claims to the owners of trespassing animals.63
The landowners who were interviewed clearly regard their restraint in seek-
ing monetary relief as a mark of virtue. When asked why they did not pursue
meritorious legal claims arising from trespass or fence-finance disputes, various
landowners replied: “I’m not that kind of guy”; “I don’t believe in it”; “I don’t
like to create a stink”; “I try to get along.” The landowners who attempted to
provide a rationale for this forbearance all implied the same one, a long-term
 Order without Law: How Neighbors Settle Disputes (excerpt) 671

reciprocity of advantage. Ann Kershaw: “The only one that makes money
[when you litigate] is the lawyer.” AI Levitt: “I figure it will balance out in the
long run.” Pete Schultz: “I hope they’ll do the same for me.” Phil Ritchie: “My
family believes in ‘live and let live.’”
Mutual restraint saves parties in a long-term relationship the costs of going
through the formal claims process. Adjoining landowners who practice the
live-and-let-live approach are both better off whenever the negative externalities
from their activities are roughly in equipoise. Equipoise is as likely in closed
range as in open. Landowners with property in closed range—the ones with
the greatest formal legal rights—were the source of half of the quotations in
the prior two paragraphs.
When a transfer is necessary to square unbalanced accounts, rural neighbors
prefer to use in-kind payments, not cash. Shasta County landowners regard a
monetary settlement as an arms’ length transaction that symbolizes an unneigh-
borly relationship. Should your goat happen to eat your neighbor’s tomatoes, the
neighborly thing for you to do would be to help replant the tomatoes; a transfer
of money would be too cold and too impersonal.64 When Kevin O’Hara’s cattle
went through a break in a fence and destroyed his neighbor’s corn crop (a loss
of less than $100), O’Hara had to work hard to persuade the neighbor to accept
his offer of money to compensate for the damages. O’Hara insisted on making
this payment because he “felt responsible” for his neighbor’s loss, a feeling that
would not have been in the least affected had the event occurred in open instead
of closed range. There can also be social pressure against offering monetary
settlements. Bob Bosworth’s father agreed many decades ago to pay damages
to a trespass victim in a closed-range area just south of Shasta County; other
cattlemen then rebuked him for setting an unfortunate precedent. The junior
Bosworth, in 1982 the president of the Shasta County Cattlemen’s Association,
could recall no other out-of-pocket settlement in a trespass case.
Trespass victims who sustain an unusually large loss are more likely to take
the potentially deviant step of making a claim for monetary relief. Among those
interviewed were adjusters for the two insurance companies whose liability poli-
cies would be most likely to cover losses from animal trespass. The adjusters’
responses suggest that in a typical year these companies receive fewer than ten
trespass damage claims originating in Shasta County. In the paradigmatic case,
the insured is not a rancher but rather a ranchette owner, whose family’s horse
has escaped and trampled a neighboring homeowner’s shrubbery. The claimant
is typically not represented by an attorney, a type of professional these adjusters
rarely encounter. The adjusters also settle each year two or three trespass claims
that homeowners or ranchette owners have brought against ranchers. Ranchers
who suffer trespasses virtually never file claims against others’ insurance com-
panies. An adjuster for the company that insures most Shasta County ranchers
stated that he could not recall, in his twenty years of adjusting, a single claim
by a rancher for compensation for trespass damage.
672 Anarchy and the Law

Attorney-assisted claims. The landowners, particularly the ranchers, express

a strong aversion to hiring an attorney to fight one’s battles. To hire an attorney
is to escalate a conflict. A good neighbor does not do such a thing because the
“natural working order” calls for two neighbors to work out their problems
between themselves. The files in the Shasta County courthouses reveal that
the ranchers who honor norms of neighborliness—the vast majority—are not
involved in cattle-related litigation of any kind.
I did uncover two instances in which animal-trespass victims in the Oak
Run-Round Mountain area had turned to attorneys. In one of these cases the
victim actually filed a formal complaint. Because lawyer-backed claims are so
unusual, these two disputes, both of them bitter, deserve elaboration.
The first involved Tom Hailey and Curtis McCall. For three generations,
Hailey’s family has owned a large tract of foothill forest in an open-range area
near Oak Run. In 1978 Hailey discovered McCall’s cattle grazing on some of
Hailey’s partially fenced land. Hailey suspected that McCall had brought the
animals in through a gate in Hailey’s fence. When Hailey confronted him, Mc-
Call, who lived about a mile away, acted as if the incursion had been accidental.
Hailey subsequently found a salt block on the tract—an object he could fairly
assume that McCall had put there to service his trespassing herd. Hailey thus
concluded that McCall had not only deliberately trespassed but had also aggra-
vated the offense by untruthfully denying the charge. Hailey seized the salt block
and consulted an attorney, who advised him to seek compensation from McCall.
The two principals eventually agreed to a small monetary settlement.
Hailey is a semi-retired government employee who spends much of his time
outside of Shasta County; he is regarded as reclusive and eccentric—certainly
someone outside the mainstream of Oak Run society. McCall, a retired engineer
with a hard-driving style, moved to Shasta County in the late 1970s to run a small
livestock ranch. The Haileys refer to him as a “Texan”—a term that in Shasta County
connotes someone who is both an outsider and lacks neighborly instincts.
The second dispute involved Doug Heinz and Frank Ellis. As described in
Chapter 2, Heinz had the misfortune of owning a ranchette near Ellis’ ranch.
After experiencing repeated problems with Ellis’ giant cattle herds, Heinz uni-
laterally seized three animals that had broken through his fence. Heinz boarded
these animals for three months without notifying Ellis. Heinz later asserted he
intended to return them when Ellis next held a roundup. According to Heinz,
Ellis eventually found out that Heinz had the animals and asked for their return.
Heinz agreed to return them if Ellis would pay pasturage costs. When Ellis
replied, “You know I’m good for it,” Heinz released the animals and sent Ellis
a bill. Ellis refused to pay the bill, and further infuriated Heinz by calling him
“boy” whenever Heinz brought up the debt.
On January 8, 1981, Heinz filed a small-claims action against Ellis to
recover $750 “for property damage, hay and grain ate [sic] by defendant’s
cattle, boarding of animals.”65 Acting through the attorney he kept on retainer,
 Order without Law: How Neighbors Settle Disputes (excerpt) 673

Ellis responded eight days later with a separate civil suit against Heinz.66 El-
lis’ complaint sought $1,500 compensatory and $10,000 punitive damages
from Heinz for the shooting deaths of two Black Brangus cows that Ellis had
pastured on Bureau of Land Management lands; it also sought compensation
for the weight loss Ellis’ three live animals had sustained during the months
Heinz had been feeding them. The two legal actions were later consolidated.
Heinz, who called Ellis’ allegation that he had killed two cows “100 percent
lies” and “scare tactics,” hired an attorney based in Redding to represent him.
This attorney threatened to pursue a malicious prosecution action against Ellis
if Ellis persisted in asserting that Heinz had slain the Black Brangus cows. In
December 1981, the parties agreed to a settlement under the terms of which
Ellis paid Heinz $300 in damages and $100 for attorney fees. Ellis’ insurance
company picked up the tab. By that time Heinz was spearheading a political
campaign to close the range Ellis had been using.
The Heinz-Ellis and Hailey-McCall disputes share several characteristics.
Although both arose in open range, in each instance legal authority favored the
trespass victim: Hailey, because McCall’s trespass had been intentional; and Heinz,
because Ellis’ animals had broken through an apparently lawful fence.67 In both
instances the victim, before consulting an attorney, had attempted to obtain informal
satisfaction but had been rebuffed. Each victim came to believe that the animal
owner had not been honest with him. Each dispute was ultimately settled in the
victim’s favor. In both instances, neither the trespass victim nor the cattle owner was
a practiced follower of rural Shasta County norms. Thus other respondents tended
to refer to the four individuals involved in these two claims as “bad apples,” “odd
ducks,” or otherwise as people not aware of the natural working order. Ordinary
people, it seems, do not often turn to attorneys to help resolve disputes.68
Notes
1. My field research relied heavily on face-to-face interviews. In all, seventy-three
interviews were conducted, most of them in the summer of 1982. They were ar-
ranged with two sorts of people: landowners in the Oak Run-Round Mountain area,
and a somewhat larger number of specialists—such as attorneys, claims adjusters,
and government employees—thought likely to be knowledgeable about how rural
residents resolve stray-cattle disputes. Various government records were also
consulted, partly to have a crosscheck on the landowners’ version of history. The
techniques used are more fully described in the Appendix.
2. See infra Chapter 6, text following note 9.
3. Division of Agric. Sci., Univ. of Cal., Leaflet No. 21184, Beef Production in Cali-
fornia 12-13 (Nov. 1980).
4. Cf. Cal. Agric. Code 16803 (West 1968) (cattlemen grazing herds on open range
must include at least one bull for every thirty cows). The refinement of artificial
insemination techniques has enabled some ranchers to increase the ratio of cows
to bulls in herds kept behind fences.
5. Beef Production in California, supra note 3, at 3, 5.
6. None of the landowners interviewed mentioned an instance in which trespassing
cattle had caused personal injury. Two insurance adjusters, who frequently had
been called upon to settle dog-bite claims, could remember, between them, only
674 Anarchy and the Law

one personal-injury claim arising from cattle—an instance in which a cow had
stepped on someone’s foot.
7. Fletcher v. Rylands, I L.R.-Ex. 265, 280 (1866) (dictum) (Blackburn, J.). See also
3 William Blackstone, Commentaries *211 (“A man is answerable for not only
his own trespass, but that of his cattle also”). This rule was established in England
by 1353 at the latest. I Select Cases of Trespass from the Kings Courts, 1307-I399
lxxviii (Morris S. Arnold ed. 1985). The details of animal-trespass law are explored
more fully in Ellickson, “Of Coase and Cattle: Dispute Resolution among Neighbors
in Shasta County,” 38 Stan. L. Rev. 623, 659-667 (1986).
8. See, e.g., Montezuma Improvement C. v. Simmerly, 181 Cal. 722, 724, 189 P. 100,
101 (1919). A trespass victim’s own misconduct, such as failing to close a cattle gate
or breaching a contractual duty to build a fence, may diminish or bar his recovery.
See Glanville L. Williams, Liability for Animals 178-181 (1939). In California,
misconduct by a plaintiff does not typically operate as a complete defense in a strict
liability action. Daly v. General Motors Corp., 20 Cal. 3d 725, 575 P.2d 1162, 144
Cal. Rptr. 380 (1978) (products liability case).
9. Many authorities assert that the western states have been the chief followers of
“fencing-out” rules. See, e.g., 2 Fowler V. Harper and Fleming James, The Law
of Torts 14.10 (1956). Nineteenth-century treatises on fence law reveal, however,
that in that era, fencing-out was the dominant rule throughout the United States,
particularly in the northern states. See W. W. Thornton, The Law of Railroad Fences
and Private Crossings 8-10 (1882) (identifying thirteen states following the English
rule and twenty-one states having fencing-out regimes); Ransom H. Tyler, The Law
of Boundaries, Fences, and Window Lights 361-512 (1874) (state-by-state review
of fence law, indicating, at 451, that Michigan, for example, enacted a fencing out
statue in 1847).
10. 1850 Cal. Stat., ch. 49, 131. See Comerford v. Dupuy, 17 Cal. 308 (1861); Waters v.
Moss, 12 Cal. 535 (1859) (dictum). Because lawful-fence statutes are consequently
suited to enforcement by law “fence viewers,” described infra note 27. For a more
extended analysis of the merits of alternative rules of cattle-trespass liability, see
infra Chapter 11, text accompanying notes 3-11.
11. See Note, “Torts: Trespass by Animals upon Unenclosed Lands in California,” 7
Cal. L. Rev. 365 (1919).
12. 1915 Cal. Stat. 636 (current version at Cal. Agric. Code 17001-17128 (West 1968
& Supp. 1986)).
13. Although the 1915 statute nominally dealt with only a trespass victim’s rights to
take up estrays (strays) California case law has consistently held that a statutory
right to seize estrays on unfenced land carries with it the right to recover trespass
damages under the traditional common law rule of strict liability. See, e.g., Mont-
ezuma Improvement Co. v. Simmerly, 181 Cal. 722, 189 P.100 (1919); Williams v.
Goodwin, 41 Cal. App 3d 496, 116 Cal. Rptr. 200 (1974) (dictum).
14. 1915 Cal. Stat. 636 (current version at Cal. Agric. Code 17123-17126 (West 1968)).
Subsequent amendments repealed the exemptions applicable in all of Del Norte
County, and in parts of Shasta and Trinity counties. See Cal. Agric. Code §§17123-
17I26 (West 1968). Cal. Agric. Code §17124 (West 1968) authorizes the board of
supervisors of any county to convert closed-range areas to open range. Responding
in part to lobbying efforts by local cattlemen’s associations, an increasing number
of California’s foothill counties have “opened” parts of their mountain forest. See,
e.g., Amador County, Cal., Ordinance 590 (Apr. 26, 1977); Placer County, Cal.,
Ordinance 2017-B (June, 1976).
15. 1945 Ca. Stat. 1538-39 (current version at Cal. Agric. Code 17126 (West 1968)).
 Order without Law: How Neighbors Settle Disputes (excerpt) 675

16. 1945 Ca. Stat. 1539 (current version at Cal. Agric. Code 17126 (West 1968 & Supp.
1986)).
17. In 1974 the state legislature granted similar authority to the Board of Supervisors of
Trinity County, Shasta’s neighbor to the west. 1974 Cal. Stat. 409 (current version
at Cal. Agric. Code §17127 (West Supp. 198)). A number of other western states
that generally adhere to an open-range regime also authorize substrate entities to
“close” parts of their range. See, e.g., Maguire v. Yanke, 99 Idaho 829, 590 P.2d
85 (1978) (describing Idaho procedure through which landowners can petition to
close range on a district-by-district basis); Wash. Rev. Code Ann. §16.24.010 (1962)
(counties without townships granted power to close range).
18. A map issued by the Shasta County Department of Public Works in 1981 showed
twenty-eight separate areas the Board of Supervisors had closed by ordinance since
1945. Although most of the closed areas were located near Redding, there were
areas of closed range in the hinterland in every direction from the city.
19. Defenses based on the trespass victim’s misconduct are discussed supra note 8.
20. Persons other than the animal’s owner could conceivably be held liable for an
animal’s damage. The California courts (at least until the late 1980s) were as
expansive as any state’s in imposing tort liability. They would have been likely to
hold a landlord who had leased land for grazing liable were he negligently to have
abetted trespasses by a lessee’s livestock. Cf. Uccello v. Laudenslayer, 44 Cal.
App. 3d 504, 118Cal. Rptr. 741 (1975) (residential landlord who knew of tenant’s
vicious dog and had the power to have it removed owed a duty of care to tenants’
invitees and could be liable for negligence to dog-bite victim). But cf. Blake v. Dunn
Farms, Inc., 274 Ind. 560, 413 N.E.2d 560 (1980) (landlord not liable for damages
stemming from escape of tenants horse that he knew little about).
21. Other rules may apply when livestock have caused personal injury or damage to
chattels. In closed range, a cattle owner is strictly liable for foreseeable personal
injuries that his livestock have caused. See Williams v. Goodwin, 41 Cal. App. 3d
496, 116 Cal. Rptr. 200 (1974). But cf. Restatement (Second) of Torts §504 (1977)
(denying possessor of unfenced land in open-range recovery for personal injuries on
a strict liability theory). In both open and closed range, the owner of a trespassing
animal would be strictly liable if that animal were to kill animals belonging to the
owner of the premises invaded. See Cal. Civ. Code §3341 (West 1970).
22. See Cal. Agric. Code. §17128 (West 1968) (excepting owners of “goats, swine, or
hogs” from benefits of open-range rule); Shasta County Ordinance Code §3306
(declaring it “unlawful” to permit “any vicious dog or other dangerous animal” to
run at large).
23. Section 17122 of the Agricultural Code reads: “In any county or part of a county
devoted chiefly to grazing and so declared pursuant to this article, a person shall
not have the right to take up any estray animal found upon his premises, or upon
premises to which he has the right of possession, nor shall he have a lien thereon,
unless the premises are entirely enclosed with a good and substantial fence.” Cal.
Agric. Code §17122 (West 1968) (emphasis added). Judicial decisions construe
this sort of provision as also denying a person without such a fence the right to
recover damages for callie trespass. See supra note 13.
24. “A lawful fence is any fence which is good, strong, substantial, and sufficient to
prevent the ingress and egress of livestock. No wire fence is a good and substantial
fence within the meaning of this article unless it has three tightly stretched barbed
wires securely fastened to posts of reasonable strength, firmly set in the ground
not more than one rod [16 ½ feet] apart, one of which wires shall be at least four
feet above the surface of the ground. Any kind of wire or other fence of height,
676 Anarchy and the Law

strength and capacity equal to or greater than the wire fence herein described is a
good and substantial fence within the meaning of this article…” Cal. Agric. Code
§17121 (West 1968). This statutory definition of a lawful fence has remained es-
sentially unchanged since 1919. Compare 1919 Cal. Stat. 1150. The definition is
technologically obsolete because, at least in Shasta County, cattlemen customarily
use at least four strands of barbed wire in their boundary fences. California’s statu-
tory definitions of lawful fences before the invention of barbed wire are described
in R. Tyler, supra note 9, at 482-484 (some samples: stone walls 4 ½ feet high; rail
fence 5 ½ feet high; a 5-foot-high hedge).
25. In some states an open-range cattleman has been held liable for the trespass damages
only when he has deliberately driven his livestock onto the lands of another. See,
e.g., Garcia v. Sumrall, 58 Ariz. 526, 121 P.2d 640 (1942); Richards v. Sanderson,
39 Colo. 270, 89 P. 769 (1907). In other states, the entry of a cattleman’s livestock
has also been regarded as intentionally tortious when he has left them on a range
from which it was substantially certain that they would enter the plaintiff’s lands.
See, e.g., Lazarus v. Phelps, 152 U.S. 81 (1894); Mower v. Olsen, 49 Utah 373, 164
P. 482 (1917). Two reported California decisions deal with the issue of intentional
trespass by livestock owners; in both, applicable statutes prohibited the “herding”
of livestock on the lands of others. The more recent decision, Cramer v. Jenkins,
82 Cal. App. 269, 255 P. 877 (1927), supports the proposition that leaving animals
in a range from which they are substantially certain to trespass constitutes tortious
misconduct. But cf. Logan v. Gedney, 38 Cal. 579 (1869) (implying that active herd-
ing may be required). The California Supreme Court’s pro-plaintiff predilections
during the early 1980s would have inclined it to follow the Cramer approach.
26. Some early California statutes authorized cattle-trespass victims to recover double
damages in certain situations. See, e.g., 1850 Cal. Stat. 131 (victim enclosed by
lawful fence can recover double damages for defendant’s second offense). See also
Nev. Rev. Stat. Ann. §569.440(l) (1986) (entitling trespass victim situated behind
a lawful fence to recover double damages for second offense if the animal owner
had been negligent).
27. See, e.g., Wash. Rev. Code Ann. §16.60.015 (Supp. 1989) (“damages [shall be]
assessed by three reliable, disinterested parties and practical farmers, within five
days next after the trespass has been committed…”). See generally 35 Am. Jur.
2d Fences §§24-32 (1967). The practice of delegating valuation issues to fence
viewers was widespread in the nineteenth century and before. See R. Tyler, supra
note 9, at 395, 399, 459, 476 (describing statutes in New York, Maine, Wisconsin,
and Kansas); William Cronon, Changes in the Land: Indians, Colonists, and the
Ecology of New England 135 (1983) (colonial Massachusetts). At least one of the
early California fence statutes provided for the appointment of fence viewers. See
1860 Cal. Stat. 142 (viewers’ role is to assess the contributions that each adjoining
landowner should make to build a sufficient partition fence).
28. See Montezuma Improvement Co. v. Simmerly, 181 Cal. 722, 189 P. 100 (1919);
Blevins v. Mullally, 22 Cal. App. 519, 135 P. 307 (1913).
29. See Cal. Agric. Code §§17041. 1742, 17091-17095, 17122 (West 1968 & Supp.
1986). The animal owner may contest the propriety of the victim’s invocation of
this self-help remedy. See Yraceburn v. Cape, 60 Cal. App, 374, 212 P. 938 (1923)
(victim wrongly invoked power to seize animals). The distraint procedure also
poses potentially thorny state action and due process issues. Cf. Flagg Brothers,
Inc. v. Brooks; 436 U.S. 149 (1978) (warehouseman’s sale of entrusted goods). The
“right to distrain animals damage feasant” has deep roots in the English common
law. See 3 William Blackstone, Commentaries 8211; G. Williams, supra note 8, at
7-123.
 Order without Law: How Neighbors Settle Disputes (excerpt) 677

30. People v. Dunn, 39 Cal. App. 3d 418, 114 Cal. Rptr. 164 (1974) (dictum).
31. On the issue of whether this represents a reasonable exercise of self-help, compare
Gilson v. Fisk, 8 N.H. 404 (1836) (trespass victim who drove herd three miles away
held liable in damages for death of eight sheep), with Wells v. State, 13 S.W. 889
(Tex. Ct. App. 1890) (victim of intentional trespass did not violate criminal statute
when he drove cattle three to four miles a field). Shasta County trespass victims
sometimes adopt this time-honored self-help strategy. See infra note 56.
32. People v. Dunn, 39 Cal. App. 3d 418,114 Cal. Rptr. 164 (1974). See also Annot.,
12 A.L.R.3d 1103 (1967) (liability for accidentally or intentionally poisoning
trespassing stock). But see Hummel v. State, 69 Okla. Crim. 38, 99 P.2d 913 (1940)
(rancher was privileged to castrate a bull that threatened to impregnate pure-bred
cows grazing on open range).
33. See Shasta County Ordinance Code §3306 (habitual animal trespasses declared to
be a public nuisance, “provided that this section shall not apply to livestock upon
the open range”).
34. The Shasta County Animal Control Office’s Monthly Reports for 1980-1982 indicate
that the office impounded one “bovine” during that period—a stray animal that
Bogue said had been found within one block of the office’s animal shelter. This
figure understates the number of public impoundments because the brand inspec-
tor occasionally hauls stray cattle to the Cottonwood Auction Yard, which is better
equipped than the animal shelter to board livestock.
35. Robert Baker, the county district attorney from 1965 to 1979, could not recall a
single criminal prosecution for cattle trespass on private lands. Gary Glendenning,
the livestock specialist in the detective’s division of the county sheriff’s office, af-
firmed that criminal trespass actions were “never” brought. Criminal proceedings
have been initiated against owners of stray livestock, however, when the stray
animals have repeatedly posed serious risks to motorists. See infra Chapter 5, note
41.
36. Eleven correctly stated they lived in open range; eight correctly stated they lived in
closed range; one gave a flatly wrong answer; one, a partially wrong answer; and
two “didn’t know.”
37. Two interviewees involved in open-range politics had obtained copies of the De-
partment of Public Works’ closed-range map.
38. However, of eleven respondents asked, only three stated that they had known when
buying their land what kind of “legal range” it lay in.
39. This finding can be attributed to the fact, documented below, that trespass and estray
claims are virtually never processed through the formal legal institutions of Shasta
County.
40. Some legal specialists may also believe that the negligence principle is in every
application normatively superior to the principle of strict liability.
41. In addition, neither of the two fence contractors interviewed had any notion of these
boundaries. The county tax assessor assigned to the Oak Run-Round Mountain area
was also unfamiliar with the closed-range map.
42. In his study of the settlement of automobile-liability claims, Ross found the law in
action to be simpler and more mechanical than the formal law, but he did not find
it to be quite as disconnected as animal-trespass law is in Shasta County. See H.
Laurence Ross, Settled Out of Court 134-135, 237-240 (rev. ed. 1980).
43. The scholars involved in the Civil Liability Research Project have attempted to
standardize the vocabulary of dispute resolution. They use “grievance” to describe
a perceived entitlement to pursue a claim against another, “claim” to describe a
demand for redress, and “dispute” to describe a rejected claim. See, e.g., Richard
E. Miller and Austin Sarat, “Grievances, Claims, and Disputes: Assessing the
678 Anarchy and the Law

Adversary Culture,” 15 Law & Soc’y Rev. 525, 527 (1980-81). The usage of this
book is not precise.
44. This now-familiar phrase originated in Robert H. Mnookin and Lewis Kornhauser,
“Bargaining in the Shadow of the Law: The Case of Divorce,” 88 Yale L. J. 950
(1979).
45. Law-and-economics scholars often employ models that explicitly assume that ac-
tors have perfect knowledge of legal rules. See infra Chapter 8, text accompanying
notes 10-13.
46. Although the rural landowners were emphatic about the importance of neighborli-
ness and could offer many specific examples of neighborly behavior, they never
articulated a general formula for how a rural resident should behave. Chapter 10
puts forward the hypothesis that the norms they honored served to maximize their
objective welfare.
47. A trespass victim who cannot recognize the brand of the intruding animal—a
quandary more common for ranchette owners than for ranchers—may telephone
county authorities. Calls of this sort are eventually referred to the brand inspector
or animal control officer who then regards the main priority to be the return of the
animal to its owner.
48. One rancher reported that during the winter he expects to find thirty to forty deer
grazing in his hayfield each night. The owner of a particularly large ranch estimated
that about five hundred deer winter there, a condition he welcomes because he
regards deer as “part of nature.” John Woodbury, a key lobbyist for the passage of
the Caton’s Folly ordinance, stated that elk and deer had eaten more of the grass
in his alfalfa field than mountain cattle ever had.
49. Brand Inspector Bruce Jordan estimated that ranchers drop off approximately
three hundred head of stray livestock at the auction yard each year, and that these
ranchers typically decline to seek compensation from the owners of the strays.
50. See Robert L. Kidder, Connecting Law and Society 70-72 (1983). The phrase
multiplex relationship was first coined in Max Gluckman, The Judicial Process
among the Barotse of Northern Rhodesia 19 (1955).
51. The law-and-society literature has long emphasized that law is not likely to be im-
portant to parties enmeshed in a continuing relationship. For example, Marc Galanter
has observed: “In the American setting, litigation tends to be between parties who
are strangers. Either they never had a mutually beneficial continuing relationship,
as in the typical automobile case, or their relationship—marital, commercial, or,
organizational—is ruptured. In either case, there is no anticipated future relation-
ship. In the American setting, unlike some others, resort to litigation is viewed as
an irreparable breach of the relationship.” Marc Galanter, “Reading the Landscape
of Disputes: What We Know and Don’t Know (and Think We Know) about Our
Allegedly Contentious and Litigious Society,” 31 UCLA L. Rev. 4, 24-25 (1983).
See also infra Chapter 10, text at notes 35-49 (discussion of close-knit groups).
52 Cf. Arthur J. Vidich and Joseph Bensman, Small Town in Mass Society 34 (rev. ed.
1968): “To a great extent these arrangements between friends and neighbors have
a reciprocal character: a man who helps others may himself expect to be helped
later on. In a way the whole system takes on the character of insurance. Of course
some people are more conscious of their premium payments than others and keep
a kind of mental bookkeeping on what they owe and who owes them what; which
is a perfectly permissible practice so long as one does not openly confront others
with unbalanced accounts.”
53. See Oliver E. Williamson, Markets and Hierarchies 256-257 (1975) (a participant
in a continuing relationship seeks to achieve a favorable balance in the overall set
of interactions, not in each separate interaction).
 Order without Law: How Neighbors Settle Disputes (excerpt) 679

54. Even-Up strategies arc discussed infra Chapter 12, text accompanying notes 39-
48.
55. See supra Chapter 2, note 14.
56. Two residents stated in interviews that they had done this. For some scattered
precedents on the legality of this practice, see supra note 31.
57. Cal. Penal Code §597 (a) (West Supp. 1989); People v. Dunn, 39 Cal. App. 3d 418,
114 Cat. Rptr. 164 (1974).
58. Violent self-help—occasionally organized on a group basis as vigilante justice—was
a tradition in the nineteenth-century American West. “The laws (in Wyoming) ap-
peared to require that a farmer fence his land to keep cattle out, but many a farmer
preferred to save the cost of a fence, then wait until cattle came in his land, and with
a shot or two secure a winter’s supply of beef.” Daniel J. Boorstin, The Americans:
The Democratic Experience 30 (1973). See also Ernest Staples Osgood, The Day
of the Cattleman (1929), at 157-160 (lynching of horse thieves); at 242 (killing of
trespassing cattle); and at 252-253 (describing how large cattle companies mobilized
an army to invade Johnson County, Wyoming, to prevent small ranchers from using
violent self-help against the companies’ cattle).
59. The role of complaints to public officials is explored in M. P. Baumgartner, The
Moral Order of a Suburb 80-82 (1988) (New York suburb), and David M. Engel,
“Cases, Conflict, and Accommodation: Patterns of Legal Interaction in an American
Community,” 1983 Am. B. Found Research J. 803, 821 (rural Illinois county).
60. See infra Chapters 5 and 6.
61. Norms against litigation are discussed more generally infra Chapter 14, text ac-
companing notes 36-43.
62. In the Central Valley Justice Court, no small claims for the August 1981 to June
1982 period were provoked by animal trespass, and the civil clerk who had worked
there for eleven years could not remember any. The court’s index of defendants for
the 1975-1982 period indicated that Frank Ellis had been the only large rancher
to become the target of any kind of legal action. In the Burney Justice Court, the
small-claims files for 1980 showed no animal trespass cases, and the clerks could
recall no such cases in their four years on the job.
63. There were several reports that others had informally settled claims for the costs
of boarding estrays. Only one rancher told of paying such a claim; he regarded the
claimant’s pursuit of the money as a “cheap move.”
64. This pattern poses a puzzle for transaction-cost economists, because in-kind trans-
fers tend to be more costly to defect than cash transfers. But see infra Chapter 13,
text accompanying notes 14-17 (in-kind exchange among members contributes to
a group’s cohesion).
65. Heinz v. Ellis, No. 81 SC 7 (Cent. Valley Just. Ct., filed Jan. 8, 1981).
66. Ellis v. Heinz, No. 81 CV 6 (Cent. Valley Just. Ct., filed Jan. 16, 1981).
67. Heinz had technically imperiled his statutory claim for damages under the Estray
Act when he failed to notify the proper public authorities that he had taken up Ellis’
animals. See Cal. Agric. Code §§17042, 17095 (West 1967 & Supp. 1986).
68. See also William E. Nelson, Dispute and Conflict Resolution in Plymouth Colony,
Massachusetts, 1725-1825 (1981) (Plymouth’s particularly litigious individuals
during the 1725-1774 period tended to be people who were poorly socialized);
Harry F. Todd, Jr., “Litigious Marginals: Character and Disputing in a Bavarian
Village,” in The Disputing Process: Law in Ten Societies 86, 118 (Laura Nader
and Harry F. Todd, Jr. eds. 1978) (socially marginal people were disproportionately
represented in civil and criminal litigation).
 About the Editor
Edward P. Stringham holds the Hackley Endowed Chair for Capitalism and
Free Enterprise Studies at Fayetteville State University and is a research fel-
low at the Independent Institute. He is president of the Association of Private
Enterprise Education, editor of the Journal of Private Enterprise, editor of
Anarchy, State, and Public Choice (2006), and author of dozens of articles in
scholarly journals including the Journal of Institutional & Theoretical Econom-
ics, Quarterly Review of Economics & Finance, Journal of Labor Research,
Quarterly Journal of Austrian Economics, Review of Austrian Economics,
Journal of Libertarian Studies, and Independent Review. His work has been
discussed in the San Francisco Chronicle, San Jose Mercury News, Oakland
Tribune, Miami Tribune, and dozens of other newspapers.
Stringham earned his Ph.D. from George Mason University in 2002, and has
won Paper of the Year Award from the Association of Private Enterprise, Best
Article Award from the Society for the Development of Austrian Economics, Second
Place in the Independent Institute Garvey Contest, and Distinguished Young Scholar
Award from the Liberalni Institut and the Prague School of Economics.

About the Contributors

Terry L. Anderson is executive director of the Property and Environment Re-
search Center, senior fellow at the Hoover Institution at Stanford University,
and professor emeritus at Montana State University.

Randy Barnett is Carmack Waterhouse Professor of Legal Theory, Georgetown

University Law Center.

Bruce Benson is DeVoe L. Moore Professor and Distinguished Research Profes-

sor of Economics at Florida State University.

Edmund Burke (1729-1797) was an Anglo-Irish statesman and political theorist

who served for many years in the British House of Commons.

Bryan Caplan is an associate professor of economics at George Mason Uni-

versity.

680
 About the Editor and Contributors 681

Roy A. Childs, Jr. (1949-1992) was the editor of Libertarian Review Magazine
and the lead book reviewer for Laissez Faire Books.

Voltairine de Cleyre (1866-1912) was an anarchist, feminist essayist, and orator.

Tyler Cowen is the Holbert C. Harris Chair of Economics at George Mason Uni-
versity and director of the James Buchanan Center and the Mercatus Center.

Alfred G. Cuzán is a professor of political science at the University of West

Florida.

Robert C. Ellickson is Walter E. Meyer Professor of Property and Urban Law

at Yale Law School.

David Friedman is a professor at Santa Clara University Law School.

David Hart is the director the Liberty Fund’s Online Library of Liberty and is
the founding editor of Humane Studies Review.

John Hasnas is an associate professor of business at Georgetown University

where he teaches courses in ethics and law.

P. J. Hill is George F. Benett Professor of Business and Economics at Wheaton

College.

Randall G. Holcombe is DeVoe Moore Professor of Economics at Florida State

University.

Hans Hoppe is a professor of economics at the University of Nevada, Las Vegas,

and editor-at-large of the Journal of Libertarian Studies.

Jeffrey Rogers Hummel is an associate professor in the Department of Econom-

ics at San Jose State University.

Anthony de Jasay is an independent scholar and author living in Paluel,

France.

Don Lavoie (1951-2001) was the David H. and Charles G. Koch Chair of Eco-
nomics at George Mason University.

Peter Leeson is BB&T Professor for the Study of Capitalism at the Mercatus Center,
George Mason University.
682 Anarchy and the Law

David Lipscomb (1831–1917) was a Church of Christ preacher and editor of

the weekly paper, Gospel Advocate.
Roderick Long is an associate professor of philosophy at Auburn University
and is the editor of the Journal of Libertarian Studies.

Paul Milgrom is a professor of economics and the Shirley and Leonard Ely
Professor of Humanities and Sciences at Stanford University.

Gustave de Molinari (1819-1912) was a Belgian-born economist and the editor

of the Journal des Économistes.

Douglass North is the Spencer T. Olin Professor in Arts & Sciences at Washing-
ton University Saint Louis and is winner of the 1993 Nobel Prize in Economic
Science.

Robert Nozick (1938-2002) was a chair of the department of philosophy and

the Pellegrino University Professor at Harvard University.

David Osterfeld (1950-1993) was a professor of political science at St. Joseph’s

College, Indiana.

Joseph R. Peden (1933-1996) was a professor of history at City University of

New York, Baruch College.

Murray Rothbard (1926-1995) was the S.J. Hall Distinguished Professor of

Economics at University of Nevada, Las Vegas and the founding editor of the
Journal of Libertarian Studies and the Review of Austrian Economics.

Andrew Rutten is a lecturer in political science at Stanford University.

Lysander Spooner (1808-1887) was an American individualist anarchist, abo-

litionist, and legal theorist.

Daniel Sutter is a professor of economics at University of Texas Pan Ameri-

can.

Morris Tannehill (1926-1989) and Linda Tannehill (1939- ) wrote their one
book on political economy as independent scholars.

Benjamin Tucker (1854-1939) was an American individualist anarchist author

who edited the periodical Liberty.

Barry Weingast is the Ward C. Krebs Family Professor in the Department of

Political Science at Stanford University.
 Index
Abreu, Dilip, 602 minarchism v., 504; and modern Ameri-
Adams, John, 454 can society, 458-61; and neccessity for
Adler, Max, 505 frequent revolutions, 454; on political
Against Politics (de Jasay), 342 spectrum, 537n117; public education
aggression, 500-501. See also government; and, 453-54; sectarianism relationship
security to, 459; standing armies and, 457-58;
Albemarle (pre-colonial era settlement), summaries of types of, 529-31; term
437 definition in, 499-501; urbanization and,
Albert, William, 551, 555, 556, 557 457; varieties of, 504-8, 529-31
Alien and Sedition Acts, 454 “Anarchism and American Traditions”
Alienation and the Soviet Economy (Rob- (Cleyre), 11, 452-60
erts), 166n6 anarchist libertarianism. See private-prop-
alternative dispute resolution (ADR), 186. erty anarchism
See also arbitration anarchists, 2, 40-4. See also anarchism;
Althing (national assembly), 590. See also anarchy
medieval Iceland anarcho-capitalism: arbitration networks
“An American Experiment in Anarcho- in, 274-78, 284-91; arguments against
Capitalism: The Not So Wild, Wild disproved, 46-50; characteristics of,
West” (Anderson and Hill), 14-15, 642-43; collusion in, 349-50; courts in,
639-57 44-47; Cowen on, 269, 270-71, 292-
American West: absence of coercive mo- 94; diversity potential in, 43, 56; laws
nopoly in, 643; as anarcho-capitalism in, 44-47, 53; “limited government”
case study, 639, 642; cattlemen’s associ- concept v., 55-56; major tenets of, 642-
ations of, 646-47; civil law development 43; non-Libertarian nature of, 51-53;
in, 647-49; land clubs of, 644-46; min- poor people in, 53-54; power abuse in,
ing camps of, 647-49; misconceptions 349-50; private-property anarchism v.,
about, 639, 643; private enforcement 641; security in, 42-43, 50-51; socialism
organizations of, 647; private property compared to, 55-56; stability in, 47-48;
rights in, 652; reality of, 639-40; statis- as superior to existing government,
tics for homicides in, 643-44; summary 54-55. See also American West; private-
of anarcho-capitalistic character of, property anarchism
654-55; vigilance committees in, 644; anarcho-collectivism, 508-9
wagon trains of, 650-54 anarcho-communism, 507-8
anarchism: agriculture relationship to, anarcho-liberalism, 341-52
457; American Revolution and, 451-53; anarcho-syndicalism, 509-11
chart of variations of, 529; commerce as anarchy: abuse of power in, 349-50; as
weakening, 455-56; constitutions and, always present on international level,
457-58; definition of terms used in, 372; anarcho-capitalist school of thought
499-501; Federalists and, 456; global and, 640-41; assumptions about, 259-60,
commerce and, 456-57; industrialization 341, 342; and common sense, 350-52;
and, 456-57; interdependence v., 459-60; and communist governments, 266n6;

683
684 Anarchy and the Law

concepts of central planning and govern- 637n12. See also alternative dispute
ment v., 266; conceptual relationship to resolution (ADR); anarcho-capitalism
government, 259-61; constitutionalist “Are Public Goods Really Common
school of thought and, 640; cooperation Pools? Considerations of the Evolution
and, 315-16; as current global reality, of Policing and Highways in England”
373-74; as currently fashionable, 341, (Benson), 13, 538-64
342; defined, 2, 40-41, 259, 341, 393, armed populace (for national defense),
640; as existing within in all govern- 156-57
ments, 260-62; government corruption “An Arrow Against All Tyrants” (Over-
form of, 166n10; historical presence ton), 377
of, 371-72, 373-74; as less convenient “artificial” society (Burke), 378
but preferable to governments, 267n20; athletic team organizations, 307-8
liberal theory and, 343-47; as not ul- attorneys. See courts; laws
timately breaking down and leading Augustine (Roman Catholic saint), 568
to government, 371; official executive Aumann, Robert, 602
power as, 267n11; organized crime as, Axelrod, Robert, 140, 540, 602
266n8, 267n15; power structure reality Azfar, Omar, 363
in, 260-62, 349-50; private property
anarchist school of thought and, 640- Babcock, John, 515
41; property rights in, 640; schools of Baden, J., 624
thought regarding public goods theory Bakunin, Mikhail, 266n2, 505, 508-9
within, 640; social contractualist school Bank of Exchange, 509
of thought and, 640; sustainability of, Barnett, Randy, 4, 75-106
371-73; third-party social arrangement Barton, R.F., 626, 628, 631
v., 260-61; in totalitarian regimes, Bastiat, Frederic, 521-22
266n6; as ubiquitous, 259-67; unofficial, Beaird, Paul, 523-24
266n8, 266n10; violence in, 262-65, Beattie, J.M., 547
266n7; v. minimal state, 262. See also Becker, Gary, 588
specific anarchist schools of thought Benson, Bruce, 13, 299, 538-64, 605,
Anarchy, State, and Utopia (Nozick), 5 606, 624-38
Anderson, Terry L., 14-15, 323-24, 639- Beresford, M.W., 553
57 Berman, Harold, 605
Anglo-Saxons. See medieval England Binchy, D.A., 565
animal trespass disputes. See Shasta Blackburn, J., 659
County, California case study Black Panther raid (Chicago, 1969), 51
Annals of Ulster, 569 Blackwell, John, 445, 446
anti-capitalism, 504-7 Blair, Peter Hunter, 541, 543
anti-statism, 377-87. See also libertarian Boal, W., 307
anarchy Bodey, Hugh, 552
arbitration: collusion potential of agencies Bogue, Brad, 661, 662, 669, 670
providing, 274-78, 292-94, 315-21; Boissonade, P., 566
in competitive market-based system, Boone County Company, 653. See also
61-62, 64-65; evolution into monopoly American West
by network of agencies providing, 274- Bosworth, bob, 671
78, 292-94; historical precedents for boycott, 299-300. See also self-enforcing
networks of, 320; in medieval England, contracts
542; in medieval Iceland, 590; minimal Brailsford, H.N., 512
state and, 236-37; in modern society, brehons, 31, 567-79
24-25, 43, 44-45; network of agencies Brennan, Larry, 658, 667
performing, 272-73, 274-78, 284-91, Brubaker, Earl, 135
292-94; in primitive societies, 625, 626, Bryce, James, 586
 Index 685

Buchanan, James M., 327, 344, 358, 540, legal capacity and property rights under,
641-42 579, 582; writing of, 567-68
Buckley, William F., 527 Champagne Fairs (medieval France),
Burke, Edmund, 10, 399-423; on abuses of 602-22
law, 342, 413-16; anti-statism of, 377- charity, 102-3n24. See also poor people
79; on aristocracy, 403-5; on artificial charity economy (for national defense),
law, 412-13; on artificial society, 400- 155-56
401, 415; on artificial theology, 413-14; Charleston, Virginia Mining Company,
as conservatism, 527; on courts of law, 650, 652-53. See also American West
417; on despotism, 401-3; on human checks and balances, 34-35, 87
reason, 527; as liberal anarchist, 377- Chevalier, Michel, 385
78; limitations of, 378; on mixed form Chicago School economists, 121-22n10,
of government/divisive factionalism, 122-23n12, 123-24n13
409-12; on natural society, 399-400, Childs, Roy A., Jr., 6-7, 218-31, 250-58,
409, 414-15; on oligarchies, 408-9; on 521
poor people, 414-15; on republics, 405- Christianity, 461-68, 568-71
8; on rich v. poor, 416-18; on slavery, Civil Government: Its Origin, Mission, and
419-20; on value of existence, 420; on Destiny, and the Christian’s Relation to
war, 418-19 It (excerpt, Lipscomb), 11-12, 461-68
Burnham, James, 527, 528 claims associations, 644-46. See also
Byers, W., 320 American West
classical liberalism, 124-25n17
Cadwell, Charles C., 363 classical libertarianism. See libertarianism
California territory, 648, 649. See also Cleyre, Voltairine de, 11, 451-60
American West coalitions, 328-31, 339n7, 339n9. See also
Calomiris, C., 305, 307 institutions; network industries; public
Calvert, Randall, 602 goods theory
Cambridge Economic History (Power, Coase, Ronald, 658, 662, 664-65
ed.), 566 Coase theorem, 280n15
“Can Anarchy Save Us from Leviathan?” Coate, S., 300
(Rutten), 9, 341-53 Coddington, William, 439
capitalism, 504-7 Coe, George, 306
“Capitalist Production and the Problem coercion. See aggression; security
of Public Goods” (excerpt, Hoppe), 4, Coghlan, Daniel, 566
107-26 collectivism, 130-31
Caplan, Bryan, 8, 157-59, 160, 295-314 Collége de France, 385
Carlton, Dennis W., 303, 304 colonial America, 437-49
Caton, John, 70 Colorado territory, 649. See also American
cattlemen’s associations, 646-47 West
Celtic Irish law: absence of kings in, 567; common-access benefits, 548, 552
Anglo-Norman invasion impact on, 574- common law judges, 29-30
75, 576, 578; Christianity and, 568-71; Common Sense (Paine), 232
class-consciousness of, 572; clientship communal enforcement, 348. See also
in, 574-76; contract types in, 573-74; institutions; self-enforcing contracts
inheritance laws of, 578; joint tenancy communism, 427, 428, 430, 505, 506
in, 576-78; language interpretation dif- comparative institution approach, 100n4
ficulties with, 565-66, 568; legal classes compensation. See courts; laws
in, 571-76; overview, 566-67; property “competing governments,” 523-24
ownership in, 576-78; schools of law Comte, Charles, 383-84, 386
comprising, 568; summary discussion, confederacy, 328. See also coalitions;
582-83; surety types in, 573; women’s institutions
686 Anarchy and the Law

Conflict, Cooperation and Competition Davies, John, 582, 583

in Anarchy (Cowen and Sutter), 8, debt. See workhouses
315-21 de Cleyre, Voltairine, 11, 451-560
conservatism, 527-29 “Defending a Free Nation” (Long), 5,
constables, 547-48 149-262
Constant, Benjamin, 379, 380 defense. See national defense
constitution. See U.S. Constitution de Jasay, Anthony, 8-9, 322-40, 341-52,
contract game, 332-35 361
“Conventions: Some Thoughts on the de Maistre, Joseph, 433
Economics of Ordered Anarchy” (de Democracy - The God that Failed (Hoppe),
Jasay), 8-9, 322-40 4
Conybeare, C.A.V., 594 Demsetz, Harold, 100n4, 131, 323, 624
Cook, Arthur, 446, 449 De Puydt, P.E., 390-91
Coombs, Dick, 665 DeRoover, Raymond, 605, 606
cooperation paradox, 295-310, 315-21 Dewing, A., 303
Courrier français, 386 disarmament, 141, 148n42
courts; in anarcho-capitalism, 43-46, 44- distribution game, 329-32
47; appeals court privatization, 27-28; doctrinaire liberalism. See liberalism
arbitration uses, 24-25; civil dispute domestic security. See national defense
resolution privatization, 24-26; coercive dominant protective agency: agency poli-
monopoly in existing, 34; criminal case cies in, 202, 203-5, 223; anthropological
scenario, 26-27; failures of existing viewpoint regarding, 213-14; collusive
systems for, 104-5n45; fallacies of belief outcome of arbitration network for,
about, 34; in Liberty Approach, 84-94; 274-78; compensation principles under,
power of ostracism and boycott, 25; in 209-11, 219-20, 227-30; Cowen on,
private-property anarchism, 23-28, 62- 269-270-271, 273-78; and geography
63; privatization scenarios for, 23-24, factor, 212-13; independent enforce-
26-27; problems of government-run, 24. ment prohibition by, 208-220-223;
See also minimal state; rule of law individual rights with, 203-5, 218;
Cowen, Tyler, 7-8, 268-83, 292-94, 315- invisible hand explanation for state as,
21; on anarcho-capitalism, 269, 270-71, 214-15; legitimate violence under, 214;
292-94; Caplan discussion of, 295-310; and monopoly, 207-8, 215, 223, 281n23;
on dominant protective agency, 269, penalty phase and, 204-7; precedents for,
270-71; on Friedman, 269, 270-71, 213; and protection of others, 208-11; as
292-94; Friedman discussion of, 284-91; state, 211-14; violence authorized solely
Holcombe discussion of, 357; on mini- by, 214, 224. See also security
mal state, 269, 270-71; on Novick, 269, Donahue, Charles, 39, 39n12
270-71; on private-property anarchism, Dowd, K., 305, 306
269, 270-71; on Rothbard, 269, 270-71; “Do We Ever Really Get Out of Anarchy?”
Stringham discussion of, 295-310 (Cruzanán), 7, 259-67
Coyne, Christopher, 376 drop dead principle, 242-46
crime. See prisons; security Druids, 567
Critical Legal Studies, 177-80, 192n32 Dunoyer, Charles., 383-84, 386
Cromwell, Oliver, 441 Dyer, William, 444
customary law, 625-28, 635-36n3,
636n4,n6 early American West. See American West
Cuzán, Alfred G., 7, 259-67, 279n9 Eckard, W.W., 320
Economic Inquiry, 13
damages. See courts; laws; restitution Economides, N., 303
system Edelman, Murray, 363
Darby, H.C., 554, 555, 557 education, 103 n27, n30
 Index 687

Edward I (king of England), 565, 571 free-market legal services, 43-46, 186-91
egoism, 513-15 free-market society. See anarcho-capital-
elections, 471-74 ism; private-property anarchism
Ellickson, Robert C., 15, 341, 541, 658-79 Free Nation Foundation, 152
Ellis, Frank, 659, 660-61, 663, 667-70, free-rider issues: dynamics of social
672-73 consensus in, 134-38, 141; government
endogenous theory of institutions, 322- intervention dynamics in, 131-34; high-
27 ways and, 551; market failure in, 131;
England. See medieval England public goods theory by-products and,
English Civil War, 377, 438 139-40; and self-interest, 138-39, 141,
Enquiry into Political Justice (Godwin), 147n33; social consensus in, 134-38
379-80 Friedman, David, 3, 7, 14, 284-91, 586-
Epstein, Richard, 344 601; contractual agreements in work of,
equilibrium institution, 347-48 541; on Cowen, 284-91; Cowen discus-
Estray Act of 1915, 660 sion of, 269, 270-73
Evans, David S., 303, 304 Friedman, Milton, 354, 364
Evers, Williamson, 233, 239 Frontier Violence: Another Look (Hol-
evidence rules, 486-87 lon), 643
evolutionary individualist anarchism, Fudenberg, Drew, 602
521-22 Fuller, L.L., 625, 626, 627, 634
evolution of law. See primitive societies functional theory of institutions, 324-27
executive. See national defense; security
exogenous theory of legal rules, 664 games theory, 329-32, 350
Explorations in the Theory of Anarchy Garfield, James A., 464, 468n1
(Tullock), 639 Garnier, Joseph, 387
The General Theory of Employment, Inter-
Fancher, Marty, 665 est, and Money (Keynes), 363
feasible cooperation cost and extent, 30 George II (king of England), 547
“fee communism,” 508 God and the State (Bakunin), 266n6
fencing out rules v. open range rules, godord, 587, 589. See also medieval
659-61 Iceland
Ferrigno, Robert, 341 Godwin, William, 379, 380, 512-13
Field, John, 441 Godwinism, 512-13
Fielding, Henry, 547-48 Goff, B.L., 320
Fielding, John, 547 Goldschmidt, W., 626, 628, 631
Fleisher, A.A., 320 Gorton, G., 305, 307
Fletcher, Benjamin, 448 Gorton, Samuel, 440
For a New Liberty (Rothbard), 3 government: as agency of legitimized
Frankel, Alan S., 303, 304 coercion, 40-41; as agent of society,
Freedom, Society, and the State: An 327; as aggressor, 500-501; anarcho-
Investigation Into the Possibility of capitalist definition and criticism, 40-41;
Society without Government (excerpt, as benign organized predator, 357; and
Osterfeld), 12-13, 504-37 Christian teachings, 461-68; collusion
free market anarchism: competing courts of arbitration networks leading to,
and police in, 255-57; irrational behav- 274-78; competing protection agencies
ior and, 255-56; limited government v., leading to, 274-78; contract theory and,
251-52; and monopoly, 254; need for 358; defined, 142n2, 145-46n24, 268,
government and, 254; objective laws 499-500; de Jasay arguments for, 342;
and marketplace in, 254; objectivism v., effectiveness of, 354; formation of, 356;
250-58; statism v., 250, 251; violence as highwayman, 475-76; historical prec-
and, 252, 253-54 edents for liberty and, 362-65; individual
688 Anarchy and the Law

v., 499-503; as inevitable, 354-65; as Hock, Dee, 304

invader, 500-502; liberty and, 362-65; Hoebel, E.A., 624, 626, 628, 631
monopoly power of arbitration agencies Holcombe, Randall G., 9, 341-53; on
producing, 274-78; necessity of, 365; Cowen, 358; on Hummel, 355; Lee-
predatory and permanently self-perpetu- son discussion of, 371-75; on Novick,
ating nature of, 374-75; purposes of, 354, 360-61; on Nozick, 357, 358-59; on
356, 425; relationship to individual, 499- Rothbard, 355, 358; Stringham discus-
503; as result of contract, 258; ruler self- sion of, 371-75
interest basis of, 374-75; unlikelihood of Hollon, W. Gene, 643
limitations on, 374-75; as unnecessary in Holmes, Oliver Wendell, 177-78
successful liberal society, 342 “Holy Experiment.” See Pennsylvania
“Government: Unnecessary but Inevitable” honor-price, 572-73
(Holcombe), 9, 354-70 Hoppe, Hans-Hermann, 4, 107-26
Gragas, 584. See also medieval Iceland Hosperian society, 517-19
“grand error” (Molinari), 378 Hospers, John, 517-19
Green and Jersey County Company, Houston, Sam, 655
650-51 Hughes, Kathleen, 569-70
Gregory, J.W., 551-52, 553, 554 Humboldt, Wilhelm, 525
Gregory Gulch (Colorado territory mining Hume, David, 331, 337, 494
camp), 648 Hummel, Jeffrey Rogers, 4-5, 7, 127-48;
Greif, Avner, 313, 320, 348, 603 Holcombe discussion of, 355; on liber-
Guerin, Daniel, 505 tarian anarchy, 364
Guillaume, James, 508-9 “hundred” (Anglo-Saxon legal institution),
“Gustave de Molinari and the Anti-statist 541-42
Liberal Tradition” (excerpts, Hart), 9, Hunter, Robert, 457
377-98 Hutchinson, Anne, 438-39
Gwartney, James, 362-63 Hutchinson, William, 439
Hutschneker, Arnold, 238
Hailey, Tom, 672, 673
Hamilton, Alexander, 345, 456 implicit contracts, 347-49
Harald Fairhair (king of Norway), 589 implied consent (to U.S. Constitution),
Hardin, Russell, 140 471-78
Harris, William, 441, 443 incarceration. See prisons
Hart, David, 10, 377-98 Indians, 449n4
Hart, Herbert, 194-98 indifference curve, 227
Hart, Oliver D., 336 individualist anarchism: in Albermarle,
Hasnas, John, 5, 163-92 North Carolina, 437; antistatist elements
Hausman, Daniel M., 304 in, 516-17; in colonial America, 438-
Hawthorne, Nathaniel, 619 50; contemporary and earlier writings
Hayek, Friedrich A., 354, 364, 391-92, about, 2; explained, 516; libertarianism
526, 625, 627 v., 516-17; minarchism v., 516; origins,
Heinz, Doug, 670, 672-73 437; overview, 504-7; in Pennsylvania,
Henry II (king of England), 545-46, 571 442-49; poor people in, 517; in Rhode
Henry VIII (king of England), 554 Island, 438-42. See also anarcho-capi-
Herbert, Auberon, 388-90 talism; free market anarchism; private-
Higgs, Robert, 364, 366n5 property anarchism
Hill, P.J., 14-15, 323-24, 639-57 “Individualist Anarchism in the U.S.: Ori-
Hindle, Paul B., 551 gins” (Rothbard), 11, 437-50
Hindley, Geoffrey, 557 institutions, 325-27, 329, 338n3, 347-48.
Hobbes, Thomas, 8, 265n1, 298, 322-38, See also courts; government; security
341, 356-57 interdependency, 322
 Index 689

international relations. See national de- ship and, 629; legal change in culture of,
fense 632-34; legal precedents and, 630-31;
invisible hand process, 214-15, 219, 246, ostracism in, 632; sanctions and, 631-32;
248. See also minimal state social characteristics of, 629; summary
“The Invisible Hand Strikes Back” discussion of, 634-35
(Childs), 6, 218-31 Katz, M., 296
“Is Government Inevitable? Comment Keith, George, 447-48, 450n6
on Holcombe’s Analysis” (Leeson and Kershaw, Ann, 671
Stringham), 9, 371-76 Keynes, John Maynard, 124n15, 363
It Usually Begins with Ayn Rand (Tuc- Kingsbury, Arthur A., 548
cille), 3 “king’s peace” (medieval English concept),
543-44
Jackman, W.T., 552, 553, 554, 556, 557 Kirk, Russell, 527
Jacobson, Philip, 153, 162n3 Klein, Benjamin, 602
Jasay, Anthony de. See de Jasay, Anthony Klein, Daniel B., 310, 541
Jay, John, 345, 456 Knack, Stephen, 363
Jefferson, Thomas, 451-52, 454-55, Kreps, David, 348
457-58 Kropotkin, Peter, 505, 507-8
Johannesson, Porkell, 594 Kurrild-Klitgaard, Peter, 363
Johnsen, D.B., 374
Johnson County, Iowa Claim Association, Labor Chambers, 510
645. See also American West labor economy (for national defense),
Johnson County, Wyoming War, 654. See 156-60
also American West La Decade, 380
Jones, Griffith, 445-46, 449 “laissez-faire socialism,” 515
Jordan, Bruce, 662 laissez-faire society. See anarcho-capital-
Journal des Economistes, 384, 387 ism; private-property anarchism
Journal of Law and Economics, 15 La Mar, Virginia R., 553
Journal of Libertarian Studies, 4, 6, 7, 15 land clubs, 644-46. See also American
Journal of Political Economy (Hirschleifer, West
1995; Dowd, 1997), 2 Landes, William M., 588, 591-92, 627
Joyce, Patrick, 566, 575 Langbein, John H., 547
judges; See courts; laws large group game, 335-36
judiciary. See courts; laws Laster, Richard E., 546-47
jury selection, 486 Lavoie, Don, 4-5, 127-48
jury trial, 484-98 “Law as a Private Good: A Response to
justice, 73. See also courts; laws; public Tyler Cowen on the Economics of An-
goods theory archy” (Friedman), 7, 284-91
justices of the peace (JPs), 547-48 “Law as a Public Good: The Economics
of Anarchy” (Cowen), 268-83
Kahn, Charles, 305 law enforcement. See courts; security
Kakalik, James S., 549 law merchant enforcement system model,
Kapauku Papuans of West New Guinea: 609-14
abstract rules of, 630; adjudication law merchant system, 602-6; component
procedures of, 631-32; adultery laws parts of, 618-20; dishonest law merchant
among, 632-33; compared to complex model and, 616-18; minimization of
societies, 635; confederations of, 628; transaction costs in, 614-16; purpose
contractual relationships of, 630; iden- of, 618; replacement of, 620-21; total
tification of, 628; incest and lineage system of, 618-19
laws among, 633-34; individual rights laws: in anarcho-capitalism, 44-47, 53; an-
of, 629-30; kinship basis of, 629; leader- cient Irish system for, 21-22; evaluation
690 Anarchy and the Law

of by juries, 484-96; failure of existing listic legal system in, 84-91; poor people
systems for, 104-5n45; free market in, 83-84, 102-3n24; Power Principle
in legal services v. existing system, v., 79-82; scenario embodying, 91-98;
186-91; historic precedents for court security in, 75-84, 85, 95-98; summary
privatization, 28, 29, 30; as inconsistent argument for, 98-99; unanswered ques-
and contradictory, 165-76; legal code tions about, 83-84
in libertarian society, 28; legitimacy Liberty (periodical), 12
trappings of existing, 35-36; in Liberty Lichbach, Mark Irving, 363
Approach, 87-93; misconceptions about, Liebowitz, S.J., 296, 301
163-85; in private-property anarchism, Lindsay, Cotton M., 551
63-64, 65-67, 71. See also rule of law Lipscomb, David, 11-12, 461-68
Lawson, Robert, 362-63 live-and-let-live philosophy, 665-66, 667,
lawsuits. See courts; laws 671
lawyers. See courts; laws Lloyd, David, 445
Leeson, Peter, 9, 371-75, 371-76 Lloyd, Thomas, 443, 445, 446, 447
Leffler, Keith, 602 Locke, John, 47, 214, 216n7, 265n1,
“Legal Evolution in Primitive Societies” 266n7, 344-45; 267n11, n20
(Benson), 14, 624-38 lögrétta (legislature), 589. See also medi-
legal order. See courts; laws eval Iceland
legislative. See laws Long, Roderick, 5, 149-162
Leoni, Bruno, 29, 30, 627 Lopez, Robert S., 605, 606
Les Soirées de Jarue Saint-Lazare (Mo- Loury, G., 300
linari), 379 Lyon, Bruce, 541, 543, 544-45, 546
Levellers, 377, 438
Leviathan (Hobbes), 328-29 Machiavelli, 155, 161, 162n2, 400
Levitt, Al, 671 The Machinery of Freedom; Guide to a
L’Évolution économique du XIXe siècle Radical Capitalism (excerpt, Friedman),
(Molinari), 387 3, 40-56, 639
L’Évolution politique et la revolution MacKay, John Henry, 515
(Molinari), 387 MacNeill, Eoin, 565, 575-76
liberalism, 504-7, 525-27 Madison, Charles, 515
liberal theory, 343-44, 354 Madison, James, 345, 454-55
libertarian anarchy: arbitration in, 317- Magna Carta, 484, 493-96, 497n4,
19; assumptions underlying, 269-70; 498n13
Buchanan on, 327; characteristics of, Maine, Henry, 576, 624
268-69; confrontation games in, 316- Maistre, Joseph de, 431
17; as currently nonexistent, 372; 18th Maitland, Fredrick, 542, 543, 544-45, 546
century roots of, 377-82; equilibrium Malatesta, Enrico, 505
selection in, 316-17; industrialism in, Malinowski, B., 625
383-84; liberal anti-statism tradition of, mandate parish system (road maintenance),
377-84; limited government v., 354-65, 554-56. See also medieval England
367n23, 368n24; modern era of, 391-92; Mandeville, Bernard, 325
Molinari contributions to, 387-92; 19th Margolis, S., 296, 301
century roots of, 383-84; Rothbard role market anarchy, 165n3
in, 391; 17th century origins of, 377; Market for Liberty (excerpt, Morris and
social evolution theories of, 383-84; Linda Tannehill), 57-74
summarized, 355-56. See also paradox Markham, William, 448, 449
of cooperation Marshall, John, 456
libertarianism, 504, 516-17 Martin, James, 514
Liberty Approach, 75-87, 91-100; courts Marx, Karl, 36, 218, 231, 322-23, 364,
in, 84-94; laws in, 87-93; non-monopo- 505, 514. See also socialism
 Index 691

Maskin, Eric, 602 590-91; legislative functions in, 589-90;

Massachusetts Bay colony, 438-39 monies used in, 594; outlawry in, 590,
McCall, Curtis, 672, 673 591; overview, 586-88; prosecution in,
McChesney, Fred S., 305 590; purity of private legal and police
McCloskey, H.J., 526 system in, 587-88; scenario applying
McDonald, William F., 549 security system to modern society, 597-
McKinley, William, 454 98; summary discussion, 593-94; wages
measurable uncertainty, 225-27 in, 594-97
medieval England: changes wrought by medieval Italy, 602
Norman conquest of, 544-47; church Mencken, H.L., 40, 51, 365n1
role in road maintenance in, 553-56; Menger, Carl, 627
constables in, 547-48; cooperation merchant gilds, 605. See also medieval
incentives in, 542-43; criminal law France
development in, 543-48; early codes of, Milgrom, Paul R., 14, 299, 320, 348, 541,
542-43; evolution from restitution to rev- 602-23
enue production in, 544-48; highways military establishment. See national
in, 551-59; incentives for cooperation defense
in legal system of, 539-41; institutions Mill, John Stuart, 526, 527
for prosecution of accused in, 547-48; Miller, Martin, 507
institutions for public policing in, 547- minarchism, 504, 519-21
48; justices of the peace (JPs) in, 547; Minasian, Jora R., 538, 539, 549, 550,
kingship development by Normans in, 551, 558-59
544-48; mandate parish system, 554- minimal state: agency policies in, 202,
56; merchant role in road maintenance 203-5, 234-37; anarchy v., 262; anthro-
in, 553-56; monastery role in road pological viewpoint regarding, 213-14;
maintenance in, 553-56; overview arbitration and, 236-37; and checks and
of restitution-based legal system in, balances, 237; compensation principles
538-39; policing in, 541-43; private in, 209-11, 219-20, 223-24, 227-30,
benefits in, 542-43; private property 239-41, 243-45; Cowen on, 269, 270-71;
basis for laws of, 541; private prop- drop dead principle of, 242-46; fairness
erty rights system in, 542-43; profit theory in, 218-19; and geography factor,
motivation of, 544; religious incentives 212-13, 236; independent enforcement
for road maintenance in, 553-54, 555- prohibition by, 208-11, 220-23, 234-37,
56; restitution as legal system basis in, 242-45; individual rights with, 203-5,
539-41; restitution benefit in, 542; toll 218-19, 233, 245-47, 248; invisible hand
roads in, 556-58; tort law development processes leading to, 214-15, 219, 246,
in, 539-40, 541; turnpike trusts in, 556- 248; justification questions in, 520-21;
58; voluntary police groups in, 541. See and monopoly, 207-8, 215, 223, 235,
also security 237; penalty phase and, 204-7; poor
medieval France: evolution of legal codes people in, 229; precedents for, 213,
in, 606; law merchant system in, 605- 232-33, 235; procedural rights in, 202,
6, 618-20; notaries in, 606; overview, 203-5, 223; and protection of others,
602-5 208-11; risk factor in, 222, 225-27, 237-
medieval Iceland: absence of central au- 39, 242-43, 248; social contract basis
thority in, 587; arbitration in, 590; char- for, 203-5, 218-19, 233, 245-47, 248;
acteristics of system as shared by other taxation and, 229-30, 247, 248; violence
cultures, 587; comparison with modern authorization in, 214, 224, 237, 238-39.
anarchism literature, 588-89; criminal See also dominant protective agency;
v. civil case distinction in, 591-92; ultraminimal state
economic efficiency of law in, 592-93; mining camps, 647-49
judicial functions in, 589-90; killing in, minorities, 101n14, 517
692 Anarchy and the Law

Mises, Ludwig von, 354, 364, 505, 525, national defense: armed population alterna-
527 tive for, 156-57; centralization dangers
moderate liberalism. See liberalism with, 150-51; charity economy solution
Molinari, Gustave de, 1, 10-11, 424-37; on for, 155-56; and collectivism, 130-31;
alternative methods of producing secu- decentralization dangers with, 151-52;
rity, 427-30; anti-monopolism develop- defending against the defenders in, 160-
ment in, 381; biographical information 62; defined, 129, 268; and disarmament,
for, 385-86; on communism, 427, 428, 141, 148n42; failures of existing systems
430; on competition in security, 425- for, 105n47,n48; and free market, 152;
26; contributions to liberal anti-statist free-market approaches to, 152-61; and
theory, 387-92; on de Maistre, 431; on free-rider issues, 138-40; fundamental
divine rights of kings and majorities, questions regarding, 149-50; govern-
431-33; on Dunoyer, 426; on economic ment military option for, 150; Hummel
laws v. natural laws, 426-27; as first theory summarized, 355; ideal of, 127;
free-market proprietary anarchist, 386; labor economy solutions for, 156-60;
free-market courts concept origins of, nature of, 129-31; non-excludability
382-83; on free market for security, in, 128-29; as non-state function, 500-
433-36; Hart discussion of, 377-98; on 501; nonviolent resistance alternative
monopoly, 427, 428-29; monopoly and for, 157-60, 162n5; in private-property
political economy in work of, 386-87; anarchism, 22-23, 36-39; profit economy
names for anarchism developed by, 383; solution to, 153-55; relationship to
on natural order of society, 424-25; on natural force, 265n4; Rothbard theory
private property, 433-34; professional summarized, 355; self-coercion as
affiliations of, 385; published works basis for, 127; and taxation consensus,
of, 385; role in formation of modern 125n26, 127, 136; threat of, 160-61; as
libertarian anarchy, 391; on Rousseau, unnecessary for libertarian nation, 36-
432, 433; Say influences on free market 39; varieties of, 269
anarchism development by, 381-83; on “National Defense and the Public-Goods
security as a commodity, 426; on self- Problem” (Hummel and Lavoie), 4-5,
interest, 384; on social science, 424; on 127-48
terrorism, 433 Native Americans, 450n4
monopoly: arbitration networks produc- natural anarchy, 165n3
ing actual, 274-78; dominant protective “natural” society (Burke), 378
agency, 207-8, 215; as inevitable out- “The Nature of Government” (Rand), 6-7
come of dominant protective agency and NCAA (National Collegiate Athletic As-
arbitration network, 274-78; Molinari sociation), 307-8, 320
on, 427, 428-29 network industries: banking and clearing-
Morris, William, 505 houses as, 305-7; collusion and, 296-99;
Morton, Tony, 670 cooperation cost and extent charts for,
Mosley, Walter, 341 302; credit card industry as, 303-5;
Moyes, A., 556, 557 historic examples of, 303-7; overview,
Mullineaux, D., 305, 307 296-97; self-enforcing agreements and,
mutualism, 511-12 299-302. See also arbitration; dominant
mutual organizations, 281n26 protective agency; libertarian anarchy;
“mutual-safety confederation,” 388 monopoly
“The Myth of the Rule of Law” (Hasnas), “Networks, Law, and the Paradox of
163-92 Cooperation” (Caplan and Stringham),
8, 295-314
Narveson, Jan, 361 New Guinea. See Kapauku Papuans of
National Collegiate Athletic Association West New Guinea
(NCAA), 307-8, 320 night watchman state, 102n22
 Index 693

1984 (Orwell), 164 Order Without Law; How Neighbors

nirvana approach, 100n4 Settle Disputes (excerpt, Ellickson),
Njal’s Saga, 586, 591. See also medieval 15, 658-79
Iceland organization without centralization, 151,
non-centralized organization, 151, 156 156
non-excludability, 128-29 Orwell, George, 164, 185
non-monopolistic legal system, 84-98, Osgood, Ernest Staples, 646
102n22, 104n39; classical liberalism Osterfeld, David, 12-13, 504-37
v., 124-25n17; consensus in, 125n26; ostracism, 542, 632, 637n12. See also
national defense in, 125n25; security reputation system
in, 113-20, 126n30. See also anarcho- outlawry, 590
capitalism; Liberty Approach; private- Overton, Richard, 377
property anarchism “ownness,” 513
nonviolent resistance (for national de-
fense), 157-60 Paine, Thomas, 232
Nordhaus, William D., 538, 558-59 Papua New Guinea. See Kapauku Papuans
North, Douglass C., 14, 338n3, 339n9, of West New Guinea
348, 602-23, 605, 606 paradox of cooperation, 295-310, 315-21
notaries, 606 Parkes, Joan, 551, 554, 555
“No Treason: The Constitution of No Au- Pawson, Eric, 552, 553, 555, 556, 557
thority” (excerpt, Spooner), 11, 469-83 “Paying for the Elephant: Property Rights
Nozick, Robert, 5-6, 193-217; anarcho- and Civil Order on the Overland Trail”
capitalism/American West relationship, (Reid), 651
639; Childs discussion of, 218-31; Peden, Joseph R., 13-14, 31-32, 565-85,
Cowen discussion of, 269, 270-71, 273- 635
74; Holcombe discussion of, 357, 358- Peel, Robert, 548
59, 360-61; as liberal scholar, 344; as Pelzer, Louis, 646
minarchist, 519-21; Rothbard discussion Penn, William, 442-43, 444-45, 446-49,
of, 233-350; ultraminarchism v., 518 451
Pennsylvania, 442-49
Objectivism, 250-58, 522-25; argument Pinkerton Agency, 647
against, 250-58; government in, 523-24; Pirenne, Henri, 605
as minarchism, 524; police protection in, Plummer, Charles, 565
523; as ultraminarchism, 524 Plutarch, 432
“Objectivism and the State: An Open Let- pocket boroughs, 587
ter to Ayn Rand” (Childs), 6-7, 250-58 police. See public policing; security
The Objectivist, 7 “Police, Law, and the Courts” (Rothbard),
O’Curry, Eugene, 565 3, 18-39
O’Donovan, John, 565 Pollock, Fredrick, 542, 543, 544-45, 546
Oeuvres manuscrites de 1810 (Constant), poor people: in anarcho-capitalism, 53-54;
380 Burke on, 414-15; coalitions, institutions
O’hara, Kevin, 671 and, 329-30; in individualist anarchism,
Olney, Thomas, 441 517; in Liberty Approach, 10, 83-84. See
Olson, Mancur, 139, 147n36, 148n37, also charity; minorities; workhouses
363, 364 Posner, Richard A., 588, 591-92, 624,
“On the Morrow of the Social Revolution” 627
(Bakunin), 508 Post, Richard S., 548
open range rules v. fencing out rules, Powell, Benjamin, 374
659-61 Power Principle, 79-82, 100n3, 101n4
ordered anarchy, 335-38, 339n11,n13. See Prassel, Frank, 643-44
also de Jasay Preamble (to U.S. Constitution), 469-70
694 Anarchy and the Law

President’s Commission on Law Enforce- privatization. See anarcho-capitalism;

ment and the Administration of Justice, Liberty Approach; private-property
20 anarchism
Priest, G.L., 627 “The Production of Security” (Molinari),
primitive societies: adjudication and 9-10, 424-36
enforcement in, 626-27; arbitration in, profit economy (for national defense),
625, 626; customary law evolution in, 153-55
625-28; growth process in, 627-28; law “proper government,” 523-24
v. morality in, 635; origins of customary property rights, 517-18. See also American
law in, 627-28; overview of legal evolu- West; private property; private-property
tion in, 624-25; private property systems anarchism
in, 626. See also Kapauku Papuans of “Property Rights in Celtic Irish Law”
West New Guinea (Peden), 13-14, 565-85
Prisoners’ Dilemma, 127, 128n40, 140, proprietary anarchism, 386-87
301-2, 347-49 protection agencies, 357-60. See also
Prisoners’ Dilemma (PD) game, 607-9 government; networks; security
prisons, 67-71 Proudhon, Pierre-Joseph, 389, 390, 505,
private charity. See charity 509, 511-12
“Private Creation and enforcement of Providence Plantation, 440-42
Law - A Historical Case” (Friedman), public good, 308-10
14, 586-601 public goods theory: as basis for objection
private property: anarcho-communism to national defense, 127; and Chicago
and, 507-8; Celtic Irish law and, 576- School economists, 121-22n10, 122-
79; common access benefits v., 552; 23n12, 123-24n13; classification meth-
Godwin on, 512-13; individual rights odologies used by, 109-10, 121n7,n8;
and, 651-52; mythology with regard cooperation paradox v., 107-20; de-
to, 635n2; Objectivism and, 523; in fined, 127-28, 143n3; and disarmament,
primitive societies, 626; Proudhon 141, 148n42; fallacies and failures of,
on, 511-12; Stirner on, 513; in wagon 110-13; free markets v., 111-12; and
trains of American West, 651-52. See free-rider issues, 138-40; as govern-
also American West; Celtic Irish Law; ment revenue collection justification,
private-property anarchism 558-59; market failures and, 112-13,
private-property anarchism: as alternative 128, 143n7; as misleading, 538; non-
to monopolistic state, 1-2; anarcho- excludability of, 128-29; overview,
capitalism v., 641; arguments against 107-9; paradox of cooperation v., 308-
disproved, 73-74; classification method- 10; and Prisoners’ Dilemma, 127, 140,
ologies used by, 109-10; contemporary 4840; public opinion as, 310; social
essays discussing, 1-2; courts in, 23-28, consensus theory v., 136; socialist
62-63; Cowen on, 269, 270-71; false statist theory and, 122-23n12; statist
assumptions about, 73-74; judiciary in, interventionist theory and, 123-24n13,
28-36; justice in, 72-73; laws in, 28-33, 124n15; and taxation, 136; terminology
63-64, 65-67, 71; legal and security issues in, 539
system in, 18-39; national defense in, public policing, 548-51. See also govern-
22-23, 36-39; other names for, 1; over- ment
view, 1-2; prisons in, 67-71; protection punishment. See justice; prisons; work-
from corruption of power in, 33-36; houses
public goods theory v., 107-13; security “Pursuing Justice in a Free Society: Crime
in, 57-60, 66-67, 68; self-interest basis Prevention and the Legal Order” (Bar-
of, 71; workhouses v. prisons in, 68-71. nett), 4, 75-106
See also anarcho-capitalism; Liberty
Approach; minimal state Quakers, 442-49, 450n3
 Index 695

Rand, Ayn, 6-7, 43, 250-58, 365n1, 522- illogical and unscientific, 163-85; as
25 indeterminate, 174-77; as inherently
Ransom, M., 307 political, 164-74; misunderstanding
Rawls, John, 218, 358, 639 about, 163, 165; purposes of, 174. See
Raymond, Irving W., 606 also courts; government; laws
Reid, John Phillip, 651 Rutten, Andrew, 9, 341-53
“Rejoinder to David Friedman on the
Economics of Anarchy” (Cowen), 7-8, Sabine, George, 526
292-94 Saint-Simon, Henri de, 383
“Relation of the State to the Individual” Salop, S., 307
(Tucker), 12, 499-503 Samuelson, Paul Anthony, 131, 359, 538,
religion, 102n33. See also Celtic Irish Law; 558-59
Christianity; medieval England sanctions, 299-302. See also boycott; self-
reparations. See courts; laws enforcing contracts
repeated games theory, 350 Sargent, L.T., 528
Republic of Texas, 654-55. See also Say, Jean-Baptiste, 380, 381, 381-83
American West The Scarlet Letter (Hawthorne), 619
reputation system, 602-6, 618. See also law Schatz, Albert, 383
merchant system; ostracism Schelling, Thomas, 323
restitution system, 538-41 Schelling Points, 651, 656n9
Rhode Island, 438-42 Schmalensee, Richard, 303, 304
Richardson, Samuel, 446 Schmidtz, David, 541
right of resistance, 491-94, 496-97n1, Schultz, Pete, 665, 671
497n4 Scott, Catherine, 439, 441-42
Riley, Bennett C., 648 secret ballot, 474
Ritchie, Phil, 658, 671 sectarianism, 459
“Robert Nozick and the Immaculate security: in anarcho-capitalism, 42-43,
Conception of the State” (Rothbard), 44-49, 50-51; benefit v. cost analysis
6, 232-49 in, 197-98, 216n6; dominant protective
Roberts, Paul Craig, 266n6 agency for, 202-15; enforceable obliga-
Rochet, Jean-Charles, 304 tions and, 196-97; entities supplying
Rocker, Rudolph, 510 competitively, 20, 21, 60; failures in
“The Role of Institutions in the Revival existing system, 78, 79, 80, 81, 82-83;
of Trade: The Law Merchant, Private fairness principle in, 194-98; fallacies
Judges, and the Champagne Fairs” (Mil- regarding, 18-19; general rights and en-
grom; North, and Weingast), 602-23 forcement, 196; interState wars, 22-23;
Roosevelt, Franklin D., 456 in Liberty Approach, 75-84, 85, 95-98;
Rorig, Fritz, 605 natural rights and enforcement, 194-
Rosen, Jeffery, 341 95; in non-monopolistic legal system,
Rothbard, Murray, 3, 6, 7, 11, 18-39, 232- 113-20, 126n30; for poor people, 21;
49, 437-50; Cowen discussion of, 269, and private enforcement prohibition,
270-71; Holcombe discussion of, 355, 193-94; in private-property anarchism,
358; as individualist anarchist, 516; role 18-23; private property and, 77, 78-79,
in modern libertarian anarchy, 391 80, 82; privatization benefits and, 20,
Rousseau, Jean-Jacques, 432, 433 21, 23, 35; privatization scenarios for,
Rubin, P.H., 627 21, 22, 23, 33; problems in modern
Rugg, Winifred, 439 policing, 548-51; procedural rights in
rule of law: alternative dispute resolution enforcement and, 198-292; prohibition
(ADR) under, 186; as coercive mo- of private justice enforcement agencies,
nopoly, 163, 165, 174, 175, 178; free 193-94; and property rights, 58-59; pro-
market in legal services v., 186-91; as tection from corruption and bias, 35-36;
696 Anarchy and the Law

in ultraminarchism, 518; weaknesses of sports leagues, 307-8

government-supplied, 18-19. See also Sprague, O.M.W., 306
dominant protective agency; govern- standardization, 300-301. See also self-
ment; Molinari, Gustave de enforcing contracts
self-enforcing contracts, 347-49 state. See government
self-help remedies, 661, 668-69 “The State” (Nozick), 193-217
self-interest, 384 statist-interventionist theory, 123-24n13,
Shambaugh, Benjamin, 644 124n15
Shapiro, Carl, 296, 602 St. Augustine, 568
Sharp, Gene, 159 Stenton, Frank, 551, 552
Shasta County, California case study: Stephen, James, 541, 542, 547
animal trespass incidents described, Stigler, George, 588
658-59; animal trespass law, 659-61; Stiglitz, Joseph, 602
attorney-assisted claims in, 672-73; Stirner, Max, 505, 513-15
complaints to public officials in, 669-70; St. Joseph, J.K.S., 552
complexity of relationships in, 666-67; Stoic conception of natural law, 39
contradictions in range area rules in, Stringham, Edward P., 1-17, 8, 9, 295-
660; English common law rules in, 659, 314, 371-76; on Cowen, 295-310; on
660; fencing out rules v. open range rules Holcombe, 371-75
in, 659-61; incomplete enforcement in, Studies in History and Jurisprudence
665-66; landowner attitudes about at- (Bryce), 586
torneys, 672; landowner legal ignorance Sutter, D., 8, 315-21
v. lay knowledge in, 662-63; liability in, syndicalism. See anarcho-syndicalism
660, 663; live-and-let-live philosophy
in, 665-66, 667, 671; monetary relief Talmon, J.L., 384
claims in, 670-72; norms v. legal rules Talmud, 619
in, 665; open range rules v. fencing out Tandy, Francis, 273, 278n1
rules in, 659-61; relief in, 661; reputa- Tannehill, Linda, 3, 57-74
tion and, 667; retaliation fear in, 669; Tannehill, Morris, 3, 57-74
self-help and, 661, 668-69; territorial taxation: compulsory nature of, 474-78;
and experiential knowledge of landown- consensus about national defense and,
ers in, 663-64 125n26; as robbery, 102n21, 475-76;
Shasta County Cattlemen’s Association, social consensus and, 136; as transaction
671 cost in ordered anarchy, 339n13; ultrami-
Shawomet, 440 narchism and, 517-18. See also courts;
Shellworth, Owen, 665, 670 government; laws; national defense;
Sherman, Lawrence W., 550, 552 public goods theory; security; tithing
Shughart, William F., 305 Taylor, Michael, 140
Smith, Adam, 358, 380-81, 436n3, 506, Telser, L., 299
625, 627 Texas, 654-55. See also American West
Smith, Vernon, 2 “The Myth of the Rule of Law” (Hasnas),
social consensus theory, 134-38 163-92
A Social History of Ancient Ireland A Theory of Socialism and Capitalism
(Joyce), 566 (Hoppe), 4
socialism, 55-56, 122-23n12, 389, 505 The Western Peace Officer: A Legacy of
Social Statics (Spencer), 387 Law and Order (Prassel), 643-44
Societé d’Economie Politique, 384, 385 Thierry, Augustin, 383
Sorel, Georges, 509 thingmenn, 589. See also medieval Ice-
Sowell, T., 300 land
Spencer, Herbert, 387-88, 521-22 Thomas, Robert, 605, 606
Spooner, Lysander, 11, 12, 469-83, 484-98 Throckmorton, John, 441
 Index 697

Throckmorton, Rebecca, 442 herent in, 480-82; as creating and main-

Thruneysen, Rudolph, 565 taining slavery, 480-81; elections and,
Thrupp, Silvia, 605 471-74; false implications of validity of,
Tirole, Jean, 304 471-78; implied consent for, 471-78; as
tithing, 541-42. See also medieval Eng- individual agreement, 469-70; non-cor-
land; taxation porate nature of, 470-71; preamble as
Tollison, R.D., 320 evidence for lack of authority of, 469-70;
Tolstoy, Leo, 389 as requiring individual signatures in or-
tonowi. See Kapauku Papuans of West der to bind individuals, 478-79, 478-80;
New Guinea and taxation, 474; as void due to deaths
Townsend, Robert M., 609 of signatories, 469-70; and voting, 471-
Trakman, L.E., 605, 606, 635 74. See also government
Treatise (Hume), 337 Usher, Dan, 357
trespass dispute resolution. See Shasta
County, California case study varthing (court), 590. See also medieval
trial by jury: dictation of laws to be en- Iceland
forced in, 486-87; enforcement power in, vassalage, 575
488-89; freedom and, 484-85; as invalid Veitch, J., 299
as tool for justice under government Verlinden, C., 606, 620
legal system, 489-93; jury selection victimization. See security
impact, 486; Magna Carta definition vigilantes, 644. See also American West
of, 493-96, 497n4, 498n13; as not pro- villeins, 575
tecting individual under government Vindication of Natural Society (Burke), 10,
legal system, 484-96; power of jury v. 377-78, 399-423
government power, 484-85; and power violence, 280n15. See also security
of punishment, 488-89; and right of Virginia School of political economy,
resistance, 491-94, 496-97n1, 497n4; 269, 279n4
right of revolution relationship to, 491- voting, 471-74
94; and voting, 489
“Trial by Jury” (excerpt, Spooner), 12, wagon trains, 650-54
484-98 war. See national defense
tuath, 31, 567-79 Warren, Josiah, 505
Tuccille, Jerome, 3 Washington, George, 451
Tuck, Richard, 139 Wealth of Nations (Smith), 382
Tucker, Benjamin R., 12, 389, 391, 499- Webb, Beatrice, 552, 555
503, 505, 515 Webb, Sidney, 552, 555
Tullock, Gordon, 265n2, 309, 358, 538, Weingast, Barry R., 14, 299, 320, 348,
540, 639 602-23
Turner, Frederick Jackson, 644 Wells Fargo, 647
turnpike trusts, 556-58 wergeld, 587, 594-97. See also medieval
Iceland
ultraminarchism, 517-19 West, Robert, 442
ultraminimal state, 215, 219, 223, 231, West New Guinea. See Kapauku Papuans
239, 520. See also dominant protective of West New Guinea
agency; minimal state White, L.J., 307
Umbeck, John E., 541 Wild West. See American West
“Unanimity principle,” 122n10 Wilhorn, Sorrel, 549
underprivileged. See poor people Willan, T.S., 551-52
“Union of Egoists,” 514 Williams, Ann, 442
U.S. Constitution: as contract between Williams, Caleb (Godwin), 380
individuals, 469-70; contradictions in- Williams, Robert, 441
698 Anarchy and the Law

Williams, Roger, 438, 440-42 Yarros, Victor, 515

Williamson, Oliver E., 541 Young, Owen D., 25
Woodbury, john, 658, 670
Wooldridge, William C., 25, 39n1, 51, Zywicki, T., 303
548
workhouses, 68-71