Private defense agency
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A private defense agency (PDA) is a conceptualized agency that provides personal protection and military defense services voluntarily through the free market. A PDA is not a private contractor of the state and is not subsidised in any way through taxation or immunities, nor does it rely on conscription and other involuntary methods. Instead, such agencies would be financed primarily through insurance companies, which are penalized for losses and damages, and have an incentive through competition to minimize waste and maximize quality of service.Script errorScript error
- 1 Theory
- 2 Historical examples of widespread use
- 3 References
- 4 Links
As proponents of free-market anarchism, Benjamin Tucker and Gustave de Molinari first explicitly proposed for-profit private defense agencies. The concept later was advanced and expanded upon by anarcho-capitalists who consider the state to be illegitimate, and therefore believe defense is something that should be provided or determined privately by individuals and firms competing in a free market. The Mises Institute published a book of essays entitled The Myth of National Defense: Essays on the Theory and History of Security Production. Murray N. Rothbard in For a New Liberty: The Libertarian Manifesto and David D. Friedman in The Machinery of Freedom expand substantially on the idea. Both hold that a PDA would be part of a privatized system of law, police, courts, insurance companies and arbitration agencies who are responsible for preventing and dealing with aggression. In this environment, victimless crimes and "crimes against the state" would be rendered moot, and the legal realm would be limited to contractual disputes and tort damages, as from assault, burglary, pollution, and all other forms of aggression. This concept is similar to Polycentric law. Within economics, discussion of the concept largely has been confined to the Austrian School, as in Hans Hoppe's article "The Private Production of Defense" published by the Mises Institute.
These authors emphasize that PDAs have different motives from existing statist defense agencies. Their survival depends on quality of service leading to a wide customer base, rather than the ability to extract funds via the force of law, as is true of states. Customers and markets would thus dictate that PDAs minimize offensive tendencies and militarization in favor of a pure defense. Anarcho-capitalists believe such privatization and decentralization of defense would eliminate the credibility of, and popular support for, the state.
As a private firm offering individually determined defense, the PDA provides a model for how an entirely private defense would work in a free market. John Frederic Kosanke argues that the need for large-scale defense is minimized in direct inverse proportion to the extent of domestic control by the state. Since the greater number of proprietors makes surrender more costly to an aggressor than a relatively authoritarian region, vulnerability to attack is less likely. Furthermore, since individuals minding their own business pose little threat to neighboring regions, official or ideological justification by those neighbors for attacking them is also proportionately diminished.
Lack of monopoly power
Hoppe points out that there is a contradiction in the beliefs of most philosophers and economists in reference to national defense. They generally hold that any monopoly is "bad" for consumers because, shielded from potential new entrants into his area of production, the price of his product X will be higher and its quality lower than otherwise. Yet they simultaneously hold that security must be undertaken by the government, which is a territorial monopoly of law and order (the ultimate decision maker and enforcer). Hoppe holds that the two propositions are clearly incompatible. In his essay The Production of Security, Molinari concluded:
|“||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 intangible 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. 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.||”|
Tyler Cowen, however, argues that allowing private defense agencies would not necessarily prevent a monopoly on defense services, by positing that a cooperating network of such firms could use aggressive force to enforce the cartel's market domination. Noting that advocates of PDAs typically argue that abuses would be prevented by the presence of rival agencies acting under the authority of rulings made by arbitrators empowered by inter-agency arbitration agreements, Cowen opines, "The adjudication network is stable only if it can use force to put down outlaw agencies that do not accept its higher-order arbitration decisions. Such a network could also use force to put down firms that do not adhere to the collusive agreement."
Anarcho-capitalists argue that competing defense providers would concentrate on comparatively lower-cost defense and security technology rather than relatively costly offensive weaponry, in order to maintain lower premiums and service charges. A company's offensive capabilities would also be readily exposed by such an aggressor's competitors. State-subsidized militaries, in contrast, are granted a distinct offensive advantage, resulting in a proportionately greater tendency toward monopolization.
Treatment of soldiers
There is historical evidence that military personnel would likely be paid more under a privatized system. In the early nineteenth century, the typical monthly wage for a merchant seaman was about $30. In a detailed survey of nine different American privateers and their prize distributions, Garitee found the average value of one share to be about $150. Since most crewmen earned from two to four shares, this meant that in the typical privateer cruise of three months, a man might earn the equivalent of 18 months' wages, and sometimes more.
Aggression and abuses by private defense agencies
Randall G. Holcombe argues that "Firms might prey on their competitors' 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." Holcombe states that the mafia offers protection for a fee, but it also uses its resources for predation; and thus profit-maximizing firms could be expected to employ them in the dual roles of protection and predation. Peter Leeson and Edward Stringham rebut this argument by claiming that unless the firm were overwhelmingly more powerful than its prey, it could incur substantial costs and risks in attempting to extract wealth by force. They argue that the potential for even a small state to inflict losses on an aggressor explains why violent confrontations between states are less common than between individuals in New York City's Central Park.
In The Market for Liberty, Linda and Morris Tannehill note that a private defense agency would be unlikely to engage in aggression, as it would not only become a target of retaliatory force, but would become the subject of severe business ostracism. Honest and productive individuals would dissociate themselves from it, fearing that it might use its aggressive force against them in the event of a dispute; or that they might become accidental casualties when retaliatory force is used by one of its other victims; or that their own reputation would suffer due to their ties to it. Moreover, the private defense agency's reputation would suffer and it would be regarded as a poor credit and insurance risk, the latter due to the high risk of claims resulting from its involvement in aggression. The employees and leaders of such an agency as well could face personal civil liability for their involvement, and the agency would not be shielded by sovereign immunity. High-quality employees would presumably be less willing to be involved with such an organization.
They also argue that a defense company would be less likely to abuse its power and impose tyranny, noting that it "couldn't extract taxes from them, as a government does...A market relationship is a free relationship, and if a customer doesn't like a company's service or mistrusts its goals, he is free to take his business elsewhere, or to start his own competitive company, or to do without the service and just provide from himself...The objection that a tyrant might take over is actually a devastating argument against government."
Rothbard makes a similar point, noting, "Of course, some of the private defense agencies will become criminal, just as some people become criminal now. But the poin the pr2 of ld disso, "issoetyIf thery would bn to gopul,In
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