Book:Practical Anarchy/2

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Introduction: The Six Questions

When considering statist objections to anarchic solutions, the six questions below are most useful.

  1. Does the government actually solve the problem in question? People often say that government courts “solve” the problem of injustice. However, these courts can take many years to render a verdict – and cost the plaintiff and defendant hundreds of thousands of dollars or more. Government courts are also used to harass and intimidate, creating a “chilling effect” for unpopular opinions or groups. Thus I find it essential to question the embedded premises of statism: Do State armies actually defend citizens? Does State policing actually protect private property? Does State welfare actually solve the problem of poverty? Does the war on drugs actually solve the problem of addiction and crime? Do State prisons actually rehabilitate prisoners and reduce crime? It can be very tempting to fall into the trap of thinking that the existing statist approach is actually a solution – but I try to avoid taking that for granted, since it is so rarely the case.
  2. Can the criticism of the anarchic solution be equally applied to the statist solution? One of the most common objections to a stateless society is the fear that a political monopoly could somehow emerge from a free market of competing justice agencies. In other words, anarchism is rejected because it contains the mere possibility of political monopoly. However, if political monopoly is such a terrible evil, then a statist society – which is founded on just such a political monopoly – must be rejected even more firmly, just as we would always choose the mere possibility of cancer over actually having cancer.
  3. Is anarchy accepted as a core value in non-political spheres? In my last book, “Everyday Anarchy,” I pointed out the numerous spheres in society where anarchy is both valued and defended, such as dating, career choices, education, and so on. If anarchy is dismissed as “bad” overall, then it also must be “bad” in these other spheres as well. Unless the person criticising anarchy is willing to advocate for a Ministry of Dating, the value of anarchy in certain spheres must at least be recognised. Thus anarchy cannot be rejected as an overall negative – and its admitted value and productivity must at least be accepted as potentially valuable in other spheres as well.
  4. Would the person advocating statism perform State functions himself? Most of us recognise and accept the right to use violence in an extremity of self-defence Those who support statism recognise that, in this realm, State police merely formalise a right that everyone already has, namely the right of self-defence. A policeman can use force to protect a citizen from being attacked, just as that citizen can use force himself. However, if someone argues that it is moral to use force to take money from people to pay for public schools, would he be willing to use this force himself? Would he be willing to go door to door with a gun to extract money for public schools? Would he be willing to extend this right to everyone in society? If not, then he has created two opposing ethical categories – the State police, to whom this use of violence is moral – and everyone else, to whom this use of violence is immoral. How can these opposing moral categories be justified?
  5. Can something be both voluntary and coercive at the same time? Everyone recognises that an act cannot be both “rape” and “lovemaking” simultaneously. Rape requires force, because the victim is unwilling; lovemaking does not. Because no action can be both voluntary and coercive at the same time, statists cannot appeal to the principle of “voluntarism” when defending the violence of the State. Statists cannot say that we “agree” to be taxed, and then say that taxation must be coercive. If we agree to taxation, the coercion is unnecessary – if we do not agree to taxation, then we are coerced against our will.
  6. Does political organisation change human nature? If people care enough about the poor to vote for state welfare programs, then they will care enough about the poor to fund private charities. If people care enough about the uneducated to vote for state schools, they will care enough to donate to private schools. Removing the State does not fundamentally alter human nature. The benevolence and wisdom that democracy relies on will not be magically transformed into cold selfishness the moment that the State ends. Statism relies on maturity and benevolence on the part of the voters, the politicians, and government workers. If this maturity and benevolence is not present, the State is a mere brutal tyranny, and must be abolished. If the majority of people are mature and benevolent – as I believe – then the State is an unnecessary overhead, and far too prone to violent injustices to be allowed to continue. In other words, people cannot be called “virtuous” only when it serves the statist argument, and then “selfish” when it does not.

There are a number of other principles, which are more specific to particular circumstances, but the six described above will show up repeatedly. We will now take a quick tour through an overview of anarchism, and sketch in broad strokes the beginnings of our solutions to the horrors of worldwide violence.

Anarchism – Frequently Asked Questions

Isn’t Anarchism ‘Bad’?

Unfortunately, the term has been degraded through mythology to mean “a world without rules” – usually garbed in post-apocalyptic outerwear and riding a well-armed motorbike. This is nonsense, of course. “Anarchy” is merely the logically consistent application of the moral premise that the initiation of the use of force is wrong. If violence is a bad way to solve problems, then the government is by definition immoral, since “government” always means a group of individuals who claim the right to initiate violence against everyone else, in the form of taxation, regulations, etcetera.

But if there is no government, how can the inevitable conflicts in human society be resolved?

The most important thing in philosophy is to consistently question the premises of propositions. For instance, embedded in the above question is the premise that conflicts within human society are currently being resolved by governments. This is pure nonsense. Governments are agencies of force – governments do not persuade, governments do not reason, governments do not motivate, governments do not encourage, governments do not resolve disputes. Governments have no more power to create morality then rape has to create love. A gun is only useful in self-defence; it cannot be used to create virtue.

For somebody who is an anarchist, you sure do sound like a politician! Wasn’t that just a complete dodge of the question?

Excellent catch! Here is as good a place as any to introduce you to the concept of Dispute Resolution Organisations (DROs). This concept cannot answer every conceivable question you might have about dispute resolutions within a stateless society, but rather is a framework for understanding the methodology of dispute resolution – just as the scientific method cannot answer every possible question about the natural world, but rather points towards a methodology that allows those questions to be answered in a rational manner. DROs are companies that specialise in insuring contracts between individuals, and resolving any disputes that might arise. For instance, if I borrow one thousand dollars from you, I may have to pay ten dollars to a DRO to insure my loan. If I fail to pay you back your money, the DRO will pay you instead. Obviously, as my credit rating improves, the cost of insuring my contracts will decline. The DRO theory can be as complex as any other free market theory – and a lot of intellectual effort has gone into resolving how particular transactions might occur, such as multimillion dollar international contracts. Credible DRO theories have also been advanced that solve problems ranging from abortion to child abuse to murder to pollution. For more on DRO theory and practice, please see “The Stateless Society: An Examination of Alternatives” below.

But what about the roads?

The most important thing to understand about anarchism is that it is a moral theory which cannot logically be judged by consequences alone. For instance, the abolition of slavery was a moral imperative, because slavery as an institution is innately evil. The abolition of slavery was not conditional upon the provision of jobs for every freed slave. In a similar manner, anarchic theory does not have to explain how every conceivable social, legal, or economic transaction could occur in the absence of a coercive government. What is important to understand is that the initiation of the use of force is a moral evil. With that in mind, we can approach the problem of roads more clearly. First of all, roads are currently funded through the initiation of force. If you do not pay the taxes which support road construction, you will get a stern letter from the government, followed by a court date, followed by policemen coming to your house if you do not appear and submit to the court’s judgement. If you use force to defend yourself against the policemen who are breaking into your home, you will very likely be shot down. The roads, in other words, are built at the point of a gun. The use of violence is the central issue, not what might potentially happen in the absence of violence. That having been said, roads will be built by housing developers, mall builders, those constructing schools and towns – just as they were before governments took them over in the nineteenth century. For more on this, please see the section on “Roads” below.

Okay – here’s a scenario for you: a guy builds a road that completely encircles a suburban neighborhood, and then charges $1 million for anyone to cross that road. Isn’t he holding everyone who lives in that neighborhood hostage?

This is fundamentally impossible. First of all, no one is going to buy a house in a neighbourhood unless they are contractually guaranteed access to roads. Thus it will be impossible for anyone to completely encircle the neighbourhood. Secondly, even if it were possible, it would be a highly risky investment. Can you imagine going to investors with a business plan that said: “I’m going to try to buy all the land that surrounds the neighbourhood, and then charge exorbitant rates for anyone to cross that land.” No sane investor would give you the money for such a plan. The risk of failure would be too great, and no DRO would enforce any contract that was so destructive, unpopular, and economically infeasible. DROs, unlike governments, must be appealing to the general population. If a DRO got involved with the encircling and imprisonment of a neighbourhood, it would become so unpopular that it would lose far more business than it could potentially gain.

All right, smarty-pants – what about this: the company that supplies water to a neighborhood suddenly decides to increase its rates Tenfold – people are going to be forced to pay the exorbitant price, right?

First of all, if you are so concerned about people paying increasingly exorbitant prices for services, then it scarcely seems logical to propose the government as the solution to that problem! Taxes have risen immensely over the past thirty years, while services have declined. However, even if we accept the premise of the problem, it is easily solved in a stateless society. First of all, no one will buy a house in a neighbourhood without a contractual obligation that requires the supply of water at reasonable rates. Secondly, if the water company starts charging exorbitant prices, another company will simply move in and supply water in another form – in barrels, bottles, or whatever. Thus, raising prices permanently costs the water company its customers – and makes every potential customer back away, for fear that the same predation will happen to them. Investors will quickly realise that the water company is shooting itself in the foot, and will align themselves with other shareholders, resulting in a takeover of the price-gouging water company, and a reduction in rates, accompanied by rank apologies and base grovelling Given that this result will be known in advance, no CEO would be allowed to pursue such a self-destructive course. Only governments that can be manipulated by corporations to prevent competition truly endanger consumers.

Okay – what if two DROs have different rules – isn’t that just going to result in endless civil war?

First of all, it is unlikely that DROs would have wildly different rules, because that would be economically inefficient. Cell phone companies use similar protocols, so that they can interoperate with each other. Rail road companies tend to use the same gauge, so that trains can travel as widely as possible. Internet service providers exchange data with other service providers, passing e-mails and other data back and forth. Like evolution, the free market is more about cooperation than pure competition. If a DRO wants to create a new rule, that rule will be fairly useless unless other DROs are willing to cooperate with it – just as a new e-mail program is fairly useless unless it uses existing protocols. This need for interoperability with other DROs will inevitably keep the number of new rules to the most economically efficient minimum. Customers will prefer DROs with broader reciprocity agreements, just as they prefer credit cards that are valid in a large number of locations. New rules will also add to the costs for DRO subscribers – and if it costs them more money than it saves, the DRO will lose business.

But – won’t the most successful DRO just arm itself, violently eliminate all the other DROs, and emerge as a new government?

First of all, if the potential emergence of a new government at some point in the future is of great concern, then surely the elimination of existing governments in the present is a worthy goal. If we have cancer, we go through chemotherapy to eliminate it in the present, even though we may get cancer again at some point in the future. Secondly, unlike governments, DROs are not violent institutions. DROs will be primarily populated by white-collar workers: accountants, mediators, executives, and so on. DROs are about as likely to become paramilitary organisations as your average accounting firm is likely to become an elite squad of ninja death warriors. Given the current existence of governments that possess nuclear weapons, I for one am willing to take that risk. Thirdly, if a DRO tries to turn itself into a government, the other DROs will certainly act to prevent it. DROs would simply refuse to cooperate with any DRO that refused to submit to “arms inspections.” Furthermore, DRO customers would also not take very kindly to their DRO becoming an armed institution – and their rates would certainly sky-rocket, because their DRO would have to provide its regular services, as well as pay for all those black helicopters and RPGs. Any DRO that was paying for goods or services that its customers did not want – i.e. an army – would very quickly go out of business, because it would not be competitive in terms of rates.[1]

Are There Any Examples Of Anarchic Societies Being Successful In The Past?

There are, but that is not the essential question. Again, the essential aspect of anarchic theory is the moral rule banning the initiation of the use of force. Anarchists advocate a stateless society because governments are evil. When slavery was abolished for the first time in human history, there was no prior example of a successful slave–free society — if that had been a requirement, then slavery would be with us still.

That having been said, I can confidently point towards a non-violent society that you’re intimately aware of – you. I am guessing that you do not use violence directly to achieve your aims. It seems likely to me that you did not hold your employer hostage until you got your job; I also doubt that you keep your spouse locked in the basement, or that you threaten to shoot your “friends” if they do not join you on the dance floor. In other words, you are the perfect example of a stateless society. All of your personal relationships are voluntary, and do not involve the use of force. You are an anarchic microcosm – to see how a stateless society works, all you have to do is look in the mirror.

How can a society without a government pay for national defense?

Many people, when first hearing the concept of a stateless society, cannot imagine how collective defence could possibly be paid for in the absence of taxation. I have already briefly discussed this above – here are some more details.

This is an important question to ask, but there is a way of answering it that also answers many other questions about collective action.

In any society, there are four possibilities that can occur in the realm of collective defence:

  1. No one wants to pay for collective defence.
  2. Only a minority of people want to pay for collective defence.
  3. The majority of people want to pay for collective defence.
  4. Everyone wants to pay for collective defence.

Let’s compare how these four possibilities play out in a state-based democracy:

  1. No one wants to pay for collective defence. In this case, voters will universally reject any politician who proposes collective defence of any kind.
  2. Only a minority of people want to pay for collective defence. In this case, no politician who proposes paying for collective defence will ever get into office, because he will never secure a majority of the votes.
  3. The majority of people want to pay for collective defence. In this case, pro-defence politicians will be voted into office, and spend tax money on defence.
  4. Everyone wants to pay for collective defence. This achieves the same outcome as number three.

Thus, all other things being equal, a democracy produces almost the same outcome as a stateless society – with the important exception of number two.

If only a minority of people want to pay for defence, they cannot do so in a democracy, but can do so in a stateless society. In a stateless society, if the majority of people are interested in paying for collective defence, it will be paid for. The addition of the government to the interaction is entirely superfluous – the equivalent of creating a Ministry devoted to communicating the pleasures of candy to children, or sex to teenagers.

However, the possibility exists that people are willing to pay for collective defence only if they know that everyone else is paying for it as well. This argument fails on multiple levels, both empirical and rational.

People tip waiters and give to charity, even though they know that some people never do.

There is no reason why, in a stateless society, people should not have full knowledge of who has donated to collective defence. Agencies providing collective defence could easily issue a “donor card,” which certain shops or employers might ask to see before doing business. Names of donors could also be put on a website, easily searchable, creating social pressures to donate.

When the money required for collective defence is stripped from taxpayers at the point of a gun, a basic moral tenet – and rational criterion – is violated. Citizens institute collective defence in order to protect their property – it makes no sense whatsoever to create an agency to protect property rights and then invest that agency with the power to violate property rights at will.

When collective defence is paid for by the initiation of the use of force, there is no rational ceiling to costs, and no incentive for efficiency – thus ensuring that costs will escalate to the point where they become unsustainable, causing a collapse of the economic system and leaving the country vulnerable.

What about education?

The question of education follows the same pattern as the question of collective defence outlined above. However, there are certain additional pieces of information that can strengthen the case for a free market in education.

First of all, it is important understand that State education was not imposed because children were not being educated. Prior to the institution of government-run education, the functional literacy rate of the average American was over ninety percent – far better than it is now, after hundreds of billions of dollars have been spent “educating” children. Before the government forcefully took over the schools, there was almost no violence in schools, there were no school shootings, no violent gangs, no assaults on teachers – and it did not take more than two decades and hundreds of thousands of dollars to produce a reasonably-educated adult. Most of the intellectual giants of the eighteenth and nineteenth centuries – the Founding Fathers included – did not even finish high school, let alone go to college.

Government education in America was instituted as a means of cultural control, due to rising tribal fears about the growing number of non-Protestants in society – the “immigrant issue” of the time. There are a number of core reasons that government education cripples children’s minds; for the sake of brevity, we will deal with only one here.

It is reasonable to assume that the majority of parents want to give their children a good education – and this education must necessarily include the teaching of values, or the relationship between personal ethics and real-world choices. In any multicultural society, however, a common curriculum cannot include any fundamental values, for fear of offending various groups. Thus values must be stripped from education, turning its focus to rote memorisation, bland technical skills (geometry, sports, wood shop), and neutral and propagandistic views of society and politics (“Democracy is good!” “Respect multiculturalism!” “Reduce, Reuse, Recycle!”). This effectively kills the energetic curiosity of the young, turns school into a mind-numbing series of empty exercises, creates frustration among those needing stimulation, and engenders deep disrespect for the educational system – and its teachers – who remain institutionally indifferent to the welfare of the students. Combine this hostility and frustration with the easy money available through drug sales – and the possibility of surviving on welfare – and entire generations of youths become mentally crippled. The costs of this are beyond calculation, since the damage goes far beyond economics.

Yes, but how will poor children get an education if it is not paid for through taxes?

This reminds me of the old Soviet cartoon – two old women are standing in an endless line-up to buy bread. One says to the other: “What a terribly long line!” The other replies: “Yes, but just imagine – in the capitalist countries, the government doesn’t even distribute the bread!”

Whenever I argue for a stateless society, I say: “The government should not provide ‘X’.” The response always comes back: “But how will ‘X’ then be provided?”

As mentioned above, the answer is simple: “Since everybody is concerned that ‘X’ will not be provided, ‘X’ will naturally be provided by those who are concerned by its absence.” In other words, since everyone is concerned that poor children might not get an education because it costs too much, those children will be provided an education as a direct result of everyone’s concern.

Look, either you will help poor children get an education, through charity or volunteering, or you will not. If you will help poor children get an education, you do not have to worry about the issue. If you will do nothing to help poor children get an education, it is pure hypocrisy to raise it as an issue that you claim to be concerned about.

That having been said, there are a number of ways that a free society can provide education that is far superior to the mess being inflicted on children now.

First of all, poor children are not currently getting any sort of decent education. The perceived risks of a stateless society cannot be rationally compared to a perfect situation in the here-and-now. Those most concerned with the education of the poor should be the ones most clamouring for the abolishment of the existing system. The educational statistics for poor children are absolutely appalling – and this should raise the urgency of finding a solution. It is one thing to say, “You should never cross a road against the lights, even if there is no traffic.” It is quite another thing to say, “You should never cross a road against the lights, even if you are being chased by a lion!” Those who oppose a stateless society always ignore the existence of the lion, thus adding their intellectual inertia to the weight of the status quo.

Secondly, much like the question of collective defence, the cost of education will be far lower in a free society. The ten to fifteen thousand dollars a year currently being spent per pupil in public schools is ridiculously over-inflated. Year-round accelerated education would help the child graduate several years earlier – and with tangible job skills to boot! The resulting increase in earnings would more than pay for the education – and many companies would scramble to offer loans to such children, knowing that they would be paid off soon after graduation. Thus education would be more beneficial – and, since there would be no war on drugs or automatic “welfare” in a free society, fewer self-destructive options would be available.

As for higher education, it is either recreational or vocational. If it is recreational, then it is about as necessary as a hobby, and cannot be considered a necessity. If it is vocational, such as medicine, then additional earnings will more than pay for the costs of the education. Businesses need accountants – thus those businesses will be more than happy to fund the college expenses of talented youngsters in return for a work commitment after graduation.[2]

Talented but poor children will be sought after by schools, both for the benevolence they can show by subsidising them, and also because high-quality graduates raise the prestige of a school, enabling it to increase fees.

In a stateless society, a tiny minority of poor children may slip through the cracks – but that is far better than the current situation, where most poor children slip through the cracks. The fact that some non-smokers will get lung cancer does not mean that we should encourage people to smoke. A stateless society is not a utopia, it is merely a utopia compared to a government society. Now, we shall really begin to make the case for anarchism by examining the question of whether the government is a valid moral entity.

Disproving the State: Four Arguments Against Government

Two objections constantly tend to recur whenever the subject of dissolving the State arises. The first is that a free society is only possible if people are perfectly good or rational. In other words, citizens need a centralised State because there are evil people in the world.

The first and most obvious problem with this position is that if evil people exist in society, they will also exist within the State – and be far more dangerous thereby. Citizens are able to protect themselves against evil individuals, but stand no chance against an aggressive State armed to the teeth with police and military might. Thus, the argument that we need the State because evil people exist is false. If evil people exist, the State must be dismantled, since evil people will be drawn to use its power for their own ends – and, unlike private thugs, evil people in government have the police and military to inflict their whims on a helpless and largely disarmed population.

Logically, there are four possibilities as to the mixture of good and evil people in the world:

  1. That all people are moral.
  2. That all people are immoral.
  3. That the majority of people are immoral, and a minority moral.
  4. That the majority of people are moral, and a minority immoral.[3]

In the first case, (all people are moral), the State is obviously unnecessary, since evil does not exist. In the second case, (all people are immoral), the State cannot be permitted to exist for one simple reason. The State, it is generally argued, must exist because there are evil people in the world who desire to inflict harm, and who can only be restrained through fear of State retribution (police, prisons, etcetera). A corollary of this argument is that the less retribution these people fear, the more evil they will do. However, the State itself is not subject to any force, but is a law unto itself. Even in Western democracies, how many policemen and politicians go to jail? Thus if evil people wish to do harm but are only restrained by force, then society can never permit a State to exist, because evil people will immediately take control of that State, in order to do evil and avoid retribution. In a society of pure evil, then, the only hope for stability would be a state of nature, where a general arming and fear of retribution would blunt the evil intents of disparate groups.

The third possibility is that most people are evil, and only a few are good. If this is the case, then the State also cannot be permitted to exist, since the majority of those in control of the State will be evil, and will rule over the good minority. Democracy in particular cannot be permitted to exist, since the minority of good people would be subjugated to the democratic will of the evil majority. Evil people, who wish to do harm without fear of retribution, would inevitably take control of the State, and use its power to do their evil free of that fear. Good people act morally because they love virtue and peace of mind, not because they fear retribution – and thus, unlike evil people, they have little to gain by controlling the State. And so it is certain that the State will be controlled by a majority of evil people who will rule over all, to the detriment of all moral people.

The fourth option is that most people are good, and only a few are evil. This possibility is subject to the same problems outlined above, notably that evil people will always want to gain control over the State, in order to shield themselves from retaliation. This option changes the appearance of democracy, of course: because the majority of people are good, evil power-seekers must lie to them in order to gain power, and then, after achieving public office, will immediately break faith and pursue their own corrupt agendas, enforcing their wills with the police and military.[4] Thus the State remains the greatest prize to the most evil men, who will quickly gain control over its awesome power – to the detriment of all good souls – and so the State cannot be permitted to exist in this scenario either.

It is clear, then, that there is no situation under which a State can logically or morally be allowed to exist. The only possible justification for the existence of a State would be if the majority of men are evil, but all the power of the State is always controlled by a minority of good men. This situation, while interesting theoretically, breaks down logically because:

  • The evil majority would quickly outvote the minority or overpower them through a coup;
  • Because there is no way to ensure that only good people would always run the State; and
  • There is absolutely no example of this having ever occurred in any of the dark annals of the brutal history of the State.

The logical error always made in the defence of the State is to imagine that any collective moral judgements being applied to any group of people is not also being applied to the group which rules over them. If fifty percent of citizens are evil, then at least fifty percent of the people ruling over them are also evil (and probably more, since evil people are always drawn to power). Thus the existence of evil can never justify the existence of the State. If there is no evil, the State is unnecessary. If evil exists, the State is far too dangerous to be allowed existence.

Why is this error always made? There are a number of reasons, which can only be touched on here. The first is that the State introduces itself to children in the form of public school teachers who are considered moral authorities. Thus is the association of morality and authority with the State first made, and is reinforced through years of repetition. The second is that the State never teaches children about the root of its power – force – but instead pretends that it is just another social institution, like a business or a church or a charity. The third is that the prevalence of religion has always blinded men to the evils of the State – which is why the State has always been so interested in furthering the interests of churches. In the religious world-view, absolute power is synonymous with perfect goodness, in the form of a deity. In the real political world of men, however, increasing power always means increasing evil. With religion, also, all that happens must be for the good – thus, fighting encroaching political power is fighting the will of the deity. There are many more reasons, of course, but these are among the deepest.

I mentioned at the beginning of this section that people generally make two errors when confronted with the idea of dissolving the State. The first is believing that the State is necessary because evil people exist. The second is the belief that, in the absence of a State, any social institutions which arise will inevitably take the place of the State. Thus, Dispute Resolution Organisations (DROs), insurance companies, and private security forces are all considered potential cancers which will swell and overwhelm the body politic.

This view arises from the same error outlined above. If all social institutions are constantly trying to grow in power and enforce their wills on others, then by that very argument a centralised State cannot be allowed to exist. If it is an iron law that groups always try to gain power over other groups and individuals, then that power-lust will not end if one of them wins, but will spread across society until slavery is the norm.

It is also very hard to understand the logic and intelligence of the argument that, in order to protect us from a group that might overpower us, we should support a group that has already overpowered us. It is similar to the statist argument about private monopolies – that citizens should create a State monopoly because they are afraid of a private monopoly.

Once we begin to reason away the fogs of propaganda, it does not take keen vision to see through such nonsense.

Anarchy, Violence, and the State

Does more government equal less violence?

Another common objection to a stateless society is that violence will inevitably increase in the absence of a centralised State. This is a very interesting objection, and seems to arise from people who have imbibed a large amount of propaganda about the nature and function of the State. It seems hard to imagine that this conclusion could ever be reached by reasoning from first principles, as we will see below.

There are several circumstances under which the use of violence will either increase, or decrease – and they tend to correspond with the basic principles of economics. For instance, people tend to respond to incentives, and tend to be drawn to circumstances under which they can gain the most resources by expending the least effort. Thus in the lottery system, people respond to the incentive of the million dollar payout by expending minimal resources in the purchase of a ticket.

There are several circumstances under which violence will tend to increase, rather than decrease – and interestingly enough, a centralised State creates and exacerbates all such circumstances.

Principle 1: Risk

Economically speaking, risk is the great balancer of reward. If a horse is less likely to win a race, the gambling payout must be higher in order to induce people to bet on it. By their very nature, speculative investments must potentially produce greater rewards than blue-chip stocks. Similarly, white-collar criminals generally face less physical risk than muggers. A stick-up man may inadvertently run up against a judo expert, and find the tables turned very quickly – while a hacker siphoning off funds electronically faces no such risk. In general, those interested in stealing property will always gravitate toward situations where the risks of retaliation are lower.

If force or the threat thereof is required for the theft – as in the case of taxes – one of the greatest ways of reducing the possibilities of retaliation is through the principle of overwhelming force. If five enormous muggers circle a forty kilogram man and demand his wallet, the possibilities of retaliation are far lower than if the forty kilogram man approaches five enormous men and demands that they surrender their wallets.

Clearly, the existence of a centralised State creates such an enormous disparity of power that resistance against government predations is, in all practicality, impossible. A man can either stand up to or move away from the Mafia, but can do almost nothing to oppose expansions of State power. Thus, we can see that the existence of a centralised State creates the following problems with regards to violence:

  • The use of violence tends to increase when the risks of using that violence decrease.
  • The risks of initiating violence tend to decrease as the disparity of power increases.
  • There is no greater disparity of power than that between a citizen and his government.
  • There is no better way to increase the use of violence than to create a centralised political state.

Principle 2: Proximity

Using violence is a brutal and horrible task for most people. Most people are not physically or mentally equipped to use violence, either due to a lack of physical strength, a lack of martial knowledge, or an absence of sociopathic tendencies. However, the government has enormous, relatively efficient, and well-distributed systems in place to initiate the use of force against largely disarmed citizens. Thus, those who wish to gain the fruits of violence can do so by tapping into the government’s network of enforcers, without ever having to directly witness or deploy violence themselves.

It can generally be said that the use of violence tends to increase as the visibility and proximity of violence decreases. In other words, if you can get other people to do your dirty work, more dirty work will tend to get done. If everyone who wished to gain the fruits of State violence had to hold their own guns to everyone’s heads, almost all of them would end up refraining from such direct and dangerous brutality.

Thus in the realm of proximity as well, the existence of a centralised State tends to both distance and hide the reality of violence from those who wish to pluck the fruits of violence – thus ensuring that the use of violence will tend to increase.

Principle 3: Externalisation of Costs

In a stateless society, it is impossible to “outsource” violence to the police or the military, since they are not funded through collective coercion. When there is a government, however, those who wish to gain the fruits of violence – i.e. tax revenues, the regulation of competitors, the blocking of imports, and so on – can lobby the government to enforce such beneficial restrictions on the free trade and choices of others. They will have to pay for this lobbying effort, but they will not have to directly fund the police and the military, the court system, and the prison guards in order to force people to obey their whims. This “externalisation of costs” is an essential ingredient in the expansion of the use of violence.

For instance, imagine you are a steel manufacturer who wants to block the imports of steel from other countries – how expensive would it be to build your own navy, your own radar system, your own Coast Guard, hire your own inspectors, and so on? How would you convince all the shippers, dock owners, and transporters to inspect every container on your behalf? Would you pay them? Would you threaten them? And even if you found it economically advantageous to do all that, could you guarantee that none of your competitors would do the same? Would it still be economically advantageous if you ended up getting into an arms race with all of your fellow manufacturers? And what if your customers found out that you were using your own private militia to block the imports of steel – might they not take offence at your use of violence and boycott you? No, in the absence of a centralised State that you can offload all the enforcement costs to, it is going to be far cheaper for you to compete openly than develop your own private, overwhelming, and universal army.

Thus, in any situation where the costs of using violence can be externalised to some centralised agency, the use of that violence will always tend to increase. Offloading the costs of violence to taxpayers will always make violence profitable to specific agencies – whether private or public. And so, once again, we can see that the existence of the State will always tend to increase the use of violence.

Principle 4: Deferment

How much do you think you would spend if you knew that you would be long-dead when the bill came due? This is, of course, the basic principle of deficit financing – the deferment of payments to the next generation – which is perhaps the most insidious form of taxation. Forcibly transferring property from those who have not even been born yet is perhaps the greatest “externalisation” of costs that can be imagined! Naturally, the risks of retaliation from the unborn are utterly non-existent – and neither is any direct violence performed against them. Thus the principle of “deferment” is perhaps one of the greatest ways in which the existence of a centralised State increases the use of violence.

Principle 5: Propaganda

It is well known in totalitarian regimes that in order to get people to accept the use of violence, that violence must always be re-framed in a noble light. Government violence can never be referred to as merely the use of brute force for the material gain of politicians and bureaucrats – it must always represent the manifestation of core social or cultural values, such as caring for the poor, the sick, the old, or the indigent. The violence must always be tucked away from direct view, and the effects of violence elevated to sentimental heights of soaring rhetoric. Furthermore, the effects of the withdrawal of violence must always be portrayed as catastrophic and evil. Thus the elimination of the welfare state would cause mass starvation; the elimination of medical subsidies would cause mass death; the elimination of the war on drugs would cause massive addictions and social collapse – and the elimination of the State itself would directly create a post-apocalyptic cyberpunk nightmare world of brutal and endlessly warring gangs.

Propaganda is different from advertising in that all that advertising can ever do is get you to try a product for the first time – if the quality of the product does not meet your needs or expectations, then you will simply never buy that product again. Propaganda, on the other hand, is quite different. Advertising appeals to choice and self-interest; propaganda uses rhetoric to morally justify the absence of choice and self-interest. Advertising can only stimulate a one-time demand; propaganda permanently suppresses rationality. Advertising generally uses the argument from effect (you will be better off); propaganda always uses the argument from morality (you are evil for doubting).

The private funding of propaganda is never economically viable, since the amount of time and energy required to instil propaganda in the mind of the average person is far too great to justify its cost. In a voluntary system like the free market, paying for year after year of propaganda (which can only result in a “first time” purchase of a good or service) is never worth it. Propaganda is only “worth it” when it can be used to keep people passive within a coercive system like State taxation or regulation. For instance, here in Canada, socialised medicine is always called a “core Canadian value,” and can be subject to no rational, moral, or economic analysis.[5] Because the existing system is so terrible, it takes years of State propaganda – primarily directed at children – to overcome people’s actual experiences of the endless disasters of socialised medicine. Propaganda is always required where people would never voluntarily choose the situation that the propaganda is praising. Thus we need endless propaganda extolling the virtues of the welfare state, the war on drugs, and socialised medicine, while the virtues of eating chocolate cake are left for us to discover and maintain on our own. Government propaganda is primarily aimed at children through State schools, and usually takes the form of an absence of topics. The coercive nature of the State is never mentioned, of course, and neither are the financial benefits which accrue to those who control the State. Children do hear endlessly about how the State protects the environment, feeds the poor, and heals the sick. This propaganda blinds people to the true nature of State violence – thus ensuring that State violence can increase with relatively little or no opposition.

Parents are forced to pay for the propaganda of public schools through taxation. Thus a ghastly situation is created wherein the taxpayers are forced to pay for their own indoctrination – and the indoctrination of their children. This “externalisation of cost” is perhaps the greatest tool that the government uses to ensure that increasing State violence will be subject to little or no opposition or rational analysis. No corporation or private agency could possibly profit from a fourteen-year program of indoctrinating children – the State, however, by inflicting the costs of indoctrination onto parents, creates a situation where the slaves are forced to pay for their own manacles. And as we all know, when slaves don’t resist, owning slaves becomes far more economically viable.

For the above reasons, it is clear that the existence of a centralised State vastly increases both the profits and the prevalence of violence. The fact that the violence is masked by obedience in no way diminishes the brutality of coercion. All moralists interested in one of the greatest topics of ethics – the reduction or elimination of violence – would do well to understand the depth and degree to which the existence of a centralised State promotes, exacerbates – and profits from – violence. Private violence is a negative but manageable situation – however, as we can see from countless examples throughout history, public violence always escalates until civil society becomes seriously threatened. Because the State so directly profits from violence, eliminating the State can in no way increase the use of violence within society. Quite the contrary – since private agencies do not profit from violence, eliminating the State will, to a degree unprecedented in human history, eliminate violence as well.

War, Profit, and the State

It has often been said that war is the health of the State – but the argument could also be made that the reverse is more true: that the State is the health of war. In other words, that war – the greatest of all human evils – is impossible without the State.

The great Austrian economist Ludwig von Mises was once asked what the central defining characteristic of the free market was – i.e. since every economy is more or less a mixture of freedom and State compulsion, what institution truly separated a free market from a controlled economy – and he replied that it was the existence of a stock market. Through a stock market, entrepreneurs can achieve the externalisation of risk, or the partial transfer of potential losses from themselves to investors. In the absence of this capacity, business growth is almost impossible.

In other words, when risk is reduced, demand increases. The stagnation of economies in the absence of a stock market is testament to the unwillingness of individuals to take on all the risks of an economic endeavour themselves, even if this were possible. When risk becomes shareable, new possibilities emerge that were not present before – the Industrial Revolution being perhaps the most dramatic example. Sadly, one of those possibilities – in all its horror, corruption, brutality, and genocide – is war. In this section, I will endeavour to show that, in its capacity to reduce the costs and risks of violence, the State is, in effect, the stock market of war.

All economists know the “fallacy of the broken window,” which is that the stimulation of demand caused by a vandal breaking a window does not add to economic growth, but rather subtracts from it, since the money spent replacing the window is deducted from other possible purchases. This is self-evident to all of us – we don’t try to increase our incomes by driving our cars off cliffs or burning down our houses. Although it might please car manufacturers and home builders, it neither pleases us, nor the people who would have had access to the new car and house if we did not need them for ourselves. Destruction always diverts resources and so bids up prices, which costs everyone.[6]

There will always be accidents, of course, and so repairs are a legitimate aspect of any free market. However, war can never be said to be an accident, is never part of the free market, and yet is commonly believed to be good for the economy – and must be, for at least some people, since it is pursued so often. How can these opposites be reconciled? How can destruction be economically advantageous, when it is so obviously bad for the economy as a whole?

We can imagine an unethical window repairman who smashes windows in order to raise demand for his business. This would certainly help his income – and yet we see that this course is almost never pursued in real life in the free market. Why not?

One obvious answer could be that business managers are afraid of going to jail – and that certainly is a risk, but not a very great one. Arsonists are notoriously hard to catch, for instance, and there are so many hard-to-trace sabotages that can be undertaken. Poison can be added to the water supply that would incriminate a water supplier, which would take months to resolve – at which point the trail would be long cold. Foreign hackers could be paid to infiltrate competitor’s networks, or mount denial-of-service attacks on their web sites – sure doom for those who sell over the Internet.

Not convinced? Well, what about eBay? If you have a competitor who is taking away your business, why not just get a hundred of your closest friends to give him a bad rating, and watch his reputation – and business – dry up and blow away?

All of the above practices are very rare in the free market, for three main reasons. The first is that they are costly, the second is that they increase risks, and the third is the fear of retaliation.

The Cost of Destruction

If you want to hire an arsonist to torch the factory of your competitor, you have to become an expert in underworld negotiations. You might pay an arsonist and watch him take off to Hawaii instead of setting the fire. You also face the risk that your arsonist will take your offer to your competitor and ask for more money to not set the fire – or, worse, return the favour and torch your factory! It will certainly cost money to start down the road of vandalism, and there is no guarantee that your investment will pay off in the way you want.

There are other tertiary costs to pursuing a path of “competition by destruction.” You can only target one competitor at a time, which is only partially helpful, since most businesses face many competitors simultaneously – some local, some overseas and probably out of reach. Even if you are successful in destroying your competitor, you have opened a “hole” in the market, which will just invite others to come in – and perhaps compete even more fiercely with you. When it comes to competition, in most cases it is better to stay with “the devil you know.” It wouldn’t make much sense to knock out a small software competitor, for instance, and end up giving Microsoft a good reason to enter the market.

Also, if you are a business owner, competition is very good for you. Just as a sports team gets lazy and unskilled if it never plays a competent opponent, businesses without competition get unproductive, lazy, and inefficient – a sure invitation to others to come in and compete. Successful businesses need competition to stay fit. Resistance breeds strength.

Also, what happens if you do manage to successfully sabotage your opponents? If you do it well, no one has any idea that you are behind the sudden spate of arson. What happens to your insurance costs? They go through the roof – if you can even get any! Furthermore, you will not be able to meet all the new demand right away, thus ensuring that clients will find alternatives, which will likely remain outside your control. Thus you have increased your costs, created incentives for potential customers to find alternatives, and alarmed your employees – creating a dangerous situation where competitors are highly motivated to enter your field just when you are the most vulnerable to competition! Overall, not a very bright idea!

The Risks of Destruction

Let us say you decide to pay a man named Stan to torch your competitor’s factory – well, the basic reality of the transaction is that Stan, as a professional arsonist, knows how to work the situation to his advantage far better than you do, since you are, ahem, new to the field. Stan knows that no matter what he does, you cannot go to the police for protection. What if he tapes your conversations and then blackmails you? Then your exercise in amoral competition suddenly becomes a lifelong nightmare of expense, guilt, fear, and rage.

As mentioned above, what if Stan decides to go to your competitor and reveal your plans? Surely your competitor would pay good money for that information, since he could then go to the police and destroy you legally even more completely than you were hoping to destroy him illegally. A basic fact of criminal activity is that once the gloves come off, the results become very hard to predict indeed!

What if Stan goes to your competitor and says: “For twenty-five thousand dollars, I was supposed to torch this place – for thirty thousand dollars I can just turn around and set quite a different fire!” This pendulum bidding war can turn into a desperately stressful money-loser for everyone concerned (except Stan, of course).

And who is to say that Stan is even a “legitimate” arsonist? What if he is an undercover agent of some kind? What if he has been sent by someone else in order to get some dirt on you? What if it turns out to be blackmail, or a set-up by your competitor? How would you know? Again – it is all very risky!

The Risks of Personal Retaliation

Let us say that all of the above works out just the way you want it and Stan actually torches your competitor Bill’s factory – what might happen then? You have just created a bitter enemy who suspects foul play, knows that you have a good motive for torching his factory, and has nothing to lose. He might complain about you to the police, hire private investigators, and put an advertisement in every local paper offering a cash reward of a million dollars for information leading to proof of your participation – so he can sue you and recover far more than a million dollars!

Either your new enemy will find out actionable information, and then go to the police, or he will find out unactionable information – hints, not proof – in which case he may choose to retaliate against you. Since you’ve been able to do it in a way that cannot be proven – and he now knows how – you have just educated a bitter and angry man on how to torch a factory and escape detection. Are you going to sleep safe in your bed? Are you sure that he’s going to target only your factory?

What does all this look like in terms of economic calculation? Have a look at a sample table below showing the costs and benefits of competition through arson. If we assign arson a cost of fifty thousand dollars, with a fifty percent probability of success, and a resulting economic benefit of one million dollars, we see a net benefit of four hundred fifty thousand dollars (fifty percent of one million dollars minus fifty thousand dollars in costs). So far so good. But if we include a ten percent risk of blackmail, a twenty percent chance of retaliation, a twenty-five percent chance of increased competition – all reasonable numbers – and finally one hundred thousand dollars in increased insurance and security costs – we can see that the economic benefits are erased very quickly (see below).

Action Cost Probability Economic Effect Net benefit (benefit * risk - cost)
Arson -$50,000 50% $1,000,000 $450,000
Blackmail -$250,000 10% -$250,000 -$25,000
Retaliation -$1,000,000 20% -$1,000,000 -$200,000
Increased comeptition -$500,000 25% -$500,000 -$125,000
Increased costs (insurance, security, etc.) -$100,000 100% -$100,000 -$100,000
Net effect: $0

As the above conservative example shows, it is not really worth it to attempt economic gain through the destruction of property – and that is exactly how it should be. We want people to be good, of course, but we also want strong economic incentives for virtue as well, to shore up the uncertain integrity of free will![7]

How does this relate to war and the State? Very closely, in fact – but with very opposite effects.

The Economics of War

The economics of war are, at bottom, very simple, and contain three major players: those who decide on war, those who profit from war, and those who pay for war. Those who decide on war are the politicians, those who profit from it are those who supply military materials or are paid for military skills, and those who pay for war are the taxpayers (the first and second groups, of course, overlap).

In other words, a corporation which profits from supplying arms to the military is paid through a predation on citizens through State taxation – and under no other circumstances could the transaction exist, since the risks associated with destruction outlined above are equal to or greater than any profits that could be made.

Certainly if those who decided on war also paid for it, there would be no such thing as war, since war follows the same economic incentives and costs outlined above.

However, those who decide on war do not pay for it – that unpleasant task is relegated to the taxpayers (both current, in the form of direct taxes and inflation, and future, in the form of national debts). Let us see how the above analysis of the costs of destruction changes when the State enters the equation.

The Costs of Military Destruction

If you want to start a war, you need a very expensive military – which must also be trained and maintained when there is no war. There is simply no way to recover the costs of that military by invading another country – otherwise, the free market would directly fund armies and invasions, which it never does. Or, if you would prefer another way of looking at it, you can only invade another country by destroying large portions of it, killing many of its citizens, and then fighting endless insurgencies. Given the costs of invasions and occupations – always in the hundreds of millions or billions of dollars – what profits could conceivably be extracted from the bombed-out country you are occupying? That would be like asking a thief to make money by fire-bombing a house he wanted to steal from, and then staying and keeping the occupants hostage. Madness! Thieves don’t operate that way – and neither would war, without the presence of the State and the money of the taxpayers.

Since the taxpayer’s money pays for the war, the costs of destruction for those who start the war are very low – how much did George Bush personally pay for the Iraq invasion? While it is true that those who profit from the war also pay the taxes needed to support the war effort, the amount they pay in taxes is far less than they receive in profits – again, facts we know because there are always people willing and eager to supply the military.

The Risks of Annihilation

Those who decide on war and those who profit from war only start wars when there is no real risk of personal destruction. This is a simple historical fact, which can be gleaned from the reality that no nuclear power has ever declared war on another nuclear power. The US gave the USSR money and wheat, and yet invaded Grenada, Haiti, and Iraq.[8]

Avoiding the risk of destruction was the reason that the USSR and the US (to take two obvious examples) fought “proxy wars” in out-of-the-way places like Afghanistan, Vietnam, and Korea. As we shall see below, the fact that the risk of destruction is shifted to taxpayers (and taxpayer-funded soldiers) considerably changes the economic equation.

The Risks of Military Retaliation

The “risk of retaliation” in economic calculations regarding war should not be taken as a general risk, but rather a specific one – i.e. specific to those who either decide on war or profit from it. For example, Roosevelt knew that blockading Japan in the early 1940s carried a grave risk of retaliation – but only against distant and unknown US personnel in the Pacific, not against his friends and family in Washington.[9]

If other people are exposed to the risk of retaliation, the risk becomes a moot point from an amoral economic standpoint. If I smoke, but some unknown stranger might get lung cancer, my decision to continue smoking will certainly be affected!

Externalising Military Risk

The power of the State to so fundamentally shift the costs and benefits of violence is one of the most central facts of warfare – and the core reason for its continued existence. As we can see from the above table regarding arson, if the person who decides to profit through destruction faces the consequences themselves, they have almost no economic incentive to do so. However, if they can shift the risks and losses to others – but retain the benefit themselves – the economic landscape changes completely! Sadly, it then becomes profitable, say, to tax citizens to pay for eight hundred US military bases around the world, as long as strangers in New York bear the brunt of the inevitable retaliation. It also becomes profitable to send uneducated youngsters to Iraq to bear the brunt of the insurgency.

Externalising Emotional Discomfort

The fact that the State shifts the burden of risk and payment to the taxpayers and soldiers is very important in emotional terms. If the “arson” example could be tweaked to provide a profit – say, by reducing the risks of blackmail or retaliation – the other risks would still accrue to the person contemplating such violence. Such risks would cause emotional discomfort in all but the most rare and sociopathic personalities – and the generation of negative stimuli such as fear, guilt, and worry would still require more profit than the model can reasonably generate.

Thus the fact that the State externalises almost all the risks and costs of destruction is a further positive motivation to those who would use the power of State violence for their own ends. Once you throw in endless pro-war propaganda (also called “war-nography”), the emotional benefits of starting and leading wars funded by others can become a definitive positive – which ensures that wars will continue until the State collapses, or the world dies.

In Other Words, The State Is War

If the above is understood, then the hostility of anarchists towards the State should now be at least a little clearer. In the anarchist view, the State is a fundamental moral evil not only because it uses violence to achieve its ends, but also because it is the only social agency capable of making war economically advantageous to those with the power to declare it and profit from it. In other words, it is only through the governmental power of taxation that war can be subsidised to the point where it becomes profitable to certain sections of society. Destruction can only ever be profitable because the costs and risks of violence are shifted to the taxpayers, while the benefits accrue to the few who directly control or influence the State.

This violent distortion of costs, incentives, and rewards cannot be controlled or alleviated, since an artificial imbalance of economic incentives will always self-perpetuate and escalate (at least, until the inevitable bankruptcy of the public purse). Or, to put it another way, as long as the State exists, we shall always live with the terror of war. To oppose war is to oppose the State. They can neither be examined in isolation nor opposed separately, since – much more than metaphorically – the State and war are two sides of the same bloody coin.

A Successful Operation (a dead patient!)

Most libertarians have, at one time or another, been challenged by the problem of public property, or how the market can best protect and allocate goods “owned” in common such as fish in the sea, roads, airwaves, and so on. An old economics parable sums up the problem nicely – let’s briefly review it before taking a strong swing at solving the problem of public property.

The issue is well described by a parable called the problem of the commons (POTC), which goes something like this: a group of sheep-owning farmers own land in a ring around a common area. They each benefit individually from letting their sheep graze on the common land, since that frees up some of their own farmland for other uses. However, if they all let their sheep graze on the commons, they all suffer, since the land will be stripped bare, and so they will end up watching their sheep starve, since their own land has all been turned to other uses. In many circles, this is considered an incontrovertible coup de grace for the absolute right of private property – and the free market in general – insofar as it “proves” that individual self-interest, rationally pursued, can result in economic catastrophe. Due to the POTC, it is argued, the property rights of the individual must be curtailed for the sake of the “greater good.” Thus regulation and government ownership must be instituted to control the excesses of individual self-interest for the sake of long-term stability, blah, blah, blah.

There is one significant difficulty with the POTC, however, which is that it fails to prove that government regulation or public ownership is necessary, or that turning the POTC over to the State solves the problem in any way. In fact, it is easy to prove that even if the POTC is a real dilemma, the worst possible way of solving it is to create government regulations or public ownership.

Problem #1: Public Ownership

The simplest rebuttal to the POTC, of course, is to point out that the problem faced by the farmers is not an excess of private property, but a deficiency. If we imagine the farms surrounding the commons to be doughnut-shaped, then clearly the POTC is best solved by simply extending the ownership of the farms to the very centre, like pizza slices (yes, these metaphors are making me hungry as well!). If private property is thus extended to include the commons, farmers no longer face the problem of everyone wanting to exploit unowned resources. Everyone can then use their extra land to feed their sheep, and everyone is content.[10]

However, let us accept that under some circumstances the POTC is real, and cannot be overcome through the extension of private property rights. What solutions can then be brought to bear on the problem? Solutions to social problems always fall into one of two categories: voluntary or coercive. Voluntary solutions to the POTC abound throughout history – the most notable being the kinds of social arrangements made by fishermen. When a number of fishing communities dot a lake, villagers develop complex, and effective measures to ensure that the lake is not over-fished. Any display of wealth is frowned upon, since it is clear that wealth can only come from over-fishing. Communal leaders meet to figure out how much each village can catch – and it is very hard to hide your catch in a small village. Furthermore, the problem of not knowing exactly how much fish is being taken by others – as well as natural annual variations in fish stocks – lead to significant underestimation of allowable catches, which ensures that sustainability is always achieved. Left-leaning economists might be baffled by the POTC, but there is scant recorded historical evidence of illiterates in fishing villages regularly starving to death due to over-fishing (unless their village leaders were left-leaning economists perhaps).

The POTC is yet another manifestation of that old bugbear: the blind insistence that humans are beings whose sole motivation is immediate financial considerations.[11] “Ahhh,” says the miserly farmer of this ‘instant gratification’ fairy tale, “I will graze my sheep by night and callously denude the commons, so I can grow a dozen extra turnips!” But what good will his extra turnips do him if no one in the village will talk to him, or when no one will help him build a barn, or when he gets sick and needs people to care for his sheep? No, even miserly farmers are far better obeying the rules and forgetting about their extra turnips – since they will lose far more than they gain by circumventing social norms. Communities have weapons of ostracism and contempt that far outweigh immediate economic calculations.[12]

Problem #2: The State as a ‘Common’

However, let us assume that none of the above rebuttals to the POTC holds firm, and in certain circumstances there is simply no way to extend property rights to, or exercise social control over, resources which cannot be owned – what then? Do we turn such a thorny and complex problem to the tender mercies of the State to solve?

One of the most interesting aspects of using the State to solve the POTC is that the State itself is subject to the problem of the commons.

Since the State is an entity wherein property is owned in “common,” the problem of selfish exploitation leading to general destruction applies as surely to State “property” as it does to the common land ringed by greedy and short-sighted farmers. Just as farmers can destroy the commons while pursuing their individual self-interest, so can politicians, bureaucrats, lobbyists, and other assorted State toadies and courtiers destroy the economy as a whole in pursuit of their own selfish economic and political goals.

The POTC argues that, due to “common ownership,” long-term prosperity is sacrificed for the sake of short-term advantage. Because no one defends and maintains property that can be utilised by all, that property is pillaged into oblivion. And – the State is supposed to solve this problem? How? That is exactly how the State operates!

Let’s look at some examples of how the State pillages the future for the sake of greed in the here-and-now:

  • Deficit financing.
  • Inflationary monetary expansion.
  • Government bonds, which future generations must pay out.
  • Spending the money taken in through social security, which future generations must pay for.
  • Offensive “defence” spending, which future citizens will pay for through increased risk of domestic attacks.
  • Massive educational failures, which have immensely deleterious effects on future productivity and happiness.
  • The granting of special powers, rights, and benefits to lobbyists such as unions, public sector employees, and large corporations, which results in higher prices and deficits.[13]
  • The failure to adequately maintain public infrastructure such as roads, schools, bridges, the water supply, and so on, which passes enormous liabilities on to the next generation.
  • Massive spending on the war on drugs, which increases crime in the future.
  • The pollution of public lands and other fixed assets, which saves money in the short run while ruining value in the long run.
  • And goodness knows how much more!

From the above examples, it is easy to see that the POTC applies to the State to a far greater degree than any other social agency or individual. If we recall our group of greedy farmers, we can easily see that they have a strong incentive to avoid or solve the POTC, since it is they themselves who will suffer from the despoiling of unowned lands. However, in the case of the State, those who prey upon and despoil the public purse will never themselves face the direct consequences of their pillaging. Thus their incentive to prevent, solve, or even alleviate the problem is virtually non-existent.

Furthermore, even if the farmers do end up destroying the unowned lands, they can at least get together and voluntarily work to find a better solution in the future. Once the government takes over a problem, however, control passes almost completely from the private sphere to the public sphere of enforcement, corruption, and politics. Once firmly planted in the realm of the State, not only is the problem of public ownership made incalculably worse, but it cannot ever be resolved, since the predation of the public purse is now defended by all the armed might of the State military. Consequences evaporate, competition is eliminated, and a mad free-for-all grab-fest simply escalates until the public purse is drained dry and the State collapses.[14]

Thus the idea of turning to the State to solve the POTC is akin to the old medical joke about the operation being a complete success, with the minor exception that the patient died. If the POTC is a significant issue in the private sector, then turning it over to the government makes it staggeringly worse – turning it from a mildly challenging problem of economics into a suicidal expansion of State power and violence. If the problem of the commons is not a significant issue, then surely we do not need the State to solve it at all.

Either way, there is no compelling evidence or argument to be made for the value, morality, or efficacy of turning problems of public ownership over to the armed might of the State. Both logically and ethically, it is the equivalent of treating a mild headache with a guillotine.

So, if the State is an evil, corrupt, and destructive solution to the problems of social organisation, what alternatives can anarchism offer?

Dispute Resolution Organisations

An essential aspect of economic life is the ability to guarantee contracts and resolve intractable disputes. How can a stateless society provide these functions in the absence of a government?

The first thing to understand about contracts is that they are a form of insurance, insofar as they attempt to minimise the risks of non-compliance. If I enter into a five-year mortgage agreement with a bank, I will attempt to minimise my risks by requiring that the bank give me a fixed interest rate for the time period of the contract. My bank, on the other hand, will minimise its risk by retaining ownership of my house as collateral, in case I do not pay the mortgage.

In a world without risk, contracts would be unnecessary, and everyone would do business on a handshake. However, there are people who are dishonest, scatterbrained, manipulative, and false, and so we need contracts which basically spell out the penalties for non-compliance to particular requirements.

In modern statist societies, contracts are generally enforced not through the court system, but rather through the threat of the court system. I was in business for many years, at an executive level, and I never once heard of a contract being successfully enforced through the state court system, although I did on occasion hear litigious threats – which is quite different. The threat was not so much, “I am going to use the court to enforce this contract,” but rather, “I am going to use the threat of taking you to court in order to enforce this contract.” The prospect of expensive and time-consuming legal action was always enough to force a resolution of some kind. No actual court compulsion was ever required.

It is quite easy to see that when a process that is designed to mediate disputes becomes itself a threat which causes disputes to be mediated privately, it has largely failed in its intent. State court systems have become like the quasi-private car insurance companies – the threats and inconvenience of using them has caused most people to settle their disputes privately, rather than involve themselves in something that they are forced to pay for, but can almost never use.

This bodes very well for anarchic solutions to contract disputes.

In a stateless society, entrepreneurs will be very willing and eager to provide creative solutions to the problems of contractual non-compliance. As a non-violent solution, the profits will be maximised if non-compliance can be prevented, rather than merely addressed after the fact.

To take a simple example, let us pretend that you are a loans officer at a bank, and I come in requesting ten thousand dollars. Naturally, you will be very happy to lend me the money if I will pay back both the principal and interest on time, since that is how you make your profit. However, such a guarantee is completely impossible, since even if I have the money and the intent to pay you back, I could get hit by a bus while on my way to do so, leaving you perhaps ten thousand dollars in the hole.

What questions will you need to answer in order to assess the risk? You will want to know two things in particular:

  1. Have I consistently paid back loans in the past?
  2. Do I have any collateral for the loan?

These two pieces of information are somewhat related. If I have consistently paid back loans in the past, then your need for collateral will be diminished. The more collateral that I am able to provide for the loan, the less it is necessary for me to have a good credit history.

The reason that a good credit history is so necessary is not just to establish my credit worthiness, but also to help the bank assess how much I have currently invested into my good reputation. If I have taken out loans for hundreds of thousands of dollars in the past, and repaid them on time, then it scarcely seems likely that I would have gone through all of that just to steal ten thousand dollars.

If we say that my good credit rating saves me two percentage points on my interest payments, and that I will need a further five hundred thousand dollars of loans over the course of my life, then my good credit rating will be saving me at a bare minimum tens of thousands of dollars. Thus, I would end up losing money if I took out a ten thousand dollar loan and did not pay it back, since the cash benefit would not cover the losses I would incur through the destruction of my credit rating. Physical “collateral” is thus less required, since I have the very real “collateral” of a good credit rating.

These kinds of economic calculations occur regularly in a statist society, and would not vanish like the morning mist in a stateless society.

However, there are certain kinds of loans that some financial institutions would be willing to make, despite the high level of risk involved. Young people just starting out – who have no family to provide collateral – would be in a higher risk category, as would those who had failed to make loan payments in the past. As we can see from late-night television commercials for cars, no credit history – or even a bad credit history – does not make one permanently ineligible for loans.

There are two main ways to manage risk in any complex situation – hedging, and insurance. The “hedging” approach is to bet both for and against a particular outcome. In the world of currency trading, this means betting a certain amount that the dollar will go up, and another amount that the dollar will go down. In the world of horse racing, it means betting on more than one horse. This is also why people diversify their stock portfolios.

The “insurance” approach tends to be used where hedging is impossible. When I was an executive in the software world, my employees would often take out insurance in case I got sick or died. It was relatively impossible to “hedge” this risk, because keeping “backup employees” in a basement is not particularly cost-efficient, let alone moral. Life insurance is another example of this.

These strategies are already well-established in the current quasi-free market. However, in one-to-one contracts, state courts retain their monopoly. If I am an employee, I have a one-to-one contract with my employer; I cannot “hedge” the risks involved in this contract, and currently neither can I buy insurance to mitigate the risk that my employer will go out of business, while still owing me pay and expenses.

In the absence of a government, the need for the rational mitigation of risk in contracts would still be there, and entrepreneurs will inevitably provide creative and intelligent solutions to address this.

Breaking Contract

Let us take a relatively small example of how contract disputes can be resolved in a stateless society.

Let us say that I pay you fifteen thousand dollars to landscape my garden, but you never show up to do the work. Ideally, I would like my fifteen thousand dollars back, as well as another few thousand dollars for my inconvenience. In a stateless society, when we first put pen to paper on a contract, we can choose an impartial third party to mediate any dispute. If a conflict should arise that we cannot solve ourselves, we contractually agree in advance to abide by the decision of this Dispute Resolution Organisation (DRO).

Since I am not an expert in pursuing people and getting money from them, if I had any doubts about your motives, capacity, and honesty, I would simply pay this DRO a fee to recompense me if the deal goes awry. If you run off without doing the work, I simply submit my claim to the DRO, who then pays me twenty thousand dollars.

When I first apply for this insurance, the DRO will charge me a certain amount of money, based on their evaluation of the risk I am taking by doing business with you. If you have cheated your last ten customers, the DRO will simply not insure the contract, thus implicitly informing me of the risk that I am taking. If you have a spotty record, then the DRO may charge me a few thousand dollars to insure your work – again, giving me a pretty good sense of how reliable you are.

On the other hand, if you have been in business for thirty years, and have never once cheated a customer, or received a complaint, then the DRO is simply insuring against delays caused by sudden madness or unexpected death. It may only charge me fifty dollars for this eventuality.

This form of contract insurance is a very powerful positive incentive for honest dealings in business. The cost of insuring a contract is directly added to the cost of doing business, and so if it can be kept as low as humanly possible, the financial benefits to both parties are clear.

The cost of insuring a contract can be kept even lower if you are willing to provide collateral upfront. What this means is that if you cheat me out of the fifteen thousand dollars, and the DRO has to pay me twenty thousand dollars, you promise to pay the DRO twenty-five thousand dollars. If you cheat me, the DRO can then take this money directly out of your bank account.

In this way, contracts can be enforced without resorting to violence, or lengthy and incredibly expensive court battles. The risks of entering into contracts are clearly communicated up front, and honest people will be directly rewarded through lower enforcement costs, just as non-smokers are directly rewarded through lower life insurance costs.


Suppose I have contracted with a DRO to pay restitution if I cannot fulfil my business obligations in some way, and end up owing them one hundred thousand dollars. What happens if I cannot pay, or simply refuse to pay?

Currently, the State will use violence against me if I do not pay. While this may be a satisfying form of medieval vengeance gratification, it scarcely helps me cough up one hundred thousand dollars that the DRO actually wants from me. In a stateless society, what options are available for the DRO to get its money?

In any modern economy, individuals are bound by dozens of obligations and contracts, from apartment leases to gym memberships, credit cards contracts to insurance agreements. The costs of doing business with people who are known to honour their contracts is far lower, which is why it seems highly likely that a stateless society produce both DROs, and Contract Rating Agencies (CRAs).

CRAs would be independent entities that would objectively evaluate an individual’s contract compliance. If I become known as a man who regularly breaks his contracts, it will become more and more difficult for me to efficiently operate in a complex economy. This form of economic ostracism is an immensely powerful – and non-violent – tool for promoting compliance to social norms and moral rules.

If an individual egregiously violates social norms – and we shall get to the issue of violent crime below – then one incredibly effective option that society has is to simply cease doing any form of business with such an individual.

If I cheat my DRO – or another individual – out of an enormous sum of money, the CRA could simply revoke my contract rating completely.

DROs would very likely have provisions which would simply state that they would not enforce any contract with anyone whose contract rating was revoked. In other words, if I run a hotel, and an “outcast” wants to rent a room, I will be immediately aware of this, since I will enter their credit card, and be promptly informed that no contract will be honoured with this individual. In other words, if they set fire to my hotel, steals, destroys property, or harasses another guest, then my DRO will not help me at all. Will I be likely to want to rent a room to this person, or will I tell them that, sadly, the hotel is full?

In the same way, grocery stores, taxicabs, bus companies, electricity providers, banks, restaurants, and other such organisations will be very unlikely to want to do business with such an outcast, since they will have no protection if they misbehave.

Economic interactions, of course, are purely voluntary, and no one can be morally forced to do business with another person. People who cheat, steal, and lie will be highly visible in a stateless society, and will find that other people will turn away from them more often than not, unless they change their ways, and provide restitution for their prior wrongs.

An outcast can get their contract rating restored if they are willing to repay those they have wronged. If they get a job and allow their wages to be garnished until their debts are paid off, their contract rating can be restored, at least to the minimum level required for them to hold a job and rent an apartment. A DRO, which is always interested in preventing recurrence, rather than dealing with consequences, may also reduce their burden if they are willing to attend psychological and credit counselling education.

In this way, contracts can be enforced without resorting to violence – the tool of economic and social ostracism is the most powerful method for dealing with those who repeatedly violate moral and social rules. We do not need to throw people into economically unproductive “debtor’s prisons” or send people with guns to kidnap and incarcerate them – all we need to do is publish their crimes for all to see, and let the natural justice of society take care of the rest.

Ah, but what if an “outcast” has been treated unjustly, and is being blackmailed by a DRO or CRA?

Well, remember that anarchism is always a two-sided negotiation. In order to get people to sign up to your DRO or CRA, what checks and balances would you put in your contracts to calm their fears in this regard?

The Stateless Society: An Examination of Alternatives

Let us turn to a more detailed examination of how private agencies could work in a free society.

Remember, these are only possible ideas about how such agencies could work – I’m sure that you have many of your own, which may be vastly superior to mine. The purpose of this section is not to create some sort of finalised blueprint for a stateless society, but to show how the various incentives and methodologies of freedom can create powerful and productive solutions to complex social problems, in a way that will forever elude a statist society.

If the twentieth century proved anything, it is that the single greatest danger to human life is the centralised political State, which murdered more than two hundred million souls. Modern States are the last and greatest remaining predators. It is clear that the danger has not abated with the demise of communism and fascism. All Western democracies currently face vast and accelerating escalations of State power and centralised control over economic and civic life. In almost all Western democracies, the State chooses:

  1. Where children go to school, and how they will be educated.
  2. The interest rate citizens can borrow at.
  3. The value of currency.
  4. How employees can be hired and fired.
  5. How more than fifty percent of their citizen’s time and money are disposed of.
  6. Who a citizen may choose as a doctor.
  7. What kinds of medical procedures can be received – and when.
  8. When to go to war
  9. Who can live in the country.
  10. Just to touch on a few.

Most of these amazing intrusions into personal liberty have occurred over the past ninety years, since the introduction of the income tax. They have been accepted by a population helpless to challenge the expansion of State power – and yet, even though most citizens have received endless pro-State propaganda in government schools, a growing rebellion is brewing. The endless and increasing State predations are now so intrusive that they have effectively arrested the forward momentum of society, which now hangs before a fall. Children are poorly educated, young people are unable to get ahead, couples with children fall ever-further into debt, and the elderly are finding their medical systems collapsing under the weight of their growing needs. And none of this takes into account the ever-growing State debts. These early years of the twenty-first century are thus the end of an era, a collapse of mythology comparable to the fall of communism, monarchy, or political Christianity. The idea that the State is even capable of solving social problems is now viewed with great scepticism – which foretells the imminent end, since as soon as scepticism is applied to the State, the State falls, since it fails at everything except expansion, and so can only survive on propaganda.

Yet while most people are comfortable with the idea of reducing the size and power of the State, they become distinctly uncomfortable with the idea of getting rid of it completely.

To use a medical analogy, if the State is a cancer, they prefer medicating it into remission, rather than eliminating it completely. This can never work. If history has proven anything, it is the simple fact that States always expand until they destroy society. Because the State uses violence to achieve its ends, and there is no rational end to the expansion of violence, States grow until they destroy the host civilisation through the corruption of money, contracts, civility, and liberty. As such, the cancerous metaphor is not misplaced. People who believe that the State can somehow be contained have not accepted the fact that no State in history has ever been contained.

Even the rare reductions are merely temporary. The United States was founded on the principle of limited government; it took little more than a few decades for the State to break the bonds of the Constitution, implement the income tax, take control the money supply, and begin its catastrophic expansion. There is no example in history of a State being permanently reduced in size. All that happens during a tax or civil revolt is that the State retrenches, figures out what it did wrong, and begins its expansion again – or provokes a war, which silences all but fringe dissenters.

Given these well-known historical facts, why do people continue believe that such a deadly predator can be tamed? Surely it can only be because they consider a slow strangulation in the grip of an expanding State somehow better than the “quick death” of a society bereft of a State.

Why do most people believe that a coercive and monopolistic social agency is required for society to function? There are a number of answers to this question, but they tend to revolve around four central points:

  1. Dispute resolution.
  2. Collective services.
  3. Pollution.
  4. Crime.

We will tackle the first three in this section, and the last one in the next.

Dispute Resolution

It is quite amazing that people still believe that the State somehow facilitates the resolution of disputes, given the fact that modern courts are out of the reach of all but the most wealthy and patient. In my experience, to take a dispute with a stockbroker to the court system would have cost more than a quarter of a million dollars and from five to ten years – however, a private mediator settled the matter within a few months for very little money. In the realm of marital dissolution, private mediators are commonplace. Unions use grievance processes, and a plethora of specialists in dispute resolution have sprung up to fill in the void left by a ridiculously lengthy, expensive, and incompetent State court system.

Thus it cannot be that people actually believe that the State is required for dispute resolution, since the court apparatus is unavailable to the vast majority of the population, who resolve their disputes either privately or through agreed-upon mediators.

Collective Services

Roads, sewage, water, electricity, and so on, are all cited as reasons why a State must exist. How roads could be privately paid for remains such an impenetrable mystery that most people are willing to support the State – and so ensure the continual undermining of civil society – rather than concede that this problem is solvable. There are many ways to pay for roads, such as electronic or cash tolls, GPS charges, roads maintained by the businesses they lead to, or communal organisations, and so on. The problem that a water company might build plumbing to a community, and then charge exorbitant fees for supplying it, is equally easy to counter, as mentioned above. None of these problems touch the central rationale for a State. They are all ex post facto justifications made to avoid the need for critical examination or, heaven forbid, a support of anarchism.

It is completely contradictory to argue that voluntary free-market relations are “bad” – and that the only way to combat them is to impose a compulsory monopoly on the market. If voluntary interactions are bad, how can coercive monopolies be better?

State provision of public services inevitably leads to the following:

  1. The granting of favourable contracts to political allies.
  2. Tax-subsidised costs leading to over-use, and intergenerational debt.
  3. A lack of renewal investment in infrastructure leading to expensive deterioration.
  4. A growth in coercive pro-union legislation, which spreads inefficiencies to other industries.
  5. A lack of innovation and exploration of alternatives to existing systems of production and distribution.
  6. A dangerous social dependence on a single provider.
  7. And many more such inefficiencies, problems, and predations.

Due to countless examples of free market solutions to the problem of “carrier costs,” this argument no longer holds the kind of water is used to, so people must turn elsewhere to justify the continued existence of the State.


This is perhaps the greatest problem faced by free market theorists. It is worth spending a little time on outlining the worst possible scenario, to see how a voluntary system could solve it. However, it is important to first dispel the notion that the State currently deals effectively with pollution. First of all, the most polluted land on the planet is State-owned, because States do not profit from maintaining the value of their property. Secondly, the distribution of mineral, lumber, and drilling rights is directly skewed towards bribery and corruption, because States never sell the land, but rather just the resource rights. A lumber company cannot buy woodlands from the State, just harvesting rights. Thus the State gets a renewable source of income, and can further coerce lumber companies by enforcing re-seeding. This, of course, tends to promote bribery, corruption, and the creation of “fly-by-night” lumber companies which strip the land bare, but vanish when it comes time to re-seed. Selling State land to a private company easily solves this problem, because a company that was willing to re-seed would reap the greatest long-term profits from the woodland, and therefore would be able to bid the most for the land.

Also, it should be remembered that, in the realm of air pollution, States created the problem in the first place. In England, when industrial smokestacks first began belching fumes into the orchards of apple farmers, the farmers took the factory-owners to court, citing the common-law tradition of restitution for property damage. Sadly, however, the capitalists had gotten to the State courts first, and had more money to bribe with, employed more voting workers, and contributed more tax revenue than the farmers – and so the farmer’s cases were thrown out of court. The judge argued that the “common good” of the factories trumped the “private need” of the farmers. The free market did not fail to solve the problem of air pollution – it was forcibly prevented from doing so because the State was corrupted.

However, it is a sticking point, so it is worth examining in detail how the free market might solve the problem of air pollution. One egregious example often cited is a group of houses downwind from a new factory which is busy night and day coating them in soot.

Now, when someone buys a new house, isn’t it important to them to ensure that they will not be coated with someone else’s refuse? The need for a clean and safe environment is so strong that it is a clear invitation for enterprising entrepreneurs to sweat bullets figuring out how to provide it.

If a group of home-owners are afraid of pollution, the first thing they will do is buy pollution insurance, which is a natural response to a situation where costs cannot be predicted but consequences are dire. Let us say that a home-owner named John buys pollution insurance which pays him two million dollars if the air in or around his house becomes polluted. In other words, as long as John’s air remains clean, his insurance company makes money.

One day, a plot of land up-wind of John’s house comes up for sale. Naturally, his insurance company would be very interested in this, and would monitor the sale. If the purchaser is some private school, all is well (assuming John has not bought noise pollution insurance). If, however, the insurance company discovers that Sally’s House of Polluting Paint Production is interested in purchasing the plot of land, it will likely spring into action, taking one of the following courses:

  1. Buying the land itself, then selling it to a non-polluting buyer.
  2. Getting assurances from Sally that her company will not pollute.
  3. Paying Sally to enter into a non-polluting contract.

If, however, someone at the insurance company is asleep at the wheel, and Sally buys the land and puts up her polluting factory, what happens then? Well, then the insurance company is on the hook for two million dollars to John (assuming for the moment that only John bought pollution insurance). Thus, it can afford to pay Sally up to two million dollars to reduce her pollution and still be cash-positive. This payment could take many forms, from the installation of pollution-control equipment, to a buy-out, to a subsidy for under-production, etcetera.

If the two million dollars is not enough to solve the problem, then the insurance company pays John the two million dollars and he goes and buys a new house in an unpolluted neighbourhood. However, this scenario is highly unlikely, since the insurance company would be unlikely to insure only one single person in a neighbourhood against air pollution.

So, that is the view from John’s air-pollution insurance company. What about the view from Sally’s House of Polluting Paint Production? She, also, must be covered by a DRO in order to buy land, borrow money, and hire employees. How does that DRO view her tendency to pollute?

Pollution brings damage claims against Sally, because pollution is by definition damage to persons or property. Thus Sally’s DRO would take a dim view of her pollution, since it would be on the hook for any damage her factory causes. In fact, it would be most unlikely that Sally’s DRO would insure her against damages unless she were able to prove that she would be able to operate her factory without harming the property of those around her. And without a DRO, of course, she would be unable to start her factory, borrow money, hire employees, etcetera.

It is important to remember that DROs, much like cell phone companies, only prosper if they cooperate. Sally’s DRO only makes money if Sally does not pollute. John’s insurer also only makes money if Sally does not pollute. Thus the two companies share a common goal, which fosters cooperation.

Finally, even if John is not insured against air pollution, he can use his and/or Sally’s DRO to gain restitution for the damage her pollution is causing to his property. Both Sally and John’s DROs would have reciprocity agreements, since John wants to be protected against Sally’s actions, and Sally wants to be protected against John’s actions. Because of this desire for mutual protection, they would choose DROs which had the widest reciprocity agreements.

Thus, in a truly free market, there are many levels and agencies actively working against pollution. John’s insurer will be actively scanning the surroundings looking for polluters it can forestall. Sally will be unable to build her paint factory without proving that she will not pollute. Mutual or independent DROs will resolve any disputes regarding property damage caused by Sally’s pollution.

There are other benefits as well, which are almost unsolvable in the current system. Imagine that Sally’s smokestacks are so high that her air pollution sails over John’s house and lands on Reginald’s house, a hundred miles away. Reginald then complains to his DRO/insurer that his property is being damaged. His DRO will examine the air contents and wind currents, then trace the pollution back to its source and resolve the dispute with Sally’s DRO. If the air pollution is particularly complicated, then Reginald’s DRO will place non-volatile compounds into Sally’s smokestacks and follow them to where they land. This can be used in a situation where a number of different factories may be contributing pollutants.

The problem of inter-country air pollution may seem to be a sticky one, but it is easily solvable – even if we accept that countries will still exist. Obviously, a Canadian living along the Canada/US border, for instance, will not choose a DRO which refuses to cover air pollution emanating from the US. Thus the DRO will have to have reciprocity agreements with the DROs across the border. If the US DROs refuse to have reciprocity agreements with the Canadian DROs – inconceivable, since the pollution can go both ways – then the Canadian DRO will simply start a US branch and compete.

The difference is that international DROs actually profit from cooperation, in a way that governments do not. For instance, a State government on the Canada/US border has little motivation to impose pollution costs on local factories, as long as the pollution generally goes north. For DRO’s, quite the opposite would be true.

There are so many benefits to the concept of stateless DRO’s that they could easily fill volumes. A few can be touched on here, to further highlight the value of the idea.

In a condominium building, ownership is conditional upon certain rules. Even though a man “owns” the property, he cannot throw all-night parties, or keep five large dogs, or operate a brothel. Without the coercive blanket of a central State, the opportunities for a wide variety of communities arise, which will largely eliminate the current social conflicts about the direction of society as a whole.

For instance, some people like guns to be available, while others prefer them to be unavailable. Currently, a battle rages for control of the State so that one group can enforce its will on the other. That’s unnecessary. With DRO’s, communities can be formed in which guns are either permitted, or not permitted. Marijuana can be approved or forbidden. Half your income can be deducted for various social schemes, or you can keep it all for yourself. Sunday shopping can be allowed, or disallowed. It is completely up to the individual to choose what kind of society he or she wants to live in. The ownership of property in such communities is conditional on following certain rules, and if those rules prove onerous or unpleasant, the owner can sell and move at any time. Another plus is that all these “societies” exist as little laboratories, and can prove or disprove various theories about gun ownership, drug legalisation, and so on, thus contributing to people’s knowledge about the best rules for communities.

One or two problems exist, however, which cannot be spirited away. A person who decides to live “off the grid” – or exist without any DRO representation – can theoretically get away with a lot. However, that is also true in the existing statist system. If someone currently decides to become homeless, they can more or less commit crimes at will – but they also give up all beneficial and enforceable forms of social cooperation. Thus, although DROs may not solve the problem of utter lawlessness, neither does the current system, so all is equal.

Interpersonal Crimes

Crimes against persons, such as murder and rape, are generally considered separate and distinct from those against property. However, this is a fairly modern distinction. In the European system of common law, crimes against persons were often punished through the confiscation of property. A rape cost the rapist such-and-such amount, a murder five times as much, and so on. This sort of arrangement is generally preferred by victims, who currently not only suffer from physical violation – but must also pay taxes to incarcerate the criminal. A woman who is raped would usually rather receive a quarter of a million dollars than pay a thousand dollars annually to cage her rapist, which adds insult to injury. Thus, crimes against persons and crimes against property are not as distinct as they may seem, since both commonly require property as restitution. A man who rapes a woman, then, incurs a debt to her of some hundreds of thousands of dollars, and must pay it or be ejected from all the economic benefits of society.

Finally, one other advantage can be termed the “Scrabble-Challenge Benefit.” In Scrabble, an accuser loses his turn if he challenges another player’s word and the challenge fails. Given the costs of resolving disputes, DROs would be very careful to ensure that those bringing false accusations would be punished through their own premiums, their contract ratings, and by also assuming the entire cost of the dispute. This would greatly reduce the number of frivolous lawsuits, to the great benefit of all.

On a personal note, it has been my experience that, in talking over these matters for the last twenty-odd years, people honestly claim that they cannot conceive of a society without a centralised and coercive State. To which I feel compelled to ask them: exactly how many lawsuits have you pursued in your own life? I have yet to find even one person who has prosecuted a lawsuit through to conclusion. I also ask them whether they maintain their jobs through threats or blackmail. None. Do they keep their spouses chained in the basement? Not a one. Are their friends forced to spend time with them? Do they steal from the grocery store? Nope.

In other words, I say it is clear that, although you say that you cannot imagine a society without a coercive State, you have only to look in the mirror to see how such a world might work. Everyone who is in your life is there by choice. Everyone you deal with on a personal or professional relationship interacts with you on a voluntary basis. You don’t use violence in your own life at all. If you are unsatisfied with a product, you return it. If you stop desiring a lover, you part. If you dislike a job, you quit. You force no one – and yet you say that society cannot exist without force. It is very hard to understand. People then reply that they do not need to use coercion because the State is there to protect them. I then ask them if they know how impossible it is to actually use the court system. They agree, of course, because they know it takes many years and a small fortune to approach even the vague possibility of justice. I also ask them if they are themselves burning to knock over an old woman and snatch her purse, but fear the police too greatly. Of course not. They just think that everyone else is. Well, after twenty years of conversations, I can tell you all: it’s not the case. Most people, given the correct incentives, act entirely honourably.

Of course, evil people exist. There are cold, sociopathic monsters in our midst. It is precisely because of the human capacity for evil that a centralised State always undermines society. Due to our capacity for sadism, our only hope is to decentralise authority, so that the evil among us can never rise to a station greater than that of excluded, hunted criminals. To create a State and give it the power of life and death does not solve the problem of human evil. It merely transforms the shallow desire for easy property to the bottomless lust for political power.

The idea that society can – and must – exist without a centralised State is the greatest lesson that the grisly years of the twentieth century can teach us. Our own society cannot escape the general doom of history, the inevitable destiny of social collapse as the State eats its own inhabitants. Our choice is not between the State and the free market, but between death and life. Whatever the risks of dissolving the central State, they are far less than the certain destruction of allowing it to escalate, as it inevitably will. Like a cancer patient facing certain demise, we must reach for whatever medicine shows the most promise, and not wait until it is too late.

The Stateless Society and Violent Crime

You might now be thinking: how can a stateless society deal with violent criminals?

This challenging question can be answered using three approaches. The first is to examine how such criminals are dealt with at present, the second is to divide violent crimes into crimes of motive and crimes of passion, and the third is to show how a stateless society would deal with both categories of crime far better than any existing system.

The first question is: how are violent criminals dealt with at present? The honest answer, to any unbiased observer, is surely: they are encouraged.

A basic fact of life is that people respond to incentives. The better that crime pays, the more people will become criminals. Certain well-known habits – drugs, gambling, and prostitution in particular – are non-violent in nature, but highly desired by certain segments of the population. If these non-violent behaviours are criminalised, the profit gained by providing these services rises. Criminalising voluntary interactions destroys all stabilising social forces (contracts, open activity, knowledge-sharing, and mediation), and so violence becomes the norm for dispute resolution.

Furthermore, wherever a law creates an environment where most criminals make more money than the police, the police simply become bribed into compliance. By increasing the profits of non-violent activities, the State ensures the corruption of the police and judicial system – thus making it both safer and more profitable to operate outside the law. It can take dozens of arrests to actually face trial – and many trials to gain a conviction. Policemen now spend about a third of their time filling out paperwork – and ninety percent of their time chasing non-violent criminals. Entire sections of certain cities are run by gangs of thugs, and the jails are overflowing with harmless low-level peons sent to jail as make-work for the judicial system – thus constantly increasing law-enforcement costs. Peaceful citizens are also legally disarmed through gun control laws. In this manner, the modern State literally creates, protects, and profits from violent criminals.

Thus the standard to compare the stateless society’s response to violent crime is not some perfect world where thugs are effectively dealt with, but rather the current mess where violence is both encouraged and protected.

Before we turn to how a stateless society deals with crime, however, it is essential to remember that the stateless society automatically eliminates the greatest violence faced by almost all of us: the State, which threatens us with guns if we don’t hand over our money, and our lives should it decide to declare war. Thus it cannot be said that the existing system is one which minimises violence. Quite the contrary, the honest population is violently enslaved by the State, and the dishonest provided with cash incentives and protection.

State violence – in its many forms – has been growing in Western societies over the past fifty years, as regulation, tariffs, and taxation have all risen exponentially. National debts are an obvious form of intergenerational theft. Support of foreign governments also increases violence, since these governments use subsidies to buy arms and further terrorise their own populations. The arms market is also funded and controlled by governments. The list of State crimes can go on and on, but one last gulag is worth mentioning: all the millions of poor souls kidnapped and held hostage in prisons for non-violent “crimes.” Since existing States terrorise, enslave, and incarcerate literally billions of citizens, it is hard to understand how they can be seen as effectively working against violence in any form.

How does a stateless society deal with violence? First, it is important to differentiate the use of force into crimes of motive and crimes of passion. Crimes of motive are open to correction through changing incentives; any system which reduces the profits of property crimes – while increasing the profits of honest labour – will reduce these crimes. In the last part of this section, we will see how the stateless society achieves this better than any other option.

Crimes of motive can be diminished by making crime a low-profit activity relative to working for a living. Crime entails labour, and if most people could make more money working honestly for the same amount of labour, there will be far fewer criminals.

As you have read above, in a stateless society, Dispute Resolution Organisations (DROs) flourish through the creation of voluntary contracts between interested parties, and all property is private. How does this affect violent crime?

Let’s look at “break and enter.” If I own a house, I will probably take out insurance against theft. Obviously, my insurance company benefits most from preventing theft, and so will encourage me to get an alarm system, and so on, just as occurs now.

This situation is more or less analogous to what happens now – with the not-inconsequential adjustment that, since DROs handle policing as well as restitution, their motives for preventing theft or rendering stolen property useless is far higher than it is now. As such, much more investment in prevention would be worthwhile, such as creating “voice activated” appliances which only work for their owners.

However, the stateless society goes much, much further in preventing crime – specifically, by identifying those who are going to become criminals, and preventing that transition. In this situation, the stateless society is far more effective than any State system.

In a stateless society, contracts with DROs are required to maintain any sort of economic life – without DRO representation, citizens are unable to get a job, hire employees, rent a car, buy a house, or send their children to school. Any DRO will naturally ensure that its contracts include penalties for violent crimes – so if you steal a car, your DRO has the right to use force or ostracism against you to get the car back – and probably retrieve financial penalties to boot.

How does this work in practice? Let’s take a test case. Say that you wake up one morning and decide to become a thief. Well, the first thing you have to do is cancel your coverage with your DRO, so that your DRO has less incentive against you when you steal, since you are no longer a customer. DROs would have clauses allowing you to cancel your coverage, just as insurance companies have now. Thus you would have to notify your DRO that you were dropping coverage. No problem, you’re off their list.

However, DROs as a whole really need to keep track of people who have opted out of the entire DRO system, since those people have clearly signalled their intention to go rogue and live “off the grid.” Thus if you cancel your DRO insurance, your name goes into a database available to all DROs. If you sign up with another DRO, no problem, your name is taken out. However, if you do not sign up with any other DRO, red flags pop up all over the system.

What happens then? Remember – there is no public property in a stateless society. If you’ve gone rogue, where are you going to go? You can’t take a bus – bus companies will not take rogues, because their DRO will require that they take only DRO-covered passengers, in case of injury or altercation. Want to fill up on petrol? No luck, for the same reason. You can try hitch-hiking, of course, which might work, but what happens when you get to your destination and try to rent a motel room? No DRO card, no luck. Want to sleep in the park? Parks are privately owned, so keep moving. Getting hungry? No groceries, no restaurants – no food! What are you going to do?

So, really, what incentive is there to turn to a life of crime? Working for a living – and being protected by a DRO – pays really well. Going off the grid and becoming a rogue pits the entire weight of the combined DRO system against you – and, even if you do manage to survive and steal something, it has probably been voice-encoded or protected in some other manner against unauthorised use. Let’s suppose that you somehow bypass all of that, and do manage to steal, where are you going to sell your stolen goods? You’re not protected by a DRO, so who will buy from you, knowing they have no recourse if something goes wrong? And besides, anyone who interacts with you may be dropped from the DRO system too, and face all the attendant difficulties.

Will there be underground markets? Perhaps – but where would they operate? People need a place to live, cars to rent, clothes to buy, groceries to eat. No DRO means no participation in economic life.

As well, prostitution, gambling, and drugs will not be “illegal” in a stateless society – and the elimination of the war on drugs alone would, it has been estimated, eliminate eighty percent of violent crime. There are no import duties or restrictions, so smuggling becomes completely pointless. Currency would be private, as we will see below, so counterfeiting will be much harder.

Plus, no taxation – the take-home pay for an honest worker is far higher in a stateless society!

Fewer opportunities, lower profits – and greater incentives to do an honest day’s work – there is no better way to steer those who respond to incentives alone away from a life of crime.

Thus it is fair to say that any stateless society will do a far better job of protecting people against crimes of motive – what, then, about crimes of passion?

Crimes of Passion

Crimes of passion are harder to prevent – but also present far less of a threat to those outside of the circle in which they occur.

Let’s say that a man kills his wife. They are both covered by DROs, of course, and their DRO contracts would include specific prohibitions against murder. Thus, the man would be subject to all the sanctions involved in his contract – probably confined labour and rehabilitation until a certain financial penalty was paid off, since DROs would be responsible for paying such penalties to any next of kin.

Fine, you say, but what if either the man or woman was not covered by a DRO? Well, where would they live? No one would rent them an apartment. If they own their house free and clear, who would sell them food? Or gas, water, or electricity? Who would employ them? What bank would accept their money?

Let’s say that only the murderous husband – planning to kill his wife – opted out of his DRO system without telling her. The first thing that his wife’s DRO would do is inform her of her husband’s action – and the ill intent it may represent – and help her relocate if desired. If she decided against relocation, her DRO would promptly drop her, since by deciding to live in close proximity with a rogue man, she was exposing herself to an untenable amount of danger (and so the DRO to a high risk for financial loss). Now, both the husband and wife have chosen to live without DROs, in a state of nature, and thus face all the insurmountable problems of getting food, shelter, money, and so on.

Thus, murderers would be subject to the punishments of their DRO restrictions, or would signal their intent by dropping DRO coverage beforehand, when intervention would be possible.

Let’s look at something slightly more complicated – stalking. A woman becomes obsessed with a man, and starts calling him at all hours and following him around. Perhaps boils a bunny or two. If the man has bought insurance against stalking, his DRO will leap into action. It will call the woman’s DRO, which then says to her: stop stalking this man or we’ll drop you. And how does her DRO know whether she has really given up her stalking? Well, the man stops reporting it. And if there is a dispute, she just wears an ankle bracelet for a while to make sure. And remember – since there is no public property, she can be ordered off footpaths, streets, and parks.[15]

Although they may seem unfamiliar to you, DROs are not a new concept – they are as ancient as civilisation itself, but have been shouldered aside by the constant escalation of State power over the last century or so. In the past, undesired social behaviour was punished through ostracism, and risks ameliorated through voluntary “friendly societies.” A man who left his wife and children – or a woman who got pregnant out of wedlock – was no longer welcome in decent society. DROs take these concepts one step further, by making all the information formerly known by the local community available to the world as whole, just like credit reports.[16]

There are really no limits to the benefits that DROs can confer upon a free society – insurance could be created for such things as:

  1. A man’s wife giving birth to a child that is not his own.
  2. A daughter getting pregnant out of wedlock.
  3. Fertility problems for a married couple.
  4. And much more.

All of the above insurance policies would require DROs to take active steps to prevent such behaviours – the mind boggles at all the preventative steps that could be taken! The important thing to remember is that all such contracts are voluntary, and so do not violate the moral absolute of non-violence.

In conclusion – how does the stateless society deal with violent criminals? Brilliantly! In a stateless society, there are fewer criminals, more prevention, greater sanctions – and instant forewarning of those aiming at a life of crime by their withdrawal from the DRO system. More incentives to work, fewer incentives for a life of crime, no place to hide for rogues, and general social rejection of those who decide to operate outside of the civilised world of contracts, mutual protection, and general security. And remember – governments in the twentieth century caused more than two hundred million deaths – are we really that worried about private hold-ups and jewellery thefts in the face of those kinds of numbers?

There is no system that will replace faulty people with perfect angels, but the stateless society, by rewarding goodness and punishing evil, will at least ensure that all devils are visible – instead of cloaking them in the current deadly fog of power, politics, and propaganda.

These Cages Are Only for Beasts

As mentioned above, DROs are private insurance companies whose sole purpose is to mediate disputes between individuals. If you and I sign a contract, we both agree beforehand to submit any disputes we cannot resolve to the arbitration of a particular DRO. Furthermore, we may choose to allow the DRO to take action if either of us fails to abide by its decision, such as property seizure or financial penalties. So far so good. However, a problem arises if I have no DRO contract, and turn to a life of theft, murder, and arson. How can that be dealt with? Above, I suggested that DROs would simply band together to deny goods, services, and contracts to violent criminals.

Some readers may be concerned about the power that DROs have in a stateless society. When describing how a stateless society could deal with murderers, we are reviewing an extreme situation, not everyday economic and social relations. A doctor might say: if a patient has an infected leg, and you have no antibiotics, amputate the leg. This does not mean that they advocate cutting off limbs in less serious circumstances. When I say that DROs will track violent criminals and try to deny them goods and services, I do not mean that DROs would be able to do this to just anyone. First of all, customer choice would make this impossible. A store owner can ban anyone they likes – but they cannot do so arbitrarily, or they will go out of business. Similarly, if people see a DRO acting unjustly or punitively, it will quickly find itself without customers.

The most important thing to remember is that DRO contracts are perfectly voluntary – and that hundreds of DROs will be constantly clamouring for our business. If we are afraid that they will turn into a myriad of quasi-police states, they have to address those fears if they want us as customers.

How will they do that? Why, through contractual obligations, of course! In order to sign us up, DROs will have to offer us instant contractual release – and lucrative cash rewards – if they ever harass us or treat us arbitrarily. As a matter of course, DRO contracts will include a provision to submit any conflicts with customers to a separate DRO of the customers’ choosing. All this is standard fare in the reduction of contractual risk.

In other words, every person who says, “DROs will turn into dangerous fascistic organisations,” represents a fantastic business opportunity to anyone who can address that concern in a positive manner. If you dislike the idea of DROs, just ask yourself: is there any way that my concerns could be alleviated? Are there any contractual provisions that might tempt me into a relationship with a DRO? If so, the magic of the free market will provide them. Some DROs will offer to pay you a million dollars if they treat you unjustly – and you can choose the DRO that makes that decision! Other DROs will band together and form a review board which regularly searches their warehouses for illicit arms and armies. DROs will fund “watchdog” organisations which regularly rate DRO integrity.

If none of the above appeals to you, then the DRO system is clearly not for you – but then neither is the current State system, which is already one-sided, repressive, and dictatorial. And remember – in a free society such as I describe, you can always choose to live without a DRO, of course, or pay for its services as needed (as I mention in “The Stateless Society”) – as long as you do not start stealing and killing. For those who still think DROs will become governments, I invite you to take a look at a real-world example of a DRO – one of the world’s largest “employers.” Currently, over three hundred thousand people rely on it for a significant portion of their income. Most of what they sell is so inexpensive that lawsuits are not cost-effective, and transactions regularly cross incompatible legal borders – in other words, they operate in a stateless society. So how does eBay resolve disputes? Simply through dialogue and the dissemination of information.[17] If I do not pay for something I receive, I get a strike against me. If I do not ship something that I was paid for, I also get a strike. Everyone I deal with can also rate my products, service, and support. If I am rated poorly, I have to sell my goods for less since, everything else being equal, people prefer dealing with a better-rated vendor (or buyer). If enough people rate me poorly, I will go out of business, because the risk of dealing with me becomes too great. There are no police or courts or violence involved here – thefts are simply dealt with through communication and information sharing.

Thus eBay is an example of the largest DRO around – are we really afraid that it is going to turn into a quasi-government? Do any of us truly lie awake wondering whether the eBay SWAT team is going to break down our doors and drag us away to some offshore J2EE coding gulag?

Any system can be abused – which is why governments are so abhorrent – and so checks and balances are essential to any proposed form of social organisation. That’s the beauty of the DRO approach. Those who dislike, mistrust, or fear DROs do not have to have anything to do with them, and can rely on handshakes, reputation, and trust – or start their own DRO. Those whose scope prohibits such approaches – multi-million dollar contracts or long-term leases come to mind – can turn to DROs. Those who are afraid of DROs becoming mini-States can set up watchdog agencies and monitor them (paid for by others who share such fears, perhaps).

In short, either the majority of human beings can cooperate for mutual advantage, or they cannot. If they can, a stateless society will work – especially since millions of minds far better than mine will be constantly searching for the best solutions. If they cannot, then no society will ever work, and we are doomed to slavery and savagery by nature.

Therefore, I stand by my thesis in “Caging the Beasts” above – if you mug, rape, or kill, I will support any social action that thwarts your capacity to survive in society. I want to see you hounded into the wilderness, refused hotel rooms and groceries – and I want your face plastered everywhere, so that the innocent can stay safe by keeping you at bay. I abhor the thug as much as I abhor the State – and it is because such thugs exist that the State cannot be suffered to continue, since the State always disarms honest citizens and encourages, promotes, and protects the thugs.

Stateless Dictatorships: How a Free Society Prevents the Re-emergence of a Government

By far the most common objection to the idea of a stateless society is the belief that one or more private Dispute Resolution Organisations (DROs) would overpower all the others and create a new government. This belief is erroneous at every level, but has a kind of rugged persistence that is almost admirable.

Here is the general objection:

In a society without a government, whatever agencies arise to help resolve disputes will inevitably turn into a replacement government. These agencies may initially start as competitors in a free market, but as time goes by, one will arise to dominate all the others economically, and will then wage war against its competitors, and end up imposing a new State upon the population. The instability and violence that this “DRO civil war” will inflict upon the population is far worse than any existing democratic State structure. Thus, a stateless society is far too risky an experiment, since we will just end up with a government again anyway!

This objection to an anarchic social structure is considered self-evident, and thus is never presented with actual proof. Naturally, since the discussion of a stateless society involves a future theoretical situation, empirical examples cannot apply.

However, like all propositions involving human motivation, the “replacement state” hypothesis can be subjected to logical examination.


The basis of the “replacement state” hypothesis is the premise that people prefer to maximise their income with the lowest possible expenditure of energy. The motivation for a DRO to use force is that, by eliminating all competition and taking military control of a geographical region, a DRO can make much more money than through free market competition, and that it is worth it to invest resources in military conflict in order to secure the permanent revenue source of a new tax base.

We can fully accept this premise, as long as it is applied consistently to all human beings in a stateless society. To make the “replacement state” case even stronger, we will also assume that no moral scruples could conceivably get in the way of any decision-making. By reducing the “drive to dominate” to a mere calculation of economic efficiency, we can eliminate any possible ethical brakes on the situation.

Starting Point

Let us start with a stateless society, wherein citizens can voluntarily choose to contract with a DRO for the sake of property protection and dispute resolution. Each citizen also has the right to break their contract with their DRO.

There are essentially three possible ways that a DRO could gain military control of an entire region:

  • By secretly amassing an army, and then suddenly unleashing it upon all competitors.
  • By openly amassing an army, and then doing the same thing.
  • By posing as a voluntary “Defence DRO,” amassing arms supposedly for the legitimate defence of citizens, and then turning those arms against the citizens and instituting itself as a new government.

There is one additional possibility, which is that a private citizen can try to assemble their own army.

Let’s deal with each of these in turn.

The Secret Army

In this scenario, let’s say that a DRO manager called “Bob” decides that he is tired of dealing with customers on a voluntary basis. He decides he is going to spend company money buying enormous amounts of armaments and training an army.[18]

Let us assume that Bob’s DRO has annual revenues of five hundred million dollars a year, and profits of fifty million dollars a year.

The most immediate challenge that Bob is going to face is: how on earth am I going to pay for an army? Given that, in a free society, there is no way of knowing exactly how many citizens are armed – or what kinds of weapons they have – it would be necessary to err on the side of caution and assemble a fairly prodigious and overwhelming army to gain control of an entire region, otherwise Bob’s investment would be entirely lost in a military defeat. Such armies are scarcely cheap. For the purposes of this argument, let’s say that it is going to cost five hundred million dollars over five years for Bob to assemble his army – surely a low-ball estimate. How is he going to get the money to pay for this?

Raising Rates

The most obvious way for Bob to raise the extra five hundred million dollars is to charge his customers more. The five hundred million dollars Bob needs represents more than ten years of his DROs annual profits of fifty million a year (reinvesting the fifty million for five years at ten percent yields approximately eight hundred million). Thus, in order to pay for his army within five years, Bob is going to have to more than double his prices. Since we have already assumed that it is Bob’s greed that makes him want to create a new government – and that this greed is common to all citizens within the society – we can also assume that his customers share his motivation. Thus, just as Bob wants to have an army so that he can maximise his income, his customers just as surely do not want Bob to have an army, for exactly the same reasons. The moment that Bob informs his customers that he will now be charging them more than double for exactly the same services, he will lose all his customers, and go out of business. Sadly, no army for Bob.

Full Disclosure

Perhaps, though, Bob recognises this danger, and plans to keep his customers by telling them that he is raising their rates in order to fund an army. “Help me buy an army by paying me double your current rates,” he tells them, “and I will share the plunder I’ll get when I take over such-and-such a neighbourhood!” Even if we assume that Bob’s customers believe him, and are willing to fund such a mad scheme, Bob’s secret is now out, and society as a whole – including all the other DROs – have been informed of Bob’s nefarious intentions. Clearly, all the other DROs will immediately cease doing business with Bob’s DRO. Since a central value of any DRO is its ability to interact with other DROs – just as a core value of a cell phone company is its ability to interact with other cell phone companies – Bob’s DRO will thus be crippled. In other words, Bob will be more than doubling his rates for many years – while providing a far inferior service – for a highly uncertain and dangerous “profit.”

In addition, Bob’s bank would immediately cease doing business with him, rendering him unable to pay his employees, his office rental, or his bills. Bob’s electricity company will cease supplying electricity, he will find his taps strangely dry, his phones will be cut off, and many other misfortunes will arise as a result of his stated desire to become a new dictator. It is hard to imagine him lasting five days, let alone retaining all of his paying customers at double the rates for the five years required to build his army!

Even if all the above problems could somehow be overcome, it is hard to imagine that Bob’s customers would be happy to arm Bob in the hopes of sharing in his plunder. Unlike the government, which can tax at will, DROs must actually protect their customer’s property in order to retain their business. Given that those who contract with DROs are those with the most interest in protecting their property, it makes little sense that they would fund Bob’s DRO army, since they would have no actual control with that army once it was created, and thus no way of enforcing any “plunder contract” created beforehand. In a free society, people would not try to “protect” their property by funding a powerful army that could then take it away from them at will. That sort of madness requires the existence of a government!

Alternative Funding

Perhaps Bob will try to fund his army in other ways. He may try and borrow the money, but his bank will only lend him the money if he comes up with a credible and measurable business plan. If Bob’s business plan openly states his desire to create an army, his bank would cease supporting him in any way, shape, or form, since the bank would only stand to lose if such an army were created. If Bob took the money from the bank by submitting a fraudulent business plan, the bank would be aware of this almost immediately, and would take the remainder of the money back – and impose stiff penalties on Bob to boot! Again, no army for Bob.

What if Bob tried to pay for his army by reducing the dividends he was paying to shareholders? Naturally, the shareholders would resent this, and would either have him thrown out, or would simply sell their shares and invest their money elsewhere, thus crippling Bob’s DRO. Perhaps Bob would try paying his employees less, but that would only drive his employees into the arms of other DROs – also destroying his business.

It is safe to say that it is practically impossible for Bob to get the money to pay for his army – and even if he got such money, his business would never survive such a dangerous transgression of social and economic norms.

There are other dangers, however, which are well worth examining.

Defense DROs

The most likely threat would seem to come from “Defence DROs,” since those agencies would already have weapons and personnel that might be used against the general population. However, this would be very difficult for two main reasons. First, “Defence DROs” would require investment and banking relationships in order to grow and flourish. Given that investors and banks would not want to fund an army that could steal their property, they would be certain to insert myriad “fail-safe” mechanisms into their “Defence DRO” contracts. They would make sure that all arms purchases were tracked, that all monies were accounted for, and that no secret armies were being assembled.

“Defence DROs” would also be subject to the same kinds of funding problems as Bob’s DRO. Let’s say that Dave is the head of a “Defence DRO,” and wakes up one day seized by the desire to assemble his own army and pillage society.

First of all, citizens would never contract with any “Defence DRO” that would not submit to regular audits of its weapons and accounts to ensure that no secret armies were being created. If Dave decides to bypass this contractual obligation, and start secretly funding his own army, how is he going to pay for it? The moment he raises his rates without increasing his services, his customers will know exactly what he’s up to, and withdraw their support. Bye-bye army. Dave’s funding would also be subject to all the other problems raised above.

It can thus be seen that there is no viable way for any DRO to pay for a secret army without destroying its business in the process. Armies are only really possible when the government can force taxpayers to subsidise them.

Independently Wealthy?

Perhaps, instead of Bob or Dave, we have a privately wealthy individual named Bill, a multi-billionaire who decides to raise an army and institute himself as a new dictator. Due to his immense wealth, he is not dependent on any customers, employees, or shareholders. Let us say that he can pay for an army out of his own pocket, immediately.

Bill’s challenge, of course, is that in a free society, he cannot exactly pick up a complete army at his local Wal-Mart. Armies are fundamentally uneconomical, expensive overhead at best, and thus it seems likely that geographical defence in a free society would be limited to a couple of dozen nuclear weapons, to deter any potential invader. Thus even if he could get a hold of one, buying a nuke would not help Bill very much, since he would be unable to use it to overwhelm all of the other “Defence DROs.”

What about more conventional weapons? Part of the service that “Defence DROs” would offer to subscribers would be a guarantee that they would do everything in their power to prevent the rise of an independent army – either of their own making, or of anyone else’s. Thus arms manufacturers would have to provide rigorous accounts of everything they were making and selling, to be sure that they weren’t selling arms to some secret army, probably in the foothills of Montana. If people were really worried about the possibility of someone creating a private army, they would only do business with “Defence DROs” that guaranteed that they bought their arms from open and legitimate arms dealers – subject to independent verification, of course.

Thus when Bill came along trying to buy five hundred million dollars worth of weapons, and hire an army of tens of thousands of soldiers, one question would be: where on earth would they come from? Arms manufacturers would not be sitting on five hundred million dollars of inventory, due to the limited demand for such products, and the costs of making and storing them. Thus the arms manufacturers would have to really crank up their production, which could not be hidden from the general population, or the Defence DROs that such extra production would directly threaten. In order to make all the extra armaments, manufacturers would have to borrow money to expand production. Where would they get this extra money from? Their banks would surely not fund such a dangerous endeavour, and would immediately notify any Defence DROs it had contracts with, and drop the rogue arms manufacturer as a customer. Defence DROs and general customers would also never do business with such a dangerous arms manufacturer ever again, thus driving it out of business.

No manufacturer would ever expand production for a “one time” purchase, any more than you would buy a car to make a single trip. Also – why would an arms manufacturer sell deadly weapons to a private individual, knowing that this individual would be able to use those arms to steal more weapons from the manufacturer?

Secondly, even if Bill could somehow get his hands on the necessary weapons, where would these tens of thousands of new troops come from? In a stateless society, the military would not be exactly the same kind of “in demand” career that it is today. In order to assemble an army of tens of thousands of men, Bill would have to advertise, recruit, pay them, train them, etcetera. This would be impossible to hide. Since it would be completely obvious that Bill was assembling an army, what could people in society conceivably do to stop him?

First of all, if this were a potential risk, his bank would have a clause in its service agreement giving it the right to refuse to honour any payments clearly designed to fund a private army. Secondly, no DRO would do business with Bill – or his soldiers – the moment that it became apparent what he was up to. This would mean that none of Bill’s soldiers would have any guarantees that they would get paid, grocery stores would not sell them food, electricity companies would cut them off, petrol stations would not sell them petrol, etcetera. When society as a whole wants to stop doing business with you, it becomes very hard to get by.

The Question of Profit

Remember, we began this section with the premise that someone would want an army in order to make money. Let us see if this can be achieved, even if all the above obstacles can somehow be overcome. Let us say that our first friend “Bob” can somehow get his army – the question is: can he make that army pay?

Remember, it cost Bob five hundred million dollars over five years to assemble his army – let us say that it costs another one billion over the next five years to subdue a reasonably-sized region, due to the loss of life and equipment involved in combat. What kinds of financial returns can Bob expect?

If you know that Bob’s army is going to be at your house in two weeks, and there is no way to stop it, you would just pull a “scorched-earth Russian defence” and leave, right? You would take everything of value with you, and perhaps destroy everything that you could not bring. Thus, what would Bob’s army end up getting control of? Not much.

However, let us imagine that Bob’s army could somehow seize assets that would be worth something. How much would they have to steal in order to make a profit?

First, let us look at the alternatives, or the opportunity costs of Bob’s army.

Bob has to invest one hundred million dollars each year over five years to assemble his army – what does that cost him overall? If Bob invested the one hundred million back into his DRO instead, he will likely get a ten percent return on investment. In five years of compound returns, that translates to approximately eight hundred million dollars.

Then, Bob has to invest another billion dollars over the next five years invading a series of neighbourhoods. How much does that really cost him? One billion, six hundred million dollars, or one billion invested at ten percent over five years. But that’s not all – the eight hundred million above would also have gained ten percent per year over the remaining five years, resulting in a total of one billion, three hundred million dollars. Thus Bob’s five years of preparation and five years of military rampaging have cost him over three billion dollars. Given the enormous risks involved in such an endeavour, investors would likely demand at least a twenty to one pay off – similar to the software field. Thus Bob would have to steal well over sixty billion, given that he would likely want to keep some money for himself.

Where would this sixty billion dollars come from? The burned-out houses? The abandoned cars? It is hard to imagine that anything Bob got his hands on would be worth very much at all.[19]

Also, Bob has wrecked an economy that was enabling him to generate a ten percent annual return on his investments – even if he steals billions of dollars, it would still be less than he would have received over the course of his life if he had just re-invested his money! Reinvestment also carries with it the considerable advantage of not exposing Bob to the risk of death through assassination or war.

What if Bob wanted to spring a surprise attack on citizens and start taxing them? Again, all the other DROs would stand to lose all their customers in such an event, and so would take all necessary steps to prevent it from occurring. They would have to provide innovative “checks and balances” solutions to potential customers in order to win them as clients, ensuring their collective vigilance against such surprise attacks. Furthermore, given that there are no borders in a stateless society, those that Bob’s army encircled would just abscond in the middle of the night, fleeing his predations.

However, even if all of the above problems can be somehow overcome, and the creation of a rogue army in a free society could become both possible and profitable, the solution to this danger is simple. Any “Defence DRO” would simply buy the trust of its clients by promising to pay them a fine in excess of any potential military profits if that DRO was ever discovered to be assembling an army. As mentioned above, DROs would simply put millions of dollars in trust, payable to any customer that could find evidence proving that a rogue army was being created. Problem solved.

When we look at the series of steps required to make the creation of a private “rogue” army economically profitable, we can see that it becomes so unlikely as to be functionally impossible. If we assume that the economic incentive of maximising profits would drive someone to consider such a course, we can easily see that the fears of inevitable private tyrannies are merely imaginary.

The “replacement state” mythology is just another ghost story invented to keep us in cages whose bars are merely fictional.

Irrational Laws?

Another question that constantly arises about anarchistic social organisation is the degree to which different communities will create or maintain unjust or irrational rules. What would stop an Islamic community from imposing Sharia law, or a particular group that wishes to raise their children communally, or have multiple spouses, or ban the wearing of red clothing?

This is of course possible, but there are several tendencies within an anarchic society that will discourage and eliminate such obtuse practices in the long run.

First of all, though, it is important to understand that there is no real solution for this in a statist society – assuming it is not a dictatorship. As long as we do not aggress against others, if a group of friends and I wish to get together and live in an enormous house, share all our property and live in some polyamorous hippie flesh-pile, there is nothing illegal about this in a statist society. As long as our children are fed, cared for, and educated, we can all choose to live common-law and raise our children collectively if we want.

Similarly, if a group of Muslims wish to live according to Sharia rules, and everyone voluntarily accepts these rules and lives by them of their own free will, there is very little that a stateless society can do about that either. Since governments only have violence and propaganda to maintain their rule, they can only send SWAT teams in to break up communes, or tanks and helicopters to dismember religious groups – but very few of us would applaud that as a reasoned and positive response to the challenges of varying beliefs within society.

Economically, a stateless society is fundamentally characterised by an inability for particular groups to violently offload the costs of their preferences onto others.

If you are part of a group that wishes to invade Iraq for instance, you will have to find a way to fund that yourself – you will not be able to print money or tax others to pay for your preferences. Do any of us truly believe that the chicken-hawks in the current political administration would have decided to commit genocide against the Iraqi population if they had been sent the multi-trillion dollar bill for the evils they contemplated? Would any purely private financial institution have funded such a monstrous invasion? Of course not – war is impossible without taxation.

The most economically efficient legal system is the one which extends reasonable resources to prevent problems before they occur – and then sits inert until someone complains about an injustice.

The DRO system is wonderful at preventing problems, since it inherently contains all sorts of red flags for potential criminal behaviour, as described above. What do I mean by saying that it will very likely sit in an inert state?

Let us look at gambling as an example.

Gambling – though obviously potentially addictive – is a voluntary transaction between adults. In any reasonable legal system, where there is consent, there can be no crime. Someone may complain if they lose their shirt at a roulette table, but they cannot claim that they were the victim of force or fraud.

If we understand this, we can see that there is an enormous difference between a proactive and a reactive legal system. A reactive legal system waits patiently until it receives a complaint about an injustice – then, it leaps into action to provide justice.

A proactive legal system sends armed men out in waves, ferreting and rooting around in society in order to capture and punish adults interacting in a voluntary and peaceful manner. This kind of legal system is an ugly stepchild of the Spanish Inquisition, and arises out of a hysterical form of aggressive moral puritanism, generally religious in origin. In this kind of legal system, an absence of force or fraud is not enough to allow people to escape moral condemnation, capture, and punishment. These “voluntary crimes” tend to revolve around mind-altering substances, gambling, and prostitution, and are often instigated in a statist society by women who find out that they have married the wrong men (the Women’s Christian Temperance Union, etcetera).

Activities which certain people find distasteful are ferreted out and punished not because the participants find them evil or immoral, but because others do. Someone who smokes some vegetation, gambles some money, or pays for sex obviously is not the criminal complainant – neither is the person who sells them weed, casino chips, or sex. Instead, it is others who wish to wreak their moral vengeance upon such transgressions.

Mencken once wrote: “Puritanism: The haunting fear that someone, somewhere, may be happy.” As a philosopher, I do not counsel or believe that drugs, gambling, or visiting prostitutes is a recipe for long-term happiness and wisdom – but I also understand that unwise or ill-considered actions are not solved by the initiation of violence.

The insertion of this “third party” into a legal system – the entity that brings charges in the absence of complaints by any individuals in a transaction – is very, very expensive. Can you imagine how expensive it would be for a computer company to send someone over to your house every time you wanted to install a program, to make sure you got it right? Compare this to the cost of your average reactive technical support call centre which would be hundreds – if not thousands – of times cheaper.

There are many people who find it highly objectionable that other people enjoy taking mind-altering substances – how many of them would be willing to fund the true cost of their outrage themselves?

In the United States, the Drug Enforcement Agency budget for 2007 was over two billion dollars. If we imagine that there are perhaps twenty-five million taxpaying adults in America who are virulently anti-drug, would they remain as virulently opposed to drugs if each of them received a bill for one hundred dollars per year? What about the approximately one hundred dollars per year that it costs to incarcerate the resulting prisoners, and the one hundred dollars in other law enforcement costs? Overall, the war on drugs costs over twenty billion dollars per year, eight hundred dollars for each of the twenty-five million taxpaying adults who find drugs so objectionable.

How many of these people would find themselves somehow magically able to manage a “live and let live” attitude towards drug consumption if they were sent a bill for eight hundred dollars every single year? Can we imagine that fifty percent of them would drop out? If so, then the remaining twelve and a half million people would be sent a bill for one thousand, six hundred dollars – how many of them would drop out at this rate? Half? Very well – then the remaining would be sent a bill for three thousand, two hundred dollars – and so on, until the last person to be sent the bill for twenty billion somehow found it in their heart to avoid the bill by embracing tolerance and compassion.

The “drug war” (which is a war of course on people, not drugs) would inevitably collapse if those who found drugs so objectionable actually had to pay for their moral outrage themselves.

Similarly, enforcing Sharia law requires just such a proactive legal system, which is horrendously expensive relative to a reactive legal system. How long would such religious intransigence last if the fanatics had to pay for their mania themselves, and faced competition from perfectly functional legal systems that charged one tenth the cost?

Proactive legal systems are prohibitively expensive, unless the costs can be violently extracted from others. In this way, we know for certain that proactive legal systems would have a very short lifespan in a stateless society, and that the natural justice of reactive legal systems would very quickly become – and remain – the norm.

What is commonly called “culture,” in other words, is most often little more than a set of violently subsidised and irrational prejudices.

Tank Control

Two other questions that arise about anarchism is the “tank in the garden” problem and the question of gun control. I have kept these examples in the “Reasoning” section because the answers to these questions pertain so many other questions as well.

The Tank in the Garden

This objection runs something along these lines:

“Let us suppose that you have a neighbour who becomes obsessed with military hardware, and begins building a tank in his backyard. It looks like a very realistic tank, and he even gets a hold of shells. He then drives the tank back and forth in his backyard, and points the turret directly at your house. Clearly, this is not a good situation for you, but your neighbour is only exercising his own property rights, and so what right do you have to interfere with his tank-building? Certainly, if he accidentally blows the top off your house, you can act in response, but surely you should not have to wait for such a disaster in order to intervene – forcefully, if necessary.”

If we believe that anarchism is a society without rules or laws, then this would seem to be a perplexing problem. In a statist society, you simply have laws against private tank ownership, and the problem is solved!

However, as we have discussed above, anarchism is not a society without rules or laws, but is rather populated by agencies entirely devoted to preventing foreseeable problems. Some problems are complicated and hard to detect – but the “tank in the garden” is not one of those problems. Furthermore, if we are so concerned about military hardware being used against us, it scarcely seems a wise “solution” to arm a government to the teeth, and disarm ourselves to the same proportion.

If people are afraid of the “tank in the garden,” all they have to do is ensure that their DRO contract contains protections against well-armed neighbours. How can this be achieved? Well, when my wife and I bought our house, we signed a contract stipulating that we were not to repaint the outside of our house for a period of five years. I am sure that we would not have hesitated to sign the contract if it also included a ban on building tanks, nuclear weapons, and aircraft carriers.

If someone does break their DRO contract by building such weapons, the DRO can invoke all of the exclusion and ostracism penalties discussed above.

Gun Control

Some people prefer to live in neighbourhoods where there are no guns; some people prefer to live in neighbourhoods where everyone has a gun – and some people do not particularly care one way or the other. Anarchism perfectly satisfies everyone’s preferences in this area. If you are a developer building a new neighbourhood, you can require everyone buying a house to sign a contract promising to refrain from owning a gun. The enforcement possibilities for this are endless, but need not be intrusive – if I were a DRO and wanted to prevent gun ownership, I would simply revoke my contract with anyone who used or showed a gun in the neighbourhood – including acts of self-defence.

On the other hand, I could build a neighbourhood which required that everyone be willing to have and know how to use a gun – as is already the case in Switzerland. If I believe that gun ownership in a net positive, I would buy a house in this neighbourhood.

Ah, but what if you have a gun in the glove box of your car, and you are driving from neighbourhood to neighbourhood? Well, then, you are just taking a risk that if you are discovered, your DRO may revoke your contract, just as if you carry a concealed weapon against the law in a statist society. Or they may not care about drivers.

In general, it seems very likely that few if any gun restrictions would be in place in a stateless society. The level of crime would be at least ninety percent lower than it is today; children would grow up happier, better educated, and more secure – and of course you do not need to actually own a gun in order to gain the protective benefits of gun ownership. A thief who wants to break into your house does not know in advance whether you have a gun or not – if everyone is legally disarmed, then he can be quite sure that you do not. However, in a stateless society, there are no “laws” against gun ownership, except those that people enter into voluntarily. If a large number of thieves somehow figure out how to operate in an anarchic society, they will inevitably be drawn to those neighbourhoods which have anti-gun contracts, so they will face less risk during their robberies. If these crimes become prevalent, then randomised gun ownership would be the most optimal solution – if these crimes remain extraordinarily rare, as is most likely the case, insofar as only the mentally ill would attempt them, then gun ownership would become an unnecessary overhead, and would very likely decline to almost nothing. There would still be people who would own guns, but they would be a small minority of eccentric collectors, like those who collect medieval swords – legacies of a brutal past that has long since faded into history.


  1. For more on this, please see “War, Profit, and the State” below.
  2. This is how my father received his doctorate.
  3. A perfect balance of good and evil is statistically impossible.
  4. This is the current situation in democracies, of course.
  5. Of course, if it really were a “core Canadian value,” we would scarcely need the State to enforce it!
  6. In fact, breaking a $100 window removes more than $100 from the economy, since all the time spent returning the window to its original state – calling the window repairman, deciding on the replacement, cleaning up the shards of glass, etc. – is also subtracted from the economy as a whole.
  7. Note that the above table only shows the economic calculations – these do not include the emotional factors of guilt, fear, and worry, which are of great significance but hard to quantify. This is important because even if the above numbers were less disagreeable, the emotional barrier would still have to be overcome.
  8. In fact, one of the central reasons it was possible to know in advance that Iraq had no weapons of mass destruction capable of hitting the US was that US leaders were willing to invade it.
  9. In fact, the blockading was specifically escalated with the aim of provoking retaliation, in order to bring the US into WWII.
  10. Alternatively, a woman can come along, buy up the commons, and start charging grazing fees. To ensure the longevity of her resource, she will naturally take care to avoid overgrazing.
  11. Economists who believe this and who also have children are most baffling in this regard!
  12. Has this changed in the Internet age? Surely we are far less constrained by social norms than we used to be! Not at all – now, with tools ranging from credit reports, web searches, and easy access to prior employers, conformity to basic decency is more important than ever.
  13. The cost to the US economy for union laws alone is calculated at fifty trillion dollars over the past fifty years.
  14. This is what happened in the Soviet Union; in the 1980s, as it became clear that communism was unsustainable, Kremlin insiders simply pillaged the public treasury until the State went bankrupt.
  15. If the man has not bought insurance against stalking, no problem – it will just be more expensive to buy with a “pre-existing condition”.
  16. If you prefer your information to be kept more private, DROs will doubtless offer this option.
  17. See
  18. For the moment, let us assume that Bob can make this decision entirely on his own, and does not need to submit to any sort of Board, bank, or investor review.
  19. The evidence of history tends to support this conclusion. Economically, imperialism is a disaster for everyone except those intimately connected to the coercive power of the State.