From: pmetzger@snark.shearson.com (Perry E. Metzger)
Subject: How would free market anarchism work?
Organization: Partnership for an America Free Drug
Date: Fri, 8 Jan 1993 22:37:21 GMT

cmk@athena.mit.edu (Charles M Kozierok) writes:
>In article <1993Jan8.014816.19283@shearson.com> pmetzger@snark.shearson.com (Perry E. Metzger) writes:
>>I'm a small-o objectivist, and also an anarchocapitalist.
>>
>>I see no contradiction. From my perspective, being a small-o
>>objectivist means that I believe in things like the virtue of
>>selfishness, capitalism, and the non-coercion principle. I don't see
>>any reason all those can't be promoted by an anarchist system, and
>>indeed, I believe that they would be promoted MORE effectively in such
>>a system. My reading and research over the last few years has lead me
>>to conclude that there is no more reason to believe that you need or
>>even desire a government to manage law courts than there is to believe
>>that you desire or need a government to manage supermarkets.
>
>i would like to hear more about this. because it does not make sense
>to me (yet?). i am willing to listen, but it does not *seem* reasonable.
>
>i don't know if being an anarchist and an objectivist at the same
>time is possible. even a small-o objectivist. because i believe
>that having an objective, neutral government to guarantee rights
>which objectivism considers fundamental, is an inherent part of
>objectivism. i don't think a lack of government is consistent
>with all the implications of the non-coercion principle, for example.

Well, lets consider. The non-coercion principle says, more or less,
that initiating force against persons or their property is wrong. In
order to enforce the existance of a monopoly government and prevent
people from setting up competitive courts and police forces, won't you
have to use force? Assuming these competing organs only use
retaliatory force and never initiate force, it would seem that they
are acting within their rights, so in order to enforce a state
monopoly you would need to prevent people, by violence if necessary,
from entering buisnesses like arbitration.

>so how can you have competing courts of law? who enforces the laws
>controlling those who enforce the laws? please explain how this would work.
>i'll keep my mind open, even if i need a crowbar... :^)

Well, there is no law saying who enforces the laws. Anyone can try to
go into the law enforcement business or the law creation business.

Prehaps it would be clearer if we went into an example. This doesn't
reflect the ONLY mechanism that might arise in the market -- it is
just a plausible one I use for pedagogical purposes.

First, lets assume that we abolish the notion of the criminal law.
With the abolition of government, there is no longer any sense in
refering to something as a crime against the state, as there is no
state -- there are only torts against people, for which we must
compensate them. This is how most traditional anarchist legal
frameworks like the one in Iceland functioned -- in Iceland, for
instance, if you killed a man, you owed his family wergeld, literally
"man gold". We can argue about whether replacing jail time with
restitution makes sense at another time -- for clarity, lets just
concentrate on how the market handles this particular form of
compensation. Remember, this is just one plausible mechanism I'm
walking through -- there are many.

Lets say that I patronize security company A, and you patronize
company B, and you steal an object from me.

I then go to company A and complain that my object has been stolen.
They go out, and lets assume that after some investigation they
determine that you apparently are in possession of the object. You, of
course, patronize company B, and if company A's people just came in
and forceably extracted compensation from you you would likely call in
company B's people to protect you. This is the difficulty Ayn Rand
couldn't see further than. Anyway, getting on with the example,
company A will now call up company B and inform them that there is a
potential conflict arising here. In all likelyhood, if this happens
with any degree of regularity, and it doubtless would, the companies
would have made an agreement between each other on how to deal with
such matters. Lets assume there is an agreement, and that it is that
representatives of company A will present evidence for the crime in
front of an arbitrator selected by representatives of both company A
and company B, and that you (the criminal) will have a chance to
defend yourself in this proceeding. This is much like what would
doubtless happen in the single company case, except that then there is
no need for any intercompany agreements. (Prehaps in that case the
arbitrator is selected from a preagreed pool or by representatives of
the prosecution and accused -- it really doesn't matter). Assuming all
works out, the arbitrator will decide that you owe me compensation for
the object you stole (likely the object plus the costs of my doing
without it and the cost of apprehending and prosecuting you), and you
will then be asked to cough up the money. If you don't cough up the
money, presumably company B has preagreed that in case of an
adjudication against you that you refuse to comply with they will no
longer defend you against force, and company A will then extract the
money for me.

There are a number of issues you might validly ask at this juncture.

1) Why should Company A and Company B agree to settle this matter so
   peaceably?

Because it is in their interest to do so. If they did not have an
agreement for handling such matters and just went to war, it would
cost them lots of money, and personel. Indeed, as their officers are
paid and not under compulsion to serve, they might not want to risk
their lives very lightly and the companies would be under considerable
internal pressure not to get their people killed too often. You might
argue that a large company could simply ignore smaller companies
because of the threat that they pose -- but I would argue that this
can't happen in practice. The equivalent of reinsurance agreements
between companies would almost certainly arise, in which a large
company attempting to attack a small one would likely draw in lots of
third parties into the conflict, thus making an attack of this sort
non-cost effective. Also, a large company engaging in such behavior
would likely frighten its customers, who would be scared that they
might be next -- they would then switch to other companies, which
would mean that the large company would no longer have a revenue base
with which to pay its mercenaries who it is presumably using to
terrify people.

2) Why would everyone agree to more or less the same legal system? How
   would the legal system arise and get standardized? How could people
   possibly make contracts in peace not knowing the commercial code?

When one goes into a court arguing that in a corporate annual meeting
one was unfairly prevented from taking some action that the
parliamentary law would permit, the court will likely note that the
corporate charter mentions in it a little book called "Roberts Rules
of Order~. "Roberts" is published by Scott Foresman and Company, not
by the government. None the less, it has somehow aquired sufficient
force that people treat it as if it were the law, and in fact it is.
The need to standardize parliamentary law and proceedure lead people
to pick parliamentary guides in the free market and this is the one
that was standardized apon, purely by free market forces. This is an
example of "customary law" in action.

It turns out that people very rapidly standardize on agreed social and
legal norms in a society. The developement of the Lex Mercatoria in
the medieval merchant courts produced a standard for how merchants
were expected to behave, even though no central authority existed. For
many centuries, judges of all sorts have looked to prior decisions and
to custom to guide them when deciding on matters that are not
codified. this is the so-called common law, which is another example
of customary law at work.

Presumably, common reference works, the common law, and custom will
form a fairly commonly understood legal base in a system such as the
one I am refering to. 

Companies COULD try to force people to accept strange new legal codes
that required them to, say, kill all the homosexuals that they met,
but its unlikely that they would get customers or that other companies
would treat them as "legitimate" and form cross agreements for
settling disputes with such companies.

People making contracts would likely depend largely on custom and the
common law as well. If this made them uncomfortable too often, the
market would likely provide works like "Roberts", only in this case
containing commercial codes, and contracts might specify "this
contract is to be held to function under the rules of commercial
contract set out in "Joe's Handy Standard Commercial Code"".

In any case, law would likely be a much simpler thing. Its easy, when
the central custom is "don't initiate force", to see that things like
rape and murder and theft are not things that any company will smile
on and that people should assume will not be loved. Much of the
customary law will simply be devoted to handling tricky questions like
"what exactly is force? Is playing music too loud a right, or a tort
against your neighbor", and the like. Even having to deal with such
questions, however, 99% of the codes, which are devoted to questions
like how many years you get for trying to sell someone unregistered
securities, would likely vanish.

3) What do you do if company A says playing your radio too loud is all
   right and company B holds it to be a tort?

There are several ways such disputes will be settled. In all
likelyhood, the majority of them will be settled by custom -- i.e.,
most adjudicators will hold one way or another and after a while it
will have the force of law. I'll point out, however, as an intriguing
aside, that market forces can also be used to settle such questions.
Some hold that it could be possible for you to be insulated from the
question by having your company pretend to you that you are living
under the code that you choose. If you play your radio too loud, they
will have to pay heavy damages to your neighbors, which will result in
your having to pay them heavy premiums (a disincentive), but that
other than absorbing such costs you might otherwise be able to
"pretend" that you lived in any legal code you chose. Some legal codes
might be prohibitively expensive, with others being less expensive --
this would lead to a natural evolutionary pressure towards people
picking codes that caused minimum practical interference with their
neighbors.

4) What happens if you can't afford a security company?

There are many possibilities. You can join a co-op, in which you would
have to exchange part time labor and the like as part of the company
in exchange for protection. You could appeal to charity. You could do
without and suffer the consequences -- maybe you feel that all you
need is your six-gun, and if you live atop a mountain in the middle of
nowhere its very possible you are right.

5) What happens if you are very rich and decide to flout the law.

Ah, as it turns out, the rich have far more to lose than the poor and
have a far greater incentive to follow it. Here is one possible
scenario that assumes that we ressurect the old notion of outlawry --
its only one of many scenarios, mind you, but it should be
illustrative of the sort of checks and balances such a system provides.

Lets say that you are Bill Gates and decide not to pay for that dog
you ran over last week. (Prehaps you hate poodles anyway). After the
judgement comes in against you, and you flout it, in all likelyhood
you will be declared an outlaw -- that is, no one will be punished by
your security company (which disowns you) for committing a tort
against you. Lets say you say "fuck that, who cares! I have billions!
I can affort to hire security". Well, first of all, your security
people can't be everywhere at all times, and you have lots of product
out there, warehouses, bank balances, etc, that people might take from
you -- and your folks can't be everywhere watching everything at all
times. More than that, if they try to get stuff back, that will likely
be considered a tort which the pseudothief's security company would
defend against -- with force if necessary. Also, your security people
might be declared outlaws for dealing with/defending the assets of an
outlaw. In short, you would want to scrupulously pay your court fines.

-------------

Now, you can see that although these scenarios aren't perfectly
rounded out, and although there are lots of possible ways to run them
(and lots of flaws we haven't even begun to discuss), its possible to
consider free market security apparatuses in the place of monopoly
government security systems. There is a lot more on this topic
discussed in Bruce Benson's brilliant (and extremely scholarly) book,
"The Enterprise of Law".

I look forward to continuing this discussion.


--
Perry Metzger		pmetzger@shearson.com
--
Laissez faire, laissez passer. Le monde va de lui meme.
Newsgroups: alt.philosophy.objectivism