For the past 40 years, David Friedman has been thinking about what it might look like to have a society with private property but no legal system as we think of it today. We would, of course, need some way of protecting that private property, of settling disputes in the event of a robbery or a hit-and-run. But could we have the end product of a legal system — the enforcement of rights — without the law itself? (If you were unsettled by the prospect of law with fewer lawyers, this idea really pushes the envelope.)
Friedman, a law professor at Santa Clara University, first broached this idea in the 1973 book The Machinery of Freedom. He’s since been tinkering with the implications of his radical thought experiment: a society where individual rights are protected by private firms on the free market. The very suggestion – and the philosophy from which it stems: anarcho-capitalism – may turn off all but the staunch libertarian. But Friedman’s idea poses some intriguing questions. Would an actual market for law really produce good law? And good law for whom?
“Essentially everybody is the customer of one of a large number of private rights enforcement agencies,” Friedman explained in a lecture on the idea Tuesday at the libertarian Cato Institute. “He pays them an annual fee, in exchange for which they both protect his rights and arrange to settle disputes he has with other people.”
These firms would provide an equivalent service to today’s police and courts, or at least access to some kind of equivalent. Friedman assumes that these “rights enforcement” agencies would have pre-existing agreements with each other, and would rely on private arbitrators to work out disputes they can’t settle on their own.
In addition to providing this service, he envisions that such agencies would also peddle a related product: the threat of violence on your behalf. It is, in essence, this implied threat that keeps disputing parties peaceful, and that sends rights enforcement agencies to the arbitrator and not the battlefield.
“In a sense, underlying every society — and this is particularly obvious in places like Egypt and Tunisia — is the idea that if people really don’t like the rules enough, they’ll start shooting each other, they’ll start engaging in some violent conflict,” he said. “So somehow each functional peaceful society has worked out some solution to that mutual threat game.”
He predicts participants in this government-less world would do the same. Similar systems in fact already do exist in the U.S. (no, Friedman is not talking about the mob). Look, for example, at the market for private auto insurance.
“My car runs into your car, we have different insurance companies, it’s the same situation as, ‘I think you’ve stolen my television and we disagree about who’s at fault,’” he said. “The insurance companies have two options. One option is violence, although they call it litigation. The other option is arbitration, some way of staying out of the court system and having some procedure for determining which side plays.”
Friedman admits that such a system would contain its own points of market failure. Dispute settlements wouldn’t take into account the impacts of decisions on third parties — whether that third party is another person or, say, the environment. There would be no global climate change solution in Friedman’s world (not that he is advocating for one anyway).
“I still think this leaves the system I’m arguing for less bad than the alternatives,” he said. In other words: less bad than having government.
Friedman shakes off some of the other technical obstacles. Some people will inevitably decline to pay for a rights enforcement agent, just as some people decline to buy car insurance even where it’s required by law.
“If people really refuse to become a part of the network of agreements by which conflicts are settled without violence,” Friedman said, “they can be settled with violence.”
Perhaps this world sounds more like Somalia than the United States. But our current society includes these same people: those who feel unbound by the law and take their chances with crime.
As for the costs of buying rights protection on the open market, Friedman insists that just about everyone – even the poor – will be able to afford some kind of coverage, maybe worth a few hundred dollars a year, once they’re no longer paying sales, income and property taxes to a government. (And in this world without government, you’d probably be paying for this service with some kind of private commodity money.)
But the implication here will likely be most objectionable to Friedman’s critics: His system would create a world where you get the rights protection you pay for – or, rather, that you can afford.
In response, Friedman shrugs that he doesn’t expect his idea to operate in an egalitarian society.
“I expect that people who are willing to spend more money for getting their rights protected will have at least better protection, and they may or may not have legal rules better tailored to their preferences,” he said. But he doesn’t sound troubled by this. “Of course, that’s true under the present system as well.”