Thursday, 9 September 2010

Does 'no government' mean 'no laws'?


A government is defined as a territorial monopolist of the production of law. Law is the resolving of disputes. The defining feature of government, then, is the use of force (violence or threats of violence) to forbid anyone else acting as the final arbiter in cases of a dispute.[1]

With a monopoly on law, government can forbid competition in other industries, through the act of legislation. For example, it can outlaw private currencies, or private schools, or private restaurants. By doing this, the government establishes for itself a monopoly of the money industry, or the schooling industry, or the restaurant industry.

‘No government’ (i.e. anarchy) therefore means ‘no monopolist over the law industry’. The alternative to a monopoly, as always, is a free market. An anarchist is therefore defined as an advocate of a free market in law (and therefore also free markets in all other industries). [2]

Restaurants: Free Markets vs. Monopoly

Government has little interest in establishing for itself a monopoly over the restaurant industry. Free market firms operate and compete with each other in that industry. Entrepreneurs are free to respond to the demand for restaurants by providing restaurants.[3]

Few people, perhaps only communists, would argue that governments should take over all existing restaurants and outlaw all competition. Not only would such action be highly unethical, but it would also lead to catastrophic consequences in terms of the quality of the product. Free markets in restaurants give us high quality food and service, diversity that matches the diversity of consumer tastes, and the efficient use of resources to bring us the lowest possible prices. Competition eliminates any restaurant that is failing to meet consumer demand and provide a quality product. Bad restaurants go bankrupt and close down.

Schools: Free Markets vs. Monopoly

Schools are run as a government monopoly.[4] As a result, the quality of the product – the standard of education – is lower than it would be if schools were provided by competing free market firms. With a government monopoly, there is always inefficiency, waste, a lack of diversity, high prices, poor service, and a large potential for corruption. Politicians and special interest groups determine what is taught in schools, and how. There is no mechanism for ensuring that the schools are satisfying consumer demand, or making good use of resources. Bad schools endure.

Despite the existing government monopoly on schools, it is not difficult to imagine how schooling could be delivered on a free market. Firstly, full government monopolies over the schooling industry only began in the late 19th / early 20th century, so we can look to the past to get clues as to how a free market in schools may work.

But more importantly, we can apply economic insights, since these apply to all industries. The question is always the same: free markets or monopoly. We can learn a great deal about a free market in schools by examining existing free markets and drawing analogies.

Schools and Restaurants: An Analogy

Here are some questions that may arise when contemplating a free market in schooling:
  1. Who will run the schools?
  2. What will they teach?
  3. Couldn’t a ‘greedy capitalist’ indoctrinate the kids?
  4. How can we ensure teaching is high quality, without government-granted licences to teach?
  5. How many schools will there be in my town?
  6. How much will they cost?
  7. How much diversity will there be among schools?
  8. Won’t rich people get a better education than poor people?
  9. What about poor people who cannot afford any type of school?
These are all interesting questions. But consider if we were living under a monopoly of the restaurant industry. The following questions may arise:
  1. Who will run the restaurants?
  2. What food will they serve?
  3. Couldn’t a ‘greedy capitalist’ serve poor quality or poisonous food?
  4. How can we ensure chefs are high quality, without government-granted licences to cook?
  5. How many restaurants will there be in my town?
  6. How much will they cost?
  7. How much diversity will there be among restaurants?
  8. Won’t rich people go to better restaurants than poor people?
  9. What about poor people who cannot afford to go to restaurants?
Some of these questions sound absurd to those of us accustomed to living in a society where restaurants are provided on a free market. These fears and concerns are not justified, and the questions are not worth losing sleep over. In the restaurant industry, things just work.

They work because of the economics of the free market system, where entrepreneurs are constantly striving to satisfy consumer demand. If there are not enough, or too many, restaurants in town, for example, this will quickly be corrected, when an entrepreneur sees the potential for profits by opening a new restaurant, or suffers losses and has to close down. The only thing that can stop this market process, of constantly adapting the structure of production to best satisfy consumer demands, is government intervention.

The Production of Law

We are not used to thinking of law as a product. We are not used to applying economic insights to law. But from the economic perspective, law is a product no different from any other. It is demanded by consumers, and it can be provided either by a monopoly or by free market firms.

Now consider the following questions:
  1. Who will run the courts and write the laws?
  2. What laws will they write?
  3. Couldn’t a ‘greedy capitalist’ produce laws that are biased in his favor?
  4. How can we ensure private judges are wise, honest and fair?
  5. How many different producers of law will there be in my town?
  6. How much will I have to pay to buy laws?
  7. How much diversity will there be among law codes?
  8. Won’t rich people get better quality laws?
  9. What about poor people who cannot afford to buy laws?
These are some of the concerns of statists (or ‘archists’) when they contemplate the prospect of anarchy (a free market in law). These questions are analogous to the concerns about the schooling industry being a free market, and the hypothetical concerns that people would have if we were living under a monopoly in the restaurant industry, such as in the Soviet Union, and were contemplating a free market in restaurants.[5]

Much has been written about how law might be delivered in a free market. While throughout history there have been far more statist societies than anarchic societies, there is much that can be learned from studying how law has previously been produced in the absence of government.[6]

Anarchists such as Murray Rothbard, David Friedman and Hans-Hermann Hoppe have speculated about how a future free market in law may work, informed by economic insights (including analogies to existing free markets), historical precedents, and legal/political theory. They attempt to provide answers to the questions and concerns listed above. In this brief essay, I intend merely to point out that the concerns are directly analogous to concerns about free markets in any industry.


What will we say to the Soviet man, living through the collapse of communism, when he asks us how restaurants will be provided without a government monopoly? Just that free markets work. Any problems will sort themselves out through the market process. There is nothing to fear. There is everything to gain by having a free market in restaurants. The quality of restaurants can only get better by being subjected to market forces.

Does ‘no monopoly in the restaurant industry’ equate to ‘no restaurants’? Of course not: it means that they will be provided by the free market firms. Would ending the government monopoly on schools mean there would be no more schools? Again, no, because there is consumer demand for them, so free market firms will provide them.

Does ‘no government’ equate to ‘no laws’? Clearly the answer is no. It means that laws will be produced by free market firms in response to consumer demand. Anarchy means no rulers; this does not equate to no rules.

  • Benson, Bruce – The Enterprise of Law (1990)
  • Friedman, David – The Machinery of Freedom (1974)
  • Hoppe, Hans-Hermann – Democracy: The God That Failed (2001)
  • Rothbard, Murray – For a New Liberty (1973)
  • Stringham et al, Edward – Anarchy and the Law (2007)

[1] This includes disputes involving the government itself. The government is judge in its own cases. There is no third-party arbiter in disputes between individuals and the government.
[2] In this essay, when using the term ‘anarchist’, I mean libertarian anarchist. The modifier is unnecessary from a theoretical perspective, but is added for clarity since the term sometimes refers to ‘anarcho-communists’ and other non-libertarian anarchists.
[3] Government enforces regulations on restaurateurs, but compared to other industries, the regulations are small in extent; there is a considerable amount of freedom in that industry.
[4] Even the nominally ‘private’ schools are subject to strict and heavy regulations.
[5] Such questions were common around the time of the collapse of the Soviet Union. Many people feared they would starve to death without state-provided food and a central planning monopoly commanding the food production industry. “How will the farmers know what food to produce and how much of it?”
[6] Examples of anarchist, or near-anarchist, societies include Medieval Iceland, pre-conquest Ireland, and the early American colonies. See Rothbard, Friedman, Benson, Stringham et al. Roman Law, Common Law and Merchant Law all originally developed under free market conditions, but co-existed and were later subsumed into government-provided law.

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