In a previous article I described a legal system that doesn’t commit aggression and prohibits aggression. You may have noticed it doesn’t rely on armed agents providing ex ante defensive services — rather it relies on a) providing restitution to victims if aggressions do occur, and b) doing so at the perpetrator’s expense when possible, such that aggression becomes very risky and expensive.

Since law was one of the last things I fought mentally, myself, before being won over, and because it was a basic layout, undoubtedly there will be those with concerns and “what if” questions, which I aim to address here.

Q: “What about the poor?”

A: When you buy an insurance policy of almost any kind, there’s an option — maybe opt-in, maybe opt-out, maybe built into the boilerplate — for coverage in the event of a temporary inability to pay. It may even come with a cash award in the case of sudden involuntary unemployment, disability, illness, injury, fill in the blank, precisely because consumers are anxious about the uncertain future, something insurance companies are uniquely adept at dealing with. The system I described in my previous article evolved from a pre-existing tribal system, and it retained an interesting feature of the tribal system — you were born into the service of an indemnification firm (originally a tribe) and would be served even if you couldn’t afford to pay. You would lose only the ability to switch “tribes” if you can’t pay the new “tribe.” In another system, this time in medieval Iceland, claims to restitution were considered property and could be sold for an amount somewhat less than the expected claim. In a modern system, I imagine the most likely solution would involve voluntary charity, which should be expected to thrive even more than the quarter-trillion-dollar-a-year tradition of private charity that currently exists in America.

Q: “What if the victim doesn’t have a camera? What incentive is there to have one?”

A: If he doesn’t have it we have the same situation we have now — the burglar is harder to identify. The customer is still compensated — at the DRO’s expense, which gives the DRO a strong incentive to subsidize security systems. Reason being, the DRO can save expenses by making it easier to identify the criminal versus filing a claim. Similar to a hit and run with a car accident, the insurance provider of the victim pays.

Q: “What about murder or rape? Plus, monetary restitution may not be sufficient for those crimes.”

A: If you kill me, my DRO owes my family a lot of money. Which means your DRO owes my DRO a lot of money. Which it probably can’t recover from you, but even if it can, you’re now a very high-risk, high-cost customer, such that it doesn’t even make sense to raise your rates. You just get cut off, and it’s unlikely any other DRO would pick you up under these circumstances.

For the crime of murder, the penalty will of course be extremely stiff. It may well be unpayable, monetarily, in which case the offender loses protection as described and will be subject to retribution from others, likely including the victim’s family, who — if there was a payable penalty — would have been the recipients. There’s every reason to expect the details to differ by organization and by contract for this case. In my previous article I used the television example because it’s easier (you have my missing property and can return it) but the same principle applies to violence against the person, such as rape or murder. I’m indemnified against this sort of damage; you, who caused the damage, will be held responsible for it by similar means; you’ll know in advance of murdering or raping another individual that it’s likely to become an expensive problem for you. Expensive being a broad term as it is applicable to being expensive in monetary terms, being cast out, or being without protection from the law and suffering potential vigilante justice. All are expensive as they incur costs in one way or another.

In the Somali example there were/are some outs. The penalty/award for murder is considerably more than anyone can expect to earn in his lifetime. But if your reputation is such that enough people believe, enough to put their money where their mouth is, that you deserve a second chance, they can collectively contribute to making restitution to the victim’s family, in which case there is a second chance for you. But not a third.

Q: “Ok, so that makes sense for unjustified murders but how about manslaughter or accidental deaths? Is there a judiciary panel that would decide such?”

A: The “outlaw” outcome is a function of risk as calculated by the insurer. If I kill you while driving drunk, for example, it would be up to the insurer to decide whether that was a mitigating or an aggravating factor. Am I less risky overall because I don’t deliberately kill people, or more risky because I drive drunk? Most likely the latter. Same goes for other acts of gross negligence that result in similar outcomes. But if I accidentally kill you in what appears to be a “sh** happens” scenario like my brakes failed or something, there’s no reason for an insurer to evaluate me as any more risky to insure than anyone else (unless there is).

Q: “In your article you said there may be a contractual agreement between Jones and B and between Smith and A, but there is no lateral agreement between A and B. If A refuses to compensate B, which is likely because people/companies are out for their own self-interest and — as in this case — if they have no legal obligation to do so, what would happen?”

A: Assuming A and B are insurance companies, it works just like it works now. Anyone starting such a company can see a million miles away the inevitability of conflict with competing companies. Most of them have contractual arrangements with most of the others. In cases where there is no pre-existing arrangement, it’s in both parties’ interests to reach an agreement that serves their respective customers. The interest is obvious in the case of the firm representing the victim — they owe, or have already paid, compensation they’d like to recover from the offender or his insurer. The other party’s interests are different. If they won’t play ball, the plaintiff must deal instead directly with the defendant’s client, which is bad for him, which makes it bad for his insurer, and he’ll be less likely and also less able to negotiate favorable terms for arbitration and/or restitution, and then his insurer has to pay anyway because of the nature of the coverage. So, while it’s much simpler to do in advance, the interests of both parties are aligned toward reaching an agreement even after a conflict has arisen.

Q: “What if the parties cannot agree to a third party arbitration firm? (It certainly is not in the accused’s interests to agree to one.) How does it become decided?”

A: Even if Jones is guilty (and presumably knows it) there’s a good chance he thinks he can get away with it (say he wasn’t caught on camera or doesn’t know he was) and will plead not guilty or something equivalent. Now the assumption isn’t that this is what will usually happen — I’m just trying to limit the scope of my description, so I chose a scenario where determining guilt doesn’t introduce more complexity that needs to be described at length. But since it is a concern…

Say Jones proclaims his innocence, and we have a dispute that needs to be resolved. Presumably (and in practice) there will be private arbitration firms whose whole purpose is to resolve these disputes. Their clientele will be our indemnification firms. These firms will have contracts among themselves providing for the use of specific arbitrators or some mutually agreeable means of selecting one. Each firm arguably has an incentive to select an arbitrator friendly to it, but the other firm has the same incentive, and so the only way to resolve this is for them to agree on an arbitrator with a reputation for impartiality, which will in fact be the “good” the arbitrator is selling, so each arbitrator has a very powerful incentive to maintain his reputation for fairness.

Q: “What if the person is innocent to start with?”

A: No possible system eliminates this possibility — certainly not the one we have now. But we can minimize the likelihood, minimize the impact of error, and try to have a system that self-corrects. In the system I’ve described, each player with a role in finding the perpetrator has an actual incentive to “get his man” and not just to get a man. In the short run, an indemnifier may find an incentive to try to extract restitution from whoever it can convict, but in the intermediate and long runs this would be an entrepreneurial error with severe penalties. Because the appeals process will in principle be inexhaustible, and because of the built-in incentives, the truth will tend to win out. Firms earning a reputation for quick and erroneous convictions and punishments will lose clientele and, if the errors persist, fail.

Q: “What if my DRO says murder or theft is OK and yours doesn’t?”

A: Why would a community suddenly say murder and theft is ok, anyway? These associations don’t just get to make up whatever rules they want — they don’t exist to make rules and lack any means to make them stick anyway. What they sell is protection, indemnification against loss or harm. Murder isn’t “punishable” because some association made a rule against it — associations deal in restitution for murder because you don’t want to be murdered, so as long as people continue to want not to be murdered, there will be entrepreneurs looking to profit off of this demand by providing a service that protects against the same. It works well in part because most people find it more important to not be murdered than to have a protected privilege to commit murder, and you can’t have both at the same time. These associations will be selling personal and property security. They don’t simply decide “not to enforce murder laws.” The only reason to do so would be if it became cost prohibitive, which would only happen if there was an embarrassingly sharp decline in demand (not to be murdered), and if that happens, the world’s gone to pot anyway. So, really, what the objection is saying is “what if a community decides that no one needs personal protection” (or life insurance, for that matter). Ok. Or, essentially it is like saying, “If I or someone I care about is killed, I don’t want to be able to do anything about it.” If that is the mindset of a community, and you disagree, you won’t be part of that community, will you? Unlike under a state, there is no ability for someone to force his or her decisions upon you. You hire a DRO to indemnify yourself against loss or harm. As long as most people don’t want to be murdered, it doesn’t matter if some (or even most, or even all) people would like to be able to murder with legal impunity.

Additionally, prosecuting criminals is as much about minimizing future crime as it is about punishing crime that has already occurred by obtaining restitution from criminals. Many criminals are not going to stop with one theft, murder, or assault. These repeat offenders present a threat to paying customers, and thus prosecuting them provides a competitive advantage to any protection agency. It certainly would be bad for business if your customers can’t pay due to being dead. And customers certainly will prefer agencies that will protect them from murderers just as much as from thieves or assault perpetrators.

Q: “What about corrupt judges?”

A: That runs into at least two problems. First, if this is a concern, how is it different compared to the current system where you are assigned a judge, regardless of whether you like the judge (and his reputation for fairness) or not? Second, this move would not be focusing on the long run on the part of that arbitrator, because his means of subsistence would be sacrificed — reputation. If the judge is found to have been corrupted, he would lose all future clientele, as no individual will agree to have their case judged by someone who may be “in the other guy’s pocket.”

It would be apparent amongst A and B that disputes will arise between them on behalf of their clients. That is inevitable, and the means for resolving these disputes will need to be available. These contracts are inevitable (and in reality do appear). An unfair, biased or corrupt judge in the current system is almost impossible to penalize, and for that matter a good judge is hard to reward. He has no competition in the sense of his “customers” being able to choose another, more reputable judge. If they could, bad judges would quickly go out of business and stellar judges would rise to the top. But our coercive and monopolistic system provides little means to produce this result beyond voting every couple years — not the most effective means.

Moreover, the accused will likely have access to an appeals process set up ahead of time to ensure that innocents are not unduly punished. People are unlikely to choose to be protected by organizations that will not take steps to minimize the possibility of innocents being required to pay others. As a result, those DROs that agree to multiple possible arbitration proceedings will win out in the market, up to a certain point where consumers feel confident that they are protected in the chance of a false conviction.

In conclusion, it was my goal to answer some rather basic concerns that would be raised the most, reading my previous article. Understandably, readers may have some more but the fact that they might be giving you so much heartburn is evidence that these firms would be motivated to solve the problem. This will present another demand, which (as usual) will produce a supply. Now, it may not satisfy a curious demand for one-hundred percent efficiency, but hopefully the correlation is seen. Property rights and owners’ incentives to preserve them, the market demand this represents, the supply available through DROs or insurance solutions, how this addresses externalities and is enforced without the possibility of arbitrary and unilaterally stipulated rules or threats of violence from the state’s monopoly on law and force.

Remember, no anarchist thinks violence (be it murder, theft, etc.) is going to be eradicated by abolishing the state’s monopoly on law nor by ending the state itself. But it will de-institutionalize it, get rid of legal immunity afforded to state actors for it, and more effectively penalize it in the private sphere.



Further suggested reading:

The Rule of Law Without the State by Spencer Heath MacCallum

The Law of the Somalis by David Friedman [pdf]

Law and Appeals in a Free Society by Robert Murphy


And all of these: