Imagine a world of private laws, where laws are written by legal experts instead of inept politicians, and are voluntarily and explicitly agreed to in advance (including the penalties for breaking the law) by each individual, instead of imposed on everyone without notice and against their will. In this world, victims of crime are immediately indemnified for their loss. People have a strong financial incentive not to aggress against non-aggressors. Competing arbitration companies ensure that justice is administered fairly. Jails compete for the business of violent criminals. And organized crime (both by the State and the mafia) and police brutality are a relic of the past.
Now imagine a world where insurance companies would indemnify policyholders for losses caused by foreign aggressors. Seeking to maximize their profits, they would also provide the optimal amount of defense to protect the lives and property that they insured and reduce the risk of attack. They would purchase military hardware and equipment at a fraction of what governments pay, greatly reducing the cost of protection. Multinational defense agencies would loan out high-tech weapons to their franchises in areas under imminent threat of attack, further reducing the cost of protection. Defense agencies would advertise their capabilities instead of trying to keep them secret. And the risk of being attacked would be greatly reduced since foreigners wouldn’t feel threatened (defense agencies wouldn’t have offensive weapons because using them wouldn’t be profitable).
Bob Murphy explains how such a world of private law and private defense would work in his outstanding new book Chaos Theory. This slim tome (58 pages) describes a world that is safer, less violent, less expensive, more just, more efficient and more free. Reading it made me realize just how immoral, violent, costly, unnecessary, wasteful, inefficient, counterproductive and ridiculous—no, preposterous—the State is.
Murphy explains the crucial role that competition and the profit/loss test play in providing quality, low-cost services: “It took Ludwig von Mises to explain, in a 1920 paper, the true flaw with socialism:
Without market prices for the means of production, government planners cannot engage in economic calculation, and so literally have no idea if they are using society’s resources efficiently.
I have only two criticisms of the book. First, the many endnotes are located at the end of each essay instead of at the bottom of each page, so flipping back and forth is a chore. Second, I had been looking forward to seeing the illustrations by Robert Vroman, but there are just two of them, only one of which is Vromanesque (scroll down).
Despite these minor quibbles, I highly recommend this book, especially if you’re a libertarian who hasn’t yet become a market anarchist because you think the State is the only entity that can provide justice and defense. Murphy makes dozens of brilliant observations and really thinks outside the box. Reading this book was like taking a mind-altering drug. The book costs just $6 (plus $2 shipping & handling) and can be ordered here.
In conclusion, as Murphy writes: “It is foolish and reckless to entrust the State with the protection of civilian lives and property.” Read the book and you’ll understand why.