Market for Liberty.
ask, "But how in the world could a laissez-faire society deal
with aggression by foreign nations, since it would have no government
to protect it?" Behind this question are two unrealized assumptions:
first, that government is some sort of extra-societal entity with
resources of its own – resources which can only be tapped for
defense by the action of government – and, second, that government
does, in fact, defend its citizens.
government must draw all its resources from the society over which
it rules. When a governmentally controlled society takes defensive
action against an aggression by a foreign power, where does it get
the resources necessary to take that action? The men who fight are
private individuals, usually conscripted into government service.
The armaments are produced by private individuals working at their
jobs. The money to pay for these armaments and the pittance doled
out to the conscripts, as well as the money to pay the salaries
of that small minority comprising the other members of the armed
forces, is confiscated from private individuals by means of taxation.
only contribution is to organize the whole effort by the use of
force – the force of the draft, taxation, and other, more minor
coercions, such as rationing, wage and price ceilings, travel restrictions,
etc. So, to maintain that government is necessary to defend a society
from foreign aggression is to maintain that it is necessary to use
domestic aggression against the citizens in order to protect them
from foreign aggression.
In spite of
the obvious immorality of forcing men to protect themselves against
force, some people still maintain that a coerced defense is more
efficient than a willing one and is, therefore, permissible or even
necessary in an emergency situation such as war. A brief examination
will show the fallacy of this variation of the moral/practical dichotomy.
of any endeavor, including war, depends on the amount of thought
and effort put into it by those involved. Under the pressure of
force, a man may be induced to put forth a great deal of effort
and even a little thought, but his reluctant, fear-driven exertions
can’t compare in efficiency and productivity with the ambitious
and tireless efforts of a free man striving to accomplish something
he really wants to get done. The man who works enthusiastically
not only works more efficiently, he also uses his mind to discover
new and better ways of reaching the goal, and such innovation is
the key to success.
a system of force is always wasteful of resources, because the more
unwilling is the victim of the force, the more energy must be diverted
to keeping him in line and the less is left to accomplish the task.
Men who are forced to do what they don’t want to (or not to do what
they do want to) are amazingly good at devising devious and complicated
ways to cheat on the system which enslaves them. This is why even
the most totalitarian of governments find that they cannot wage
war without huge propaganda efforts aimed at convincing their own
people of the justice and necessity of the war.
not only as moral as governmental slavery is immoral, it is as practical
as government is impractical. It is foolish to suppose that men
would not organize to defend themselves, and do so very effectively,
if they were not forced to. Men are not so blind that they can’t
grasp the value of freedom, nor so indifferent to life that they
will not defend their values. Nor are they so stupid that they need
politicians, bureaucrats, and Pentagon generals to tell them how
to organize and what to do. The freer people are, the more efficiently
they will perform. This being true, a free-market system of defense
against foreign aggression can be expected to be very effective,
in contrast to a governmental system of comparable size, resources,
that society couldn’t be defended without a government also assumes
that government does, indeed, protect the society over which it
rules. But when it is realized that government really has nothing
except what it takes by force from its citizens, it becomes obvious
that the government can’t possibly protect the people, because it
doesn’t have the resources to do so. In fact, government, without
the citizens on whom it parasitizes, couldn’t even protect itself!
history, people have been talked into submitting to the tyrannies
of their governments because, they were told, their government was
vitally necessary to protect them from the even more terrible depredations
of other governments. The governments, having put over this bit
of propaganda, then proceeded to cajole and coerce their citizens
into protecting them!
never defend their citizens; they can’t. What they do is make the
citizens defend them, usually after their stupid and imperialistic
policies have aggravated or threatened another government to the
point of armed conflict. Governmental protection against foreign
aggression is a myth (but a myth which, sad to say, most people
actually believe in).
can’t defend its citizens, and it is foolish and sacrificial for
the citizens to defend a coercive monopoly which not only enslaves
them but makes a practice of provoking conflicts with other coercive
monopolies – i.e., with other governments. In the matter of
foreign aggression, government is far more of a liability than an
asset, and people would be much better off with a free-market system
means of defense against foreign aggression would differ in scope
and intensity, but not in principle from the free-market means of
defense against domestic aggression (such as a gang of local hoodlums).
In either case, the principle involved is that each man has both
the liberty and the responsibility to defend his own values to the
extent he considers it to be in his own self-interest. Morally,
no man may be prevented from defending himself and his values, nor
may he be forced to defend them if he doesn’t want to do so.
If some of
the people in an area feel that one of their neighbors is not "carrying
his fair share of the defense burden," they are free to use
rational persuasion to attempt to convince him that it would be
in his interest to assume his own responsibility of self-defense.
They may not, however, extort his compliance by any use or threat
of force…even if they are clearly in the majority. Nor would
it be practical for them to do so. A man who is coerced into defending
his neighbors against a foreign aggressor may decide to spend part
of his efforts on defending himself against his coercive neighbors
In a laissez-faire
society, defense against foreign aggression would be offered for
sale on the free market, just as would any other type of defense.
Because of the close natural connection between insurance companies
and defense agencies, it would probably be most feasible to sell
defense against foreign aggression in the form of insurance policies.
That is, insurance companies would sell policies agreeing to protect
their insureds against foreign aggression and to indemnify them
for losses resulting from such aggression (the contract to be void,
of course, if the insured provoked the conflict by his own aggressive
actions). The insurance companies would see to it that whatever
defenses were necessary to prevent the losses were provided, and
they would make sure that a very efficient job of defense was done,
since any losses would cost them large sums of money.1
questioned whether insurance companies could afford to pay off all
the claims caused by the widespread destruction of a modern war,
should their defenses be overpowered. If the war were lost, of course,
neither the insurance company personnel, nor their insureds, nor
anyone else would be in a position to carry on normal financial
dealings. If it were won, the insurance companies would have to
either pay off or go out of business. In determining whether an
insurance company would be financially able to pay, there are two
important considerations – the extent and intensity of the
damage, and the extent of the insurance company’s assets.
of damage is impossible to predict in advance of the actual situation,
but there is no reason to assume that it would necessarily be so
severe as to include the total destruction of all major cities.
Governments usually launch wars of destruction only against areas
which, because of the actions of their own governments, pose a threat
to the attacker. A laissez-faire society, having no government to
make imperialistic threats, would be unlikely to become the object
of a war of destruction.
A foreign government
might decide to enrich itself by annexing the free territory, but
it would attempt to do so by a war of conquest rather than by a
war of destruction. Wars of conquest are much less devastating and
call for the restrained use of conventional weapons rather than
the use of nuclear weapons. The simple reason for this is that the
conqueror stands to reap a great deal less profit from rubble and
corpses than he does from factories and slaves.
to assume that a war against a laissez-faire society would not be
totally destructive of that society is that effective defenses against
modern warfare undoubtedly can be devised. The fact that governments
have not yet devised such defenses only proves that governments
are both profoundly inefficient and more interested in imperialistic
power grabs than in defending their citizens. Given the efficiency
of the free market and the incentive of the profit motive (because
people would be willing to pay for effective defense "hardware"
if they were allowed to buy it), innovators would doubtless come
up with many defensive devices far superior to the military war
machine now imposed upon us.
consideration in determining insurance companies’ ability to pay
claims arising from foreign aggression is the extent of their assets.
Even in our society, where they are hamstrung by governmental regulations,
insurance companies manage to hold vast and varied assets, spread
over wide financial and geographic areas. They also make a practice
of dividing large risks among various companies so that a sudden,
extensive amount of destruction can be paid for without bankrupting
any of them. This is the reason that insurance companies can pay
out the millions of dollars in claims which arise from major hurricanes,
tornadoes, earthquakes, etc., and can do so again and again without
being driven out of business.
In a laissez-faire
society, insurance companies should be even better based financially
than they are in our governmentally crippled economy. This means
that an attacker would have to succeed in wiping out a large portion
of the assets of the whole society in order to put the insurance
companies out of business. But there is no reason to assume that
a foreign government would attack the whole free area at once (since,
without a government, it wouldn’t be a single political entity)
or that it would succeed in destroying most of it if it did. Although
there is no absolute guarantee that insurance companies would be
financially able to pay off the claims arising from an attack by
a foreign power, the chances that they would are very good.
defense of a laissez-faire society would be furnished by defense
companies (both independent ones and those which were subsidiaries
of insurance companies). These defenses would consist of whatever
military personnel and matriel were necessary to defeat the forces
of any nation threatening (or potentially threatening) the insureds.
Such defenses would vary in size and type according to the threat
posed, and they could include anything from spies and foot soldiers
to radar networks and defensive missiles.
Since the development
and maintenance of modern weaponry is quite expensive, all but the
largest insurance companies would probably pool their efforts and
resources under competitive pressure to provide the best possible
protection at the lowest cost. For the same reasons of efficiency,
they would tend to purchase all their foreign aggression defense
needs from a few outstanding companies which could cooperate closely
with each other. Competition between the defense companies to get
such profitable business would foster the development of the most
powerful and efficient defense system rationally warranted. Technological
innovations which are at present unforeseeable would constantly
upgrade its safety and effectiveness. No governmental system, with
its miles of red tape and built-in politicking, pork barreling,
wire pulling, and power grabbing could even remotely approximate
the potency and efficiency naturally generated by the free-market
forces (which are always moving to meet demand).
Those who doubt
that "the private sector" of the economy could sustain
the expense of a free enterprise defense system would do well to
consider two facts. First, "the public sector" gets its
money from the same source as does "the private sector"
— the wealth produced by individuals. The difference is that
"the public sector" takes this wealth by force (which
is legal robbery) — but it does not thereby have access to
a larger pool of resources. On the contrary, by draining the economy
by taxation and hobbling it with restrictions, the government actually
diminishes the total supply of available resources.
because of what it is, makes defense far more expensive than it
ought to be. The gross inefficiency and waste common to a coercive
monopoly, which gathers its revenues by force and fears no competition,
skyrocket costs. Furthermore, the insatiable desire of politicians
and bureaucrats to exercise power in every remote corner of the
world multiplies expensive armies, whose main effect is to commit
aggressions and provoke wars. The question is not whether "the
private sector" can afford the cost of defending individuals
but how much longer individuals can afford the fearsome and dangerous
cost of coerced governmental "defense" (which is, in reality,
defense of the government, for the government…by the citizens).
A major portion
of the cost of defense against foreign aggression in a laissez-faire
society would be borne originally by business and industry, as owners
of industrial plants obviously have a much greater investment to
defend than do owners of little houses in suburbia. If there were
any real threat of aggression by a foreign power, businessmen would
all be strongly motivated to buy insurance against that aggression,
for the same reason that they buy fire insurance, even though they
could save money in the short run by not doing so.
result of this fact is that the cost of defense would ultimately
tend to be spread among the whole population, since defense costs,
along with overhead and other such costs, would have to be included
in the prices paid for goods by consumers. So, the concern that
"free riders" might get along without paying for their
own defense by parasitically depending on the defenses paid for
by their neighbors is groundless. It is based on a misconception
of how the free-market system would operate.
The role of
business and industry as major consumers of foreign-aggression insurance
would operate to unify the free area in the face of any aggression.
An auto plant in Michigan, for example, might well have a vital
source of raw materials in Montana, a parts plant in Ontario, a
branch plant in California, warehouses in Texas, and outlets all
over North America. Every one of these facilities is important to
some degree to the management of that Michigan factory, so it will
want to have them defended, each to the extent of its importance.
Add to this the concern of the owners and managers of these facilities
for their own businesses and for all the other businesses on which
they, in turn, depend, and a vast, multiple network of interlocking
defense systems emerges.
of the insurance companies, with their diversified financial holdings
and their far-flung markets would immeasurably strengthen this defensive
network. Such a multiple network of interlocking defense systems
is a far cry from the common but erroneous picture of small cities,
businesses, and individuals, unprotected by a government, falling
one by one before an advancing enemy horde.
that such a defense network would not obligate any individual to
contribute money or effort to any defensive action in which his
values were not threatened. Under the present governmental system
of collectivistic defense within arbitrary boundaries, a Californian
would be forced to sacrifice his values and possibly his life in
order to defend the State of Maine, even though he had no interest
at all in the matter. At the same time, a man a few miles away in
Quebec, because he was on the other side of a particular river,
would have to sit idly by unless his own government decided to take
This is because
governmental defense, like any other governmental action, is and
must be collectivistic in nature. With a free-market defense system,
each man acts to defend his own values to the extent he wishes to
have them defended, regardless of what piece of real estate he happens
to be occupying. No man is forced to sacrifice for the defense of
the collective system of a coercive gang called government.
defense system would also make it very difficult for an attacker
to obtain a surrender. Just as a laissez-faire society would have
no government to start a war, it would have no government to capitulate.
The defenders would fight as long, and only as long, as they believed
was in their self-interest. Even the insurance companies and defense
agencies couldn’t negotiate a surrender, because their agreements
could bind no one but the persons who actually signed them. It is
interesting to speculate on what an aggressive foreign nation would
do if confronted with such a situation.
In a free-market
defense system, the size of the armies and the expenditures for
armaments would be automatically regulated according to the need
for them. Consumers, kept informed of the world situation by the
news media and by insurance advertising, would buy more insurance
when aggression threatened, and less when the tensions eased. This
would be particularly true of the big businesses and industries
constituting the largest single insurance customers. They would
be very foresighted in their purchase of foreign aggression insurance,
just as they must be foresighted in all their other dealings.
competition would force defense costs to be held down, so that all
armaments would have to be either engaged in necessary defensive
uses or disposed of, as idle armaments would not be worth their
keep. No army could grow beyond what the market would support, and
the market would never support an army larger than was actually
necessary for defense, because force is a nonproductive expenditure
responsiveness of arms to world situation, with a built-in arms
limitation, would offer several important advantages. First, it
would avoid the economic drain of maintaining standing armies larger
than necessary, yet still allow for quick increase in arms when
needed. Second, it would put an end to the dangerous irritations
and provocations to foreign nations which are always incident to
maintaining large, imperialistic armies around the world and, thus,
would remove a major source of hostility and tension. Third, it
would prevent all the various meddlings, aggressions, and "brushfire
wars" which result from trying to play "world policeman"
and regulate the affairs of everyone on the globe. And fourth, it
would guarantee that an overgrown military machine could never be
seized by a would-be dictator and used against the people of the
laissez-faire society themselves (a guarantee which no constitution
can possibly make).
defense system would also permanently end the danger that some careless
or power mad politician might "push the button" and bring
down on the hapless citizens all the retaliatory violence of "the
other side." A free-market business wouldn’t gain power by
"pushing the button"; it would lose a tremendous amount
of assets. Consequently, any military action by the free-market
protection agencies would be strictly defensive, and undertaken
only when all other means of meeting the threat had failed.
with all its other advantages, a free-market defense system would
put a permanent end to the blood-spattered immorality of the draft.
The professional, voluntary defense forces of the market would be
far superior to governmental conscript forces. Conscript armies
are terribly expensive to maintain because of the constant need
for training new conscripts to fill the places of that great and
sensible majority who leave as soon as their term is up. Furthermore,
conscripts are notably ineffective and unwilling fighters as compared
with volunteers, for obvious reasons. Once again, it is the moral
approach which is practical.
of doom have cried that there can be no defense against modern missile
warfare. In fact, the danger of such a war is one of the chief arguments
advanced in favor of a strong government. It is said that only by
maintaining a strong government can we hope to deter an enemy attack
or successfully meet it when it comes. And, since hundreds of missiles
are already aimed at various parts of the globe and don’t seem likely
to be dismantled in the foreseeable future, we are told that we
had better plan on keeping that government strong for a long time
to come and not dream of experimenting with radical ways to improve
our society, such as freedom.
doesn’t give any automatic guarantees of safety and success, it
is true that even a strong free-market defense system might be overpowered
by an all-out atomic-biological-chemical attack, should such an
attack be launched. But so might a governmental "defense"
system, so this statement doesn’t really say anything about the
relative merits of free-market defense vs. governmental "defense."
of governmental "defense" shows that it depends on the
use of initiated force against its own citizens and on much propaganda
about government-fabricated foreign "dangers," and it
requires citizens to sacrifice themselves for whatever government
officials deem to be the good of the "public." The free
market permits each man to defend his own values, uses no initiated
force against and requires no sacrifice from customers, and penalizes
those who refuse to live noncoercive lives.
"defense" is unavoidably wasteful and a drain on the resources
of the society. It is also ineffective in protecting the citizen
against modern warfare and is likely to stay that way, because without
competition and the profit motive it lacks sufficient incentive
to innovate effectively. In the free market, competition forces
businesses to cut costs and eliminate waste, and it also brings
about continual improvements in effectiveness through technological
innovation as businesses struggle to "keep ahead of the competition."
But worse than
its waste and ineffectiveness, governmental "defense"
is actually little more than an excuse for imperialism. The more
government "defends" its citizens, the more it provokes
tensions and wars, as unnecessary armies wallow carelessly about
in distant lands and government functionaries, from the highest
to the lowest, throw their weight around in endless, provocating
power grabs. The war machine established by government is dangerous
to both foreigners and its own citizens, and this machine can operate
indefinitely without any effective check other than the attack of
a foreign nation.
If such a war
machine is unopposed by the armies of other nations, it is almost
inevitably used to promote rampant imperialism. But if it is opposed
by a war machine of equal strength and deadliness, then a balance
of terror ensues, with the constant threat of a holocaust. Businesses
in a free market can’t spare the cash for such perilous follies,
because they gain customers by offering values to free men rather
than by threatening force against disarmed subjects.
don’t really defend their citizen-subjects at all. Instead, they
provoke wars, and then they force the citizens to sacrifice their
money, their freedom, and often their lives to defend the government
Such "defense" is worse than no defense at all!
It is true
that the missiles, the deadly chemicals, and the plagues of modern
warfare constitute a very real threat. But these implements of mass
destruction were ordered to be constructed by governments, and these
same governments are continually bringing new and more deadly weapons
into existence. To say that we must have a government to protect
us as long as these products of government are around is like saying
that a man should keep his cancerous tumor until sometime in the
future when he gets better, because it would be too dangerous to
remove it now!
has proved itself inefficient, wasteful, and dangerous in such areas
as transportation and medicine, surely the worst place of all to
have it is in the vital area of defense against foreign aggression.
Wars and many other, less destructive kinds of human conflicts are
the natural consequence of institutionalizing man-made violence
in the form of governments!
- This is
similar to the relationship which would prevail in a laissez-faire
society between fire insurance and fire extinguishing companies.
Insurance companies would sell fire insurance and would then either
maintain their own facilities to put out fires or buy the services
of independent fire extinguishing companies for their insureds
(and anyone else who wanted to pay a fee for the services when
used). Because the various insurance companies would find it convenient
to have contractual agreements to buy each other’s fire extinguishing
services when more feasible than using their own, it would not
be necessary to have a fires station for each insurance company
in every area.
appeared on Mises.org.
and Linda Tannehill were two libertarian activists and thinkers
who, in the early 1970s, made surprisingly profound advances in
the theory of the stateless society. Their free-market manifesto,
Market for Liberty, was written just following a period of
intense study of the writings of both Ayn Rand and Murray Rothbard;
it has the pace, energy, and rigor you would expect from an evening’s
discussion with either of these two giants.