WEBVTT NOTE Private Law 1 00:00:00.000 --> 00:00:04.000 1. Private Law 2 00:00:04.000 --> 00:00:10.000 Without question the legal system is the one facet of society that supposedly requires state provision. 3 00:00:10.000 --> 00:00:15.000 Even such champions of laissez-faire as Milton Friedman and Ludwig von Mises 4 00:00:15.000 --> 00:00:21.000 believed a government must exist to protect private property and define the rules of the game. 5 00:00:21.000 --> 00:00:25.000 However, their arguments focused on the necessity of law itself. 6 00:00:25.000 --> 00:00:29.560 By themselves, they simply assumed that the market is incapable of defining and protecting 7 00:00:29.560 --> 00:00:33.640 property rights. They were wrong. 8 00:00:33.640 --> 00:00:40.000 In this essay, I argue that the elimination of the state will not lead to lawless chaos. 9 00:00:40.000 --> 00:00:45.360 Voluntary institutions will emerge to effectively and peacefully resolve the disputes arising 10 00:00:45.360 --> 00:00:52.720 in everyday life. Not only will market law be more efficient, it will also be more equitable 11 00:00:52.720 --> 00:00:56.120 and the Government Alternative. 12 00:00:56.120 --> 00:01:01.520 Just as right-wing hacks embrace the Orwellian notion that war is peace, left-wing egalitarians 13 00:01:01.520 --> 00:01:04.160 believe that slavery is freedom. 14 00:01:04.160 --> 00:01:09.520 The hawks wage endless war to end war, while the social democrats engaged in massive theft 15 00:01:09.520 --> 00:01:15.240 – or taxation, as they call it – to eliminate crime. 16 00:01:15.240 --> 00:01:19.480 It is high time to abandon such monstrous paradoxes. 17 00:01:19.480 --> 00:01:24.500 It took no king to produce language, money or science, and it takes no government to 18 00:01:24.500 --> 00:01:27.960 produce a just legal system. 19 00:01:27.960 --> 00:01:30.200 1. 20 00:01:30.200 --> 00:01:31.200 Contract 21 00:01:31.200 --> 00:01:37.400 First, we must abandon the idea of a mythical law of the land. 22 00:01:37.400 --> 00:01:40.640 There doesn't need to be a single set of laws binding everyone. 23 00:01:40.640 --> 00:01:43.520 In any event, such a system never existed. 24 00:01:43.520 --> 00:01:48.040 The laws in each of the fifty states are different, and the difference in legal systems between 25 00:01:48.040 --> 00:01:52.900 in countries is even more pronounced, yet we go about our daily lives and even visit 26 00:01:52.900 --> 00:01:59.900 and do business with foreign nations without too much trouble. All actions in a purely 27 00:01:59.900 --> 00:02:06.600 free society would be subject to contract. For example, it is currently a crime to steal 28 00:02:06.600 --> 00:02:13.000 because the legislature says so. A prospective employer knows that if I steal from his firm, 29 00:02:13.000 --> 00:02:17.160 He can notify the government and it will punish me. 30 00:02:17.160 --> 00:02:22.040 But in a stateless society there wouldn't be a legislated body of laws, nor would there 31 00:02:22.040 --> 00:02:24.960 be government courts or police. 32 00:02:24.960 --> 00:02:30.200 Nonetheless, employers would still like some protection from theft by their employees. 33 00:02:30.200 --> 00:02:35.600 So, before hiring an applicant, the employer would make him sign a document that had clauses 34 00:02:35.600 --> 00:02:39.980 to the effect of, I promise not to steal from the Acme firm. 35 00:02:39.980 --> 00:02:45.300 If I get court-stealing, as established by Arbitration Agency X, then I agree to pay 36 00:02:45.300 --> 00:02:51.300 whatever restitution that Agency X deems appropriate. 37 00:02:51.300 --> 00:02:58.020 We immediately see two things in this contract. First, it is completely voluntary. Any laws 38 00:02:58.020 --> 00:03:04.060 binding the employee have been acknowledged by him beforehand. Second, the existence of 39 00:03:04.060 --> 00:03:11.060 of Arbitration Agency X ensures fairness and objectivity in any disputes. 40 00:03:11.680 --> 00:03:16.960 To see this, suppose that it didn't. Suppose that a big firm bribed the arbitrators at 41 00:03:16.960 --> 00:03:22.800 Agency X so that lazy workers, who were going to be fired anyway, were, falsely, charged 42 00:03:22.800 --> 00:03:29.360 by the employers with embezzlement, while Agency X always ruled guilty. With this scheme, 43 00:03:29.360 --> 00:03:33.840 The big firm could bilk thousands of dollars from its blad employees before terminating 44 00:03:33.840 --> 00:03:38.920 them, and since the hapless employees had agreed beforehand to abide by the arbitration 45 00:03:38.920 --> 00:03:45.760 outcome, they could do nothing about it. But upon consideration, it's easy to see that 46 00:03:45.760 --> 00:03:51.480 such behavior would be foolish. Just because an arbitration agency ruled a certain way 47 00:03:51.480 --> 00:03:56.520 wouldn't make everyone agree with it, just as people complain about outrageous court 48 00:03:56.520 --> 00:04:02.360 Rulings by Government Judges. The press would pick up on the unfair rulings and people would 49 00:04:02.360 --> 00:04:08.280 lose faith in the objectivity of Agency X's decision. Potential employees would think 50 00:04:08.280 --> 00:04:13.200 twice before working for the big firm as long as it required in its work contracts that 51 00:04:13.200 --> 00:04:19.200 people submitted to the suspect Agency X. Other firms would patronize different, more 52 00:04:19.200 --> 00:04:25.080 reputable arbitration agencies and workers would flock to them. Soon enough the corrupt 53 00:04:25.080 --> 00:04:32.040 Big firm and Arbitration Agency X would suffer huge financial penalties for their behaviour. 54 00:04:32.040 --> 00:04:37.920 Under market anarchy, all aspects of social intercourse would be regulated by voluntary 55 00:04:37.920 --> 00:04:43.320 contracts. Specialised firms would probably provide standardised forms so that new contracts 56 00:04:43.320 --> 00:04:49.040 wouldn't have to be drawn up every time people did business. For example, if a customer bought 57 00:04:49.040 --> 00:04:53.040 something on installment, the store would probably have him sign a form that said something 58 00:04:53.040 --> 00:05:09.720 Expertise Under this system, legal experts would draft 59 00:05:09.720 --> 00:05:16.360 the laws of the land, not corrupt and inept politicians, and these experts would be chosen 60 00:05:16.360 --> 00:05:22.460 in open competition with all rivals. Right now, one can buy definitive style manuals 61 00:05:22.460 --> 00:05:27.340 Rules for writing term papers or dictionaries of the English language. The government doesn't 62 00:05:27.340 --> 00:05:33.260 need to establish the experts in these fields. It would be the same way with private legal 63 00:05:33.260 --> 00:05:38.700 contracts. Everybody knows the rules of grammar, just like everybody would know what's legal 64 00:05:38.700 --> 00:05:42.460 and what isn't. 65 00:05:42.460 --> 00:05:46.540 Murder Of course, one of the most basic stipulations 66 00:05:46.540 --> 00:05:51.820 in any contractual relationship, whether entering a mall or living in a neighbourhood co-op, 67 00:05:51.820 --> 00:05:57.260 would be strong prohibitions on murder. In other words, all contracts of this type would 68 00:05:57.260 --> 00:06:02.580 have a clause saying, if I am found guilty of murder, I agree to pay Y million dollars 69 00:06:02.580 --> 00:06:08.540 to the estate of the deceased. Naturally, no one would sign such a contract unless he 70 00:06:08.540 --> 00:06:13.100 was sure that the trial procedures used to determine his guilt or innocence had a strong 71 00:06:13.100 --> 00:06:19.660 presumption of innocence. Nobody would want to be found guilty of a murder he didn't commit. 72 00:06:19.660 --> 00:06:23.540 But on the other hand, the procedures would have to be designed so that there was still 73 00:06:23.540 --> 00:06:28.760 a good chance that guilty people would actually be convicted, since people don't want to shop 74 00:06:28.760 --> 00:06:32.580 in malls where murder goes unpunished. 75 00:06:32.580 --> 00:06:38.000 And because all contracts of this sort, except possibly in very eccentric areas frequented 76 00:06:38.000 --> 00:06:44.200 by people who liked to live dangerously, would contain such causes, one could say that murder 77 00:06:44.200 --> 00:06:49.380 is illegal in the whole anarchist society, even though the evidentiary rules and penalties 78 00:06:49.380 --> 00:06:54.920 These might differ from area to area, but this is no different from our current system 79 00:06:54.920 --> 00:07:01.920 and no one doubts that murder is illegal in the current United States. 80 00:07:03.300 --> 00:07:05.120 Profitability the standard 81 00:07:05.120 --> 00:07:10.380 The beauty of this system is that the competing desires of everyone are taken into account. 82 00:07:10.380 --> 00:07:15.040 The market solves this problem every day in reference to other goods and services. 83 00:07:15.040 --> 00:07:20.920 For example, it would be very convenient for customers if a deli were open 24 hours a day, 84 00:07:20.920 --> 00:07:26.200 but on the other hand such long shifts would be very tedious for its workers. So the market 85 00:07:26.200 --> 00:07:31.680 system of profit and loss determines the correct hours of operation. 86 00:07:31.680 --> 00:07:36.760 In the same way, we saw above how evidentiary rules would be determined under a system of 87 00:07:36.760 --> 00:07:42.400 private law. Because people would be submitting themselves contractually to the rulings of 88 00:07:42.400 --> 00:07:47.160 For a certain arbitration agency, the agency would need a reputation for objectivity and 89 00:07:47.160 --> 00:07:53.320 fairness to defendants. But on the other hand, the owners of stores, firms, rental cars, 90 00:07:53.320 --> 00:07:58.000 etc. would want some means of restitution in the event of theft, and so the arbitration 91 00:07:58.000 --> 00:08:04.560 agencies couldn't be too lenient. As with the hours of a stores operation, so too would 92 00:08:04.560 --> 00:08:10.440 the legal procedures be decided by the profit and loss test. Maybe there would be juries, 93 00:08:10.440 --> 00:08:15.680 Maybe there wouldn't. We can't predict this beforehand, just as we can't say a priori 94 00:08:15.680 --> 00:08:24.680 how many tricycles should be made this year. We let the market take care of it automatically. 95 00:08:24.680 --> 00:08:28.600 2. Insurance 96 00:08:28.600 --> 00:08:34.220 The contractual system described above seems to work well except for one nagging problem. 97 00:08:34.220 --> 00:08:38.000 How can people afford to pay these outrageous fines? 98 00:08:38.000 --> 00:08:52.000 Granted, someone might sign a piece of paper pledging restitution to his employer if he is caught stealing. But suppose he steals anyway, and is found guilty by the arbitration agency but has no money. Then what? 99 00:08:52.000 --> 00:09:04.000 Well, how does our present system of auto damages work? Right now, if I sideswipe someone, I must pay a stiff penalty, or rather, my insurance company does. 100 00:09:04.000 --> 00:09:10.280 It would be the same way with all torts and crimes under the system I have described. 101 00:09:10.280 --> 00:09:15.520 An insurance company would act as a guarantor or co-signer of a client's contracts with 102 00:09:15.520 --> 00:09:21.700 various firms. Just as a bank uses experts to take depositor's money and efficiently 103 00:09:21.700 --> 00:09:26.320 allocate it to borrowers, so too would the experts at the insurance company determine 104 00:09:26.320 --> 00:09:32.280 the risk of a certain client, i.e. the likelihood he or she would violate contracts by stealing 105 00:09:32.280 --> 00:09:38.120 Banking or Killing, and charge an appropriate premium. Thus other firms wouldn't have to 106 00:09:38.120 --> 00:09:43.520 keep tabs on all of their customers and employees. The firm's only responsibility would be to 107 00:09:43.520 --> 00:09:50.120 make sure everyone they dealt with carried a policy with a reputable insurance agency. 108 00:09:50.120 --> 00:09:55.560 Under this system the victims of a crime are always paid, immediately. Contrast this to 109 00:09:55.560 --> 00:10:00.760 the government system where victims usually get nothing except the satisfaction of seeing 110 00:10:00.760 --> 00:10:17.760 There would also be incentives for people to behave responsibly. Just as reckless drivers pay higher premiums for car insurance, so too would repeat offenders be charged higher premiums for their contract insurance. 111 00:10:17.760 --> 00:10:26.760 First, keep in mind that wherever someone is standing in a purely libertarian society, he would be on somebody's property. 112 00:10:26.760 --> 00:10:32.760 This is the way in which force could be brought to bear on criminals without violating their natural rights. 113 00:10:32.760 --> 00:10:38.760 For example, the contract of a movie theatre would have a clause to the effect, 114 00:10:38.760 --> 00:10:44.760 if I am judged guilty of a crime by a reputable arbitration agency, perhaps listed in an appendix, 115 00:10:44.760 --> 00:10:50.760 I release the theatre owner from any liability should armed men come to remove me from his property. 116 00:10:50.760 --> 00:10:58.600 So, we see that it is not a contradiction to use force to capture fugitives in a completely 117 00:10:58.600 --> 00:11:04.720 voluntary society. All such uses would have been authorized by the recipients themselves 118 00:11:04.720 --> 00:11:09.520 beforehand. But where would these ne'er-do-wells be taken 119 00:11:09.520 --> 00:11:15.600 once they were brought into custody? Specialised firms would develop offering high-security 120 00:11:15.600 --> 00:11:45.600 are the analogues to the current jailhouse. However, the jails in market anarchy would compete with each other to attract criminals. Consider. No insurance company would vouch for a serial killer if he applied for a job at the local library, but they would deal with him if he agreed to live in a secure building under close scrutiny. The insurance company would make sure that the jail that held him was well run. After all, if the person escaped and killed again, the insurance company would be held liable. 121 00:11:45.600 --> 00:11:51.160 is vulnerable since it pledges to make good on any damages its clients commit. 122 00:11:51.160 --> 00:11:56.400 On the other hand, there would be no undue cruelty for the prisoners in such a system. 123 00:11:56.400 --> 00:12:00.800 Although they would have no chance of escape, unlike government prisons, they wouldn't be 124 00:12:00.800 --> 00:12:06.400 beaten by sadistic guards. If they were, they'd simply switch to a different jail, just as 125 00:12:06.400 --> 00:12:11.860 travellers can switch hotels if they view the staff as discourteous. Again, the insurance 126 00:12:11.860 --> 00:12:17.760 The health company which vouches for a violent person doesn't care which jail its client chooses, 127 00:12:17.760 --> 00:12:20.460 so long as its inspectors have determined 128 00:12:20.460 --> 00:12:27.860 that the jail will not let its client escape into the general population. 129 00:12:27.860 --> 00:12:30.980 4. Doubts 130 00:12:30.980 --> 00:12:33.620 Although superficially coherent and workable, 131 00:12:33.620 --> 00:12:38.120 the proposed system of market law will certainly engender skepticism. 132 00:12:38.120 --> 00:12:44.800 In the interest of brevity, I will deal with some common and valid concerns. 133 00:12:44.800 --> 00:12:48.640 What about someone who has no insurance? 134 00:12:48.640 --> 00:12:53.160 If an individual didn't carry insurance, other people would have no guaranteed recourse should 135 00:12:53.160 --> 00:12:58.280 the individual damage or steal their property. Such an individual would therefore be viewed 136 00:12:58.280 --> 00:13:03.080 with suspicion, and people would be reluctant to deal with them except for single transactions 137 00:13:03.080 --> 00:13:10.080 So we see that those without insurance would have their options, including their freedom 138 00:13:24.620 --> 00:13:30.940 of movement, greatly restricted. At the same time, the premiums for basic contract insurance, 139 00:13:30.940 --> 00:13:35.140 At least for people without a criminal history would be quite low, so there wouldn't be 140 00:13:35.140 --> 00:13:40.620 very many people walking around without this type of insurance. It's true, some people 141 00:13:40.620 --> 00:13:45.580 would still commit crimes and would have no insurance company to pay damages, but such 142 00:13:45.580 --> 00:13:52.580 cases are going to occur under any legal system. Furthermore, once someone without insurance 143 00:13:53.780 --> 00:13:58.340 had committed a serious crime, he would still be chased by detectives just as he would be 144 00:13:58.340 --> 00:14:05.340 Waring Agencies Critics often dismiss private law by alleging 145 00:14:17.860 --> 00:14:22.780 that disputes between enforcement agencies would lead to combat, even though this happens 146 00:14:22.780 --> 00:14:28.080 between governments all the time. In truth, the incentives for peaceful resolution 147 00:14:28.080 --> 00:14:33.320 of Disputes would be far greater in market anarchy than the present system. Combat is 148 00:14:33.320 --> 00:14:38.880 very expensive and private companies take much better care of their assets than government 149 00:14:38.880 --> 00:14:44.920 officials take of their subjects' lives and property. In any event, those engaging in 150 00:14:44.920 --> 00:14:51.040 warfare in a free society would be treated as any other murderers. Unlike government soldiers, 151 00:14:51.040 --> 00:14:56.400 private mercenaries would receive no special privileges to engage in condoned violence. 152 00:14:56.400 --> 00:15:01.840 Those agencies interpreting the law would not be the same as the firms enforcing it. 153 00:15:01.840 --> 00:15:06.640 There is no intrinsic reason to worry about battles between private enforcement agencies 154 00:15:06.640 --> 00:15:11.840 any more than battles between the government, army and navy. 155 00:15:11.840 --> 00:15:14.920 Won't the Mafia take over? 156 00:15:14.920 --> 00:15:19.960 It is paradoxical that the fear of rule by organized crime families causes people to 157 00:15:19.960 --> 00:15:26.320 support the State, which is the most organized and criminal association in human history. 158 00:15:26.320 --> 00:15:30.940 Even if it were true that under market anarchy people had to pay protection money and occasionally 159 00:15:30.940 --> 00:15:35.720 get whacked, this would be a drop in the bucket compared to the taxation and wartime deaths 160 00:15:35.720 --> 00:15:38.400 caused by governments. 161 00:15:38.400 --> 00:15:43.520 But even this concedes too much, for the mob derives its strength from government, not 162 00:15:43.520 --> 00:15:45.200 the free market. 163 00:15:45.200 --> 00:15:50.360 All of the businesses traditionally associated with organized crime, gambling, prostitution, 164 00:15:50.360 --> 00:15:56.000 loan-sharking, drug-dealing, are prohibited or heavily regulated by the state. 165 00:15:56.000 --> 00:16:03.000 In market anarchy, true professionals would drive out such unscrupulous competitors. 166 00:16:03.520 --> 00:16:07.960 Your insurance companies would become the state. 167 00:16:07.960 --> 00:16:12.800 On the contrary, the private companies providing legal services would have far less power under 168 00:16:12.800 --> 00:16:16.760 market anarchy than the government currently possesses. 169 00:16:16.760 --> 00:16:22.240 Most obvious, there would be no power to tax or to monopolize service. 170 00:16:22.240 --> 00:16:26.760 If a particular insurance company were reluctant to pay legitimate claims, this would quickly 171 00:16:26.760 --> 00:16:30.560 become known and people would take this into account when dealing with clients of this 172 00:16:30.560 --> 00:16:33.200 disreputable firm. 173 00:16:33.200 --> 00:16:39.060 The fear that, under market anarchy, private individuals would replace politicians overlooks 174 00:16:39.060 --> 00:16:42.160 the true causes of state mischief. 175 00:16:42.160 --> 00:16:47.240 Unlike feudal monarchs, democratic rulers don't actually own the resources, including 176 00:16:47.240 --> 00:16:49.800 human, that they control. 177 00:16:49.800 --> 00:16:56.320 Furthermore, the duration of their rule and hence control of these resources is very uncertain. 178 00:16:56.320 --> 00:17:01.840 For these reasons, politicians and other government employees do not exercise much care in maintaining 179 00:17:01.840 --> 00:17:06.760 the market value of the property in their jurisdiction. 180 00:17:06.760 --> 00:17:10.920 Shareholders of a private company, however, have every interest in choosing personnel 181 00:17:10.920 --> 00:17:15.660 and policies to maximize the profitability of the firm. 182 00:17:15.660 --> 00:17:21.660 All the horrors of the state, onerous taxation, police brutality, total war, are not only 183 00:17:21.660 --> 00:17:28.300 monstrous, but they're also grossly inefficient. It would never be profitable for anarchist 184 00:17:28.300 --> 00:17:35.620 insurance and legal firms to mimic the policies set by governments. 185 00:17:35.620 --> 00:17:39.060 Children The question of children is one of the most 186 00:17:39.060 --> 00:17:45.500 difficult. As a first pass, let us note that, obviously, concerned parents would only patronize 187 00:17:45.500 --> 00:17:50.820 is those schools and live in those apartments or housing complexes where the protection 188 00:17:50.820 --> 00:17:57.820 of their children was of paramount importance to the staff. Beyond this, the basic prohibitions 189 00:17:58.060 --> 00:18:03.180 on parental child abuse and neglect could be stipulated in the marriage contract. In 190 00:18:03.180 --> 00:18:08.220 addition to whatever romance may be entailed, a marriage is ultimately a partnership between 191 00:18:08.220 --> 00:18:13.240 two people, and prudent couples will officially spell out this arrangement with all of its 192 00:18:13.240 --> 00:18:19.960 Benefits and Obligations. For example, before abandoning her career to raise a man's children, 193 00:18:19.960 --> 00:18:26.360 a woman may require a financial pledge in the case of divorce, i.e. dissolving the partnership. 194 00:18:26.360 --> 00:18:31.020 In the same way, a standard clause in marriage contracts could define and specify penalties 195 00:18:31.020 --> 00:18:37.300 for the improper treatment of children. Another point to consider is the enhanced role of 196 00:18:37.300 --> 00:18:43.220 adoption in a free society. Much as it shocks modern sensibilities, there would be a fully 197 00:18:43.220 --> 00:18:49.220 The fully functioning baby market, in which parental privileges were sold to the highest bidder. 198 00:18:50.220 --> 00:18:54.220 Although seemingly crass, such a market would surely reduce child abuse. 199 00:18:55.220 --> 00:19:00.220 After all, abusive or negligent parents are probably the ones most likely to offer their children for adoption, 200 00:19:01.220 --> 00:19:04.220 when loving couples are allowed to pay them handsomely for it. 201 00:19:06.220 --> 00:19:11.220 The controversial issue of abortion, just as other conflicts in a private law system, 202 00:19:11.220 --> 00:19:16.140 The law system would be handled by competing firms setting policies to best match the desires 203 00:19:16.140 --> 00:19:21.780 of their customers. Those people sufficiently horrified by the practice could establish 204 00:19:21.780 --> 00:19:27.180 a gated community in which all residents agreed to refrain from abortion and to report anyone 205 00:19:27.180 --> 00:19:31.100 caught performing one. 206 00:19:31.100 --> 00:19:33.600 Title Registry 207 00:19:33.600 --> 00:19:38.700 In market anarchy, who would define property rights? If someone hands over the money to 208 00:19:38.700 --> 00:19:45.700 This is a complex issue, and I won't be able to give specifics, since the actual market solution would depend on the circumstances of the case and would draw on the legal expertise far greater than mine of the entire community. I can, however, offer some general remarks. 209 00:20:00.300 --> 00:20:07.300 Whatever, if any, the abstract or metaphysical nature of property law, the purpose of public titles is quite utilitarian. 210 00:20:08.700 --> 00:20:14.020 They are necessary to allow individuals to effectively plan and coordinate their interactions 211 00:20:14.020 --> 00:20:20.580 with each other. Specialized firms, perhaps distinct from arbitration agencies, would keep 212 00:20:20.580 --> 00:20:27.260 records on the property titles, either for a specific area or group of individuals. Title 213 00:20:27.260 --> 00:20:33.740 registry would probably be accomplished through a complex hierarchical web of such firms. 214 00:20:33.740 --> 00:20:39.420 The fear of rogue agencies unilaterally declaring themselves owner of everything is completely 215 00:20:39.420 --> 00:20:44.300 unfounded. In market anarchy, the companies publicizing property rights would not be the 216 00:20:44.300 --> 00:20:49.900 same as the companies enforcing those rights. More important, competition between firms 217 00:20:49.900 --> 00:20:56.540 would provide true checks and balances. If one firm began flouting the community norms 218 00:20:56.540 --> 00:21:01.460 established and codified on the market, it would go out of business, just as surely as 219 00:21:01.460 --> 00:21:09.420 as a manufacturer of dictionaries would go broke if its books contained improper definitions. 220 00:21:09.420 --> 00:21:11.380 Infinite Regress 221 00:21:11.380 --> 00:21:16.820 A sophisticated critic may charge that my proposal rests upon a circular argument. How 222 00:21:16.820 --> 00:21:21.460 can people use contracts to define property rights when a system of property rights is 223 00:21:21.460 --> 00:21:28.220 necessary to determine which contracts are valid? After all, Smith can't sell Jones 224 00:21:28.220 --> 00:21:35.220 To see the solution, we must break the problem into two parts. First, we should ask, could 225 00:21:46.000 --> 00:21:52.080 the free market provide a foundation for social interaction? I believe the previous sections 226 00:21:52.080 --> 00:21:58.180 have demonstrated this. That is, I have shown above that if we had a system of property 227 00:21:58.180 --> 00:22:03.900 Now, it is an entirely different question to ask, how are these titles initially defined 228 00:22:03.900 --> 00:22:10.020 and allocated? This is a broad topic and will be addressed in the next section, but to deal 229 00:22:10.020 --> 00:22:15.820 with the issue as it relates to the alleged infinite regress, let us consider contract 230 00:22:15.820 --> 00:22:16.820 law. 231 00:22:16.820 --> 00:22:21.380 is a broad topic and will be addressed in the next section, but to deal with the issue 232 00:22:21.380 --> 00:22:28.940 as it relates to the alleged infinite regress, let us consider contract law. 233 00:22:28.940 --> 00:22:34.340 Contract law is a specific branch of law, much as tort law or constitutional law. It 234 00:22:34.340 --> 00:22:39.020 is used, for example, to determine whether a contract between two parties is legally 235 00:22:39.020 --> 00:22:45.700 binding. Now, surely contract law can't be established in an anarchist system of contractual 236 00:22:45.700 --> 00:22:52.700 Law, for wouldn't this beg the question? No. The contractual pledges made by individuals 237 00:22:52.820 --> 00:22:59.820 would contain provisions for all of the contingencies handled by today's contract law. For example, 238 00:22:59.980 --> 00:23:04.800 the insurance company backing up a customer would be promising, We will make good on any 239 00:23:04.800 --> 00:23:09.780 debts that our client fails to pay, so long as the obligations have been spelled out in 240 00:23:09.780 --> 00:23:15.380 a valid contract, according to the terms described in the standard contract law pamphlet published 241 00:23:15.380 --> 00:23:18.900 by the Ace Legal Firm. 242 00:23:18.900 --> 00:23:23.760 This pamphlet would perhaps require signatures in black ink, notarized oversight for large 243 00:23:23.760 --> 00:23:29.460 sums and the signers to a contract were of sufficient age and sobriety and were not under 244 00:23:29.460 --> 00:23:32.660 duress when the contract was made. 245 00:23:32.660 --> 00:23:37.920 As with all elements of private law, the precise rules governing contract interpretation would 246 00:23:37.920 --> 00:23:42.860 be determined by the, possibly conflicting, desires of everyone through the profit and 247 00:23:42.860 --> 00:23:49.860 and Lost Test. Finally, keep in mind that the ultimate judge in a given case is the 248 00:23:50.020 --> 00:23:55.820 judge. No matter how voluminous the law books or how obvious the precedents, every case 249 00:23:55.820 --> 00:24:01.420 will ultimately depend on the subjective interpretation of an arbiter or judge who must deliver the 250 00:24:01.420 --> 00:24:08.420 ruling. We must never forget that written statutes as such are powerless unless used 251 00:24:08.420 --> 00:24:15.540 by Competent and Equitable Individuals. Only in a competitive, voluntary system is there 252 00:24:15.540 --> 00:24:23.660 any hope for judicial excellence. How do we get there? 253 00:24:23.660 --> 00:24:28.700 The route to a free society will vary according to the history of a region, and consequently 254 00:24:28.700 --> 00:24:34.820 no single description will do. The path taken by North Korean market anarchists will no 255 00:24:34.820 --> 00:24:40.580 No doubt differ from the course of similarly minded individuals in the United States. In 256 00:24:40.580 --> 00:24:46.640 the former, violent overthrow of unjust regimes may occur, while in the latter a gradual and 257 00:24:46.640 --> 00:24:52.520 orderly erosion of the state is a wonderful possibility. The one thing all such revolutions 258 00:24:52.520 --> 00:24:59.520 would share is a commitment by the overwhelming majority to a total respect of property rights. 259 00:24:59.520 --> 00:25:11.520 All societies, no matter how despotic their rulers, must possess a basic degree of respect for property rights, even if such respect is given due to custom rather than intellectual appreciation. 260 00:25:11.520 --> 00:25:18.520 All people know that it is a crime to rape or murder. Even rapists and murderers know this. 261 00:25:18.520 --> 00:25:26.520 Such universal intuitive notions of justice would constitute the foundation for a system of private law. 262 00:25:26.520 --> 00:25:32.520 This widespread agreement would allow for more specific, contractually defined rights to evolve. 263 00:25:32.520 --> 00:25:45.520 The process would be continuous, with one stage of codified property titles and legal rules forming the basis for the next generation of judges and scholars to systematize and extend. 264 00:25:45.520 --> 00:25:50.520 Regular people understand the waste and senselessness of conflict. 265 00:25:50.520 --> 00:25:55.520 They will go to great lengths and make great compromises to achieve consensus. 266 00:25:55.520 --> 00:26:05.520 For example, despite the lack of a formal government, newly arriving miners during the California gold rushes respected the claims of earlier settlers. 267 00:26:05.520 --> 00:26:17.520 To take a more modern example, even inner-city tufts unthinkingly obey the rules in a pick-up game of basketball, despite the lack of a referee. 268 00:26:17.520 --> 00:26:23.120 In market anarchy, free individuals, through their patronage of competing judicial and 269 00:26:23.120 --> 00:26:30.120 insurance firms, would foster a humane and just legal system. Those antisocial individuals 270 00:26:30.120 --> 00:26:35.800 who disrupted the process by blatantly violating obvious property rights would be dealt with 271 00:26:35.800 --> 00:26:40.320 in the ways described earlier. 272 00:26:40.320 --> 00:26:42.940 Legal Positivism 273 00:26:42.940 --> 00:26:47.700 Some readers may wonder how I can propose a replacement for the state's justice system 274 00:26:47.700 --> 00:26:52.860 when I haven't first offered a rational theory of the source and nature of legitimate property 275 00:26:52.860 --> 00:26:59.340 rights. The answer is simple, I don't have such a theory. Nonetheless, I can still say 276 00:26:59.340 --> 00:27:04.620 that a market system of private law would work far more effectively than the state alternative 277 00:27:04.620 --> 00:27:11.020 and that the standard objections to anarchy are unfounded. There is widespread distrust 278 00:27:11.020 --> 00:27:17.820 Most of allowing the market to determine something as crucial as, say, prohibitions on murder. 279 00:27:17.820 --> 00:27:24.340 But the market is just shorthand for the totality of economic interactions or freely acting 280 00:27:24.340 --> 00:27:31.080 individuals. To allow the market to set legal rules really means that no one uses violence 281 00:27:31.080 --> 00:27:38.700 to impose his own vision on anyone else. Murder isn't wrong merely because it fails the market 282 00:27:38.700 --> 00:27:46.660 test, of course not, but its intrinsic immorality will find expression through market forces. 283 00:27:46.660 --> 00:27:51.580 We can all agree contractually to refrain from murder and to abide by the decisions 284 00:27:51.580 --> 00:27:57.380 made by an arbiter should we be tried for such a crime. In this way, we know we are 285 00:27:57.380 --> 00:28:04.740 not violating anyone's rights. Now, after we have reached such agreement and are secure 286 00:28:04.740 --> 00:28:09.900 However in our lives we can let the philosophers and theologians argue about why murder is 287 00:28:09.900 --> 00:28:16.860 wrong. Legal scholars offering a priori constructions of just law would certainly have a place in 288 00:28:16.860 --> 00:28:23.520 market anarchy. After all, their tracts might influence the judge's decisions. However, 289 00:28:23.520 --> 00:28:29.260 in this essay I focus on the market forces that will shape private law, not on the content 290 00:28:29.260 --> 00:28:32.260 of such law. 291 00:28:32.260 --> 00:28:37.660 5. Applications 292 00:28:37.660 --> 00:28:42.700 So far I have concentrated on the critical issues in a theoretical discussion of private 293 00:28:42.700 --> 00:28:49.120 law. Now I would like to illustrate the versatility of such a system in a wide variety of areas 294 00:28:49.120 --> 00:28:55.540 and contrast its performance with the monopolized government alternative. 295 00:28:55.540 --> 00:28:57.780 Product Safety 296 00:28:57.780 --> 00:29:02.700 One of the most common charges against pure laissez-faire is that a completely unregulated 297 00:29:02.700 --> 00:29:08.140 market would leave consumers at the mercy of ruthless businessmen. We are told that 298 00:29:08.140 --> 00:29:13.360 without benevolent government oversight, food would be poisonous, television sets would 299 00:29:13.360 --> 00:29:19.940 explode and apartment buildings would collapse. It's true such critics might concede that 300 00:29:19.940 --> 00:29:25.620 in the long run shady companies would eventually go out of business. But surely someone who 301 00:29:25.620 --> 00:29:31.180 who sells a deadly hamburger should be immediately punished for this, on top of forfeiting future 302 00:29:31.180 --> 00:29:38.060 customers. As with other areas of law, I believe the market would deal with these sort of cases 303 00:29:38.060 --> 00:29:43.780 through contractual pledges. When a consumer bought something, part of the package would 304 00:29:43.780 --> 00:29:49.860 be a guarantee such as, if this product causes injury, as determined by a reputable arbitration 305 00:29:49.860 --> 00:29:56.440 Agency, the customer is entitled to the standard damages. And, just as individuals would likely 306 00:29:56.440 --> 00:30:01.320 need to be backed by a large insurance company before anyone would do business with them, 307 00:30:01.320 --> 00:30:05.620 so too would businesses need to be insured against possible customer lawsuits if they 308 00:30:05.620 --> 00:30:12.200 wanted to attract customers. We immediately see that this system avoids the nightmare 309 00:30:12.200 --> 00:30:19.200 scenarios cooked up by proponents of government regulation. Let's take the case of air travel. 310 00:30:19.860 --> 00:30:25.540 The Federal Aviation Administration guarantees that airplanes have had proper maintenance, 311 00:30:25.540 --> 00:30:32.540 pilots are rested, etc. So customers don't need to worry about their planes crashing. 312 00:30:32.660 --> 00:30:37.680 In contrast, many people allege under a free market, customers would have to keep statistics 313 00:30:37.680 --> 00:30:42.660 on how many crashes each airline had, and they'd have to be experts in airline maintenance 314 00:30:42.660 --> 00:30:48.420 to see which companies were best. But this is nonsense. All a flyer needs to do is make 315 00:30:48.420 --> 00:30:53.340 Make sure that when he buys a plane ticket, part of what he buys is a pledge, backed by 316 00:30:53.340 --> 00:30:58.780 an insurance company, saying, If you are killed in a plane crash, our airline will pay your 317 00:30:58.780 --> 00:31:06.780 estate $1,000,000. Now, since the insurance companies stand to lose millions if the planes 318 00:31:06.780 --> 00:31:12.260 of this airline crash, it is they who will hire trained inspectors, keep meticulous maintenance 319 00:31:12.260 --> 00:31:18.220 logs, etc. They would say to the airlines, Yes, we will underwrite your contractual 320 00:31:18.220 --> 00:31:23.500 All pledges to customers, but only if you follow our safety procedures, allow our inspectors 321 00:31:23.500 --> 00:31:28.960 to look at your planes, work out an adequate pilot screening process, etc., and if we catch 322 00:31:28.960 --> 00:31:33.780 you violating your agreement, we will fine you accordingly. 323 00:31:33.780 --> 00:31:38.580 Since they are out to maximize the profits, the insurance company will gladly pay for 324 00:31:38.580 --> 00:31:42.860 preventative efforts if this will lead to a greater savings in expected payments of 325 00:31:42.860 --> 00:31:46.500 claims to those killed in a crash. 326 00:31:46.500 --> 00:31:53.180 This stands in sharp contrast to the present system. The FAA too sets up guidelines, but 327 00:31:53.180 --> 00:32:00.180 what are its incentives? If there is a plane crash, the FAA itself will get more funding, 328 00:32:00.180 --> 00:32:06.100 since everyone will say the crash shows how awful the free market in airplanes is. Bloated 329 00:32:06.100 --> 00:32:11.060 government agencies always mismanage their resources so that there will be too many mid-leveled 330 00:32:11.060 --> 00:32:17.660 managers and not enough inspectors. Most important, since there is no competition, there is no 331 00:32:17.660 --> 00:32:23.640 benchmark against which to compare the FAA's oversight. Some lowly mechanic might have 332 00:32:23.640 --> 00:32:29.140 a great idea to improve airline safety, but the bureaucratic FAA would take years to 333 00:32:29.140 --> 00:32:33.020 implement it. 334 00:32:33.020 --> 00:32:35.380 Professional Licensing 335 00:32:35.380 --> 00:32:40.500 Closely related to the area of product safety is professional licensing. Let's use the 336 00:32:40.500 --> 00:32:45.300 the example of medicine. Without government regulation, many believe patients would be 337 00:32:45.300 --> 00:32:51.420 at the mercy of quacks. Ignorant consumers would go to whatever brain surgeon charged 338 00:32:51.420 --> 00:32:57.340 the lowest price and would be butchered on the operating table. To prevent this, the 339 00:32:57.340 --> 00:33:03.060 benevolent government must establish guidelines, backed up by guns, to limit those who enter 340 00:33:03.060 --> 00:33:10.060 the medical profession. This, of course, is nonsense. Voluntary organizations would probably 341 00:33:40.500 --> 00:33:47.500 and in malpractice suits, the insurance companies would be very careful when setting their standards. 342 00:33:47.740 --> 00:33:53.380 Such a system would be far preferable to the present one. As it is, the American Medical 343 00:33:53.380 --> 00:33:58.460 Association is little more than a glorified union, which requires immense schooling and 344 00:33:58.460 --> 00:34:03.800 training to artificially restrict the number of doctors in order to drive up their salaries 345 00:34:03.800 --> 00:34:09.780 and healthcare costs in general. Without its monopoly, the AMA would be unable 346 00:34:09.780 --> 00:34:14.780 People to check the growth in alternative therapies such as herbal that sidestep the 347 00:34:14.780 --> 00:34:21.260 current cosy alliance of big pharmaceutical companies, hospitals and the government. 348 00:34:21.260 --> 00:34:25.860 One must also realize that the incentives of the Food and Drug Administration render 349 00:34:25.860 --> 00:34:32.860 it far too conservative. If people die because of a new drug that the FDA has approved, the 350 00:34:32.860 --> 00:34:55.860 The FDA will be blamed, but if people die because the FDA has not approved a new drug, it won't be held accountable. The sickness itself will be blamed. Consequently, many potentially life-saving drugs are currently being withheld from dying patients. In a purely free market, patients would be allowed to take whatever drugs they wanted. 351 00:34:55.860 --> 00:35:01.940 Gun Control 352 00:35:01.940 --> 00:35:07.980 I realize that many libertarians find certain aspects of my system a bit unnerving. Without 353 00:35:07.980 --> 00:35:12.320 unconditional guarantees of abstract rights, it seems there would always be a danger of 354 00:35:12.320 --> 00:35:18.460 smuggling the State in through the back door. Rather than dance around such issues, I'll 355 00:35:18.460 --> 00:35:23.940 give the best example I can think of to demonstrate the difference between the conventional libertarian 356 00:35:23.940 --> 00:35:28.100 Gun Control 357 00:35:28.100 --> 00:35:33.140 As we'll see, I don't think my approach is inconsistent with the libertarian creed, but 358 00:35:33.140 --> 00:35:39.860 I do think it will, at least initially, make many libertarians uncomfortable. 359 00:35:39.860 --> 00:35:44.060 The standard arguments over gun control go like this. 360 00:35:44.060 --> 00:35:48.620 Opponents say gun control will render people defenseless against criminals and leave citizens 361 00:35:48.620 --> 00:35:51.540 at the mercy of their government rulers. 362 00:35:51.540 --> 00:35:55.980 Only when someone has actually used his gun against innocence can the law rightfully step 363 00:35:55.980 --> 00:36:02.980 in. Proponents of gun control, however, argue that this position is too dogmatic. Surely 364 00:36:02.980 --> 00:36:08.480 some preventative measures are justified in the public interest. 365 00:36:08.480 --> 00:36:12.980 As with most debates held within the context of a government legal system, I think both 366 00:36:12.980 --> 00:36:18.280 sides have legitimate points. Certainly we cannot trust the government to protect us 367 00:36:18.280 --> 00:36:24.280 once it has disarmed us. But on the other hand, I feel a bit silly arguing people should 368 00:36:24.280 --> 00:36:30.160 be able to stockpile atomic weapons in their basement. A strict interpretation of many 369 00:36:30.160 --> 00:36:36.560 libertarian arguments would mean just that. Fortunately, the system of private law that 370 00:36:36.560 --> 00:36:43.420 I have described allows us to sidestep this apparent trade-off. Recall that the penalties 371 00:36:43.420 --> 00:36:47.220 Insurance companies for injury and murder would be established by contractual pledges 372 00:36:47.220 --> 00:36:53.340 underwritten by insurance companies. People allow Joe Smith onto their property because 373 00:36:53.340 --> 00:36:57.820 they know if he hurts someone, either he will directly pay the damages or his insurance 374 00:36:57.820 --> 00:37:04.460 company will. The insurance company makes its money by charging appropriate premiums 375 00:37:04.460 --> 00:37:10.260 tailored to the individual client. If Joe Smith has been deemed guilty in the past of 376 00:37:10.260 --> 00:37:15.540 of Violent Behaviour, his insurance premiums will be accordingly higher. 377 00:37:15.540 --> 00:37:19.800 But there are other factors that an insurance company would take into account when setting 378 00:37:19.800 --> 00:37:26.600 premiums besides past behaviour, and one of these factors would undoubtedly be, what sort 379 00:37:26.600 --> 00:37:32.660 of weapons does this client keep around the house? After all, if the insurance company 380 00:37:32.660 --> 00:37:37.660 is going to agree to pay, say, ten million dollars to the estate of anyone Joe Smith 381 00:37:37.660 --> 00:37:42.420 If Joe Smith kills, the company will be very interested to know whether Joe Smith keeps 382 00:37:42.420 --> 00:37:48.740 sword-off shotguns, let alone atomic weapons, in his basement. Someone who keeps such weapons 383 00:37:48.740 --> 00:37:53.180 is much more likely to harm others as far as the insurance agency is concerned, and 384 00:37:53.180 --> 00:37:59.380 so his premiums will be that much higher. In fact, the risk of a client who kept nuclear 385 00:37:59.380 --> 00:38:04.740 or chemical, biological, etc. weapons would be so great that probably no policy would 386 00:38:04.740 --> 00:38:07.100 be offered. 387 00:38:07.100 --> 00:38:13.140 This approach is superior to the government one. Truly dangerous weapons would be restricted 388 00:38:13.140 --> 00:38:18.720 to individuals willing to pay the high premiums associated with their ownership. Kids couldn't 389 00:38:18.720 --> 00:38:24.620 buy bazookas at the local Kmart. On the other hand, there wouldn't be a slippery slope 390 00:38:24.620 --> 00:38:30.360 that there is now with all government gun control. We would never fear that all handguns 391 00:38:30.360 --> 00:38:35.280 would be banned, since the insurance companies would be out strictly to make profit, and 392 00:38:35.280 --> 00:38:41.800 it would be far more profitable to allow people to keep handguns and pay slightly higher premiums. 393 00:38:41.800 --> 00:38:47.920 As with all contracts under my system, those regulating guns would be completely voluntary, 394 00:38:47.920 --> 00:38:54.040 involving no violation of libertarian rights. The insurance company is not forcing people 395 00:38:54.040 --> 00:38:59.800 to give up their bazookas. All it is saying is this, if you want us to guarantee your 396 00:38:59.800 --> 00:39:05.660 or contracts with others, you can't own a bazooka. The insurance companies are the just 397 00:39:05.660 --> 00:39:12.580 owners of their money and it is thus perfectly within their rights to make such a request. 398 00:39:12.580 --> 00:39:17.760 This is far preferable to the government system which has no accountability. If politicians 399 00:39:17.760 --> 00:39:22.700 ban guns and cause thousands of people to be victimized by a crime, nothing happens 400 00:39:22.700 --> 00:39:28.440 to them. But if an insurance company makes unreasonable demands of its clients, they 401 00:39:28.440 --> 00:39:34.640 They will switch to a different company and it will quickly go out of business. 402 00:39:34.640 --> 00:39:36.780 Dangerous Criminals 403 00:39:36.780 --> 00:39:41.640 The supposed trade-off between individual liberty and public safety is also exemplified 404 00:39:41.640 --> 00:39:46.440 in the debates over legal technicalities. 405 00:39:46.440 --> 00:39:51.680 Conservatives like to complain about cases where a known murderer is set free by a bleeding-heart 406 00:39:51.680 --> 00:39:56.360 judge simply because the police coerced a confession or forgot to read the suspect's 407 00:39:56.360 --> 00:40:03.360 Rights. Liberals, such as Alan Dershowitz, respond that although such cases are unfortunate, 408 00:40:04.080 --> 00:40:10.600 they are necessary to keep the police in line. As with gun control, I am sympathetic to both 409 00:40:10.600 --> 00:40:16.720 sides in this debate, and again I think my system can avoid both sorts of absurdities. 410 00:40:16.720 --> 00:40:22.180 To see this, let's suppose that through some quirk a clearly guilty murderer has technically 411 00:40:22.180 --> 00:40:25.580 have really not violated any contractual provisions. 412 00:40:25.580 --> 00:40:30.580 Or suppose an arbiter who would only be hearing murder cases because of past excellence in 413 00:40:30.580 --> 00:40:36.340 his rulings, for some reason makes an outrageous ruling and finds someone innocent of murder 414 00:40:36.340 --> 00:40:40.900 despite overwhelming evidence to the contrary. 415 00:40:40.900 --> 00:40:44.980 Because he was technically acquitted, the murderer would not have to pay damages to the 416 00:40:44.980 --> 00:40:46.940 estate of his victim. 417 00:40:46.940 --> 00:40:51.940 However, the rules governing this episode would be quickly revised to prevent its recurrence. 418 00:40:51.940 --> 00:41:21.940 There is another difference. Under a government system, someone acquitted on a technicality gets off scot-free. But under the private law system I've described, the killer's insurance company could still increase the payments they charge. It wouldn't matter whether their clients have been actually convicted of a crime, their only complaint is that they have been convicted of a crime. 419 00:41:21.940 --> 00:41:31.940 The only concern would be the likelihood that he would be convicted of a different crime in the future, because then they'd have to pay the damages. 420 00:41:31.940 --> 00:41:35.940 This analysis also resolves the issue of parole. 421 00:41:35.940 --> 00:41:45.940 Although most crimes would involve financial restitution rather than imprisonment, there would still be individuals who were too dangerous to be allowed loose. 422 00:41:45.940 --> 00:41:50.620 Insurance companies would determine this threshold. As long as a company were willing to pay for 423 00:41:50.620 --> 00:41:56.100 any damages a criminal might commit in the future, people would offer him work, let him 424 00:41:56.100 --> 00:42:02.020 rent a room, etc. Rehabilitation would thus be in the great financial interest of the 425 00:42:02.020 --> 00:42:07.140 companies in order to increase their pool of paying customers. 426 00:42:07.140 --> 00:42:13.720 On the other hand, truly dangerous individuals would not be paroled. Right now the government 427 00:42:13.720 --> 00:42:18.600 has psychologists and other experts decide when sex offenders and murderers 428 00:42:18.600 --> 00:42:21.480 should be let back on the streets. 429 00:42:21.480 --> 00:42:26.480 Since they have no accountability, these ivory tower intellectuals often test out 430 00:42:26.480 --> 00:42:32.160 their theories on the hapless victims of recidivist criminals. 431 00:42:32.160 --> 00:42:35.480 6. Conclusion 432 00:42:35.480 --> 00:42:40.800 This essay has outlined the mechanics of purely voluntary market law. 433 00:42:40.800 --> 00:42:45.400 The main theme running throughout is that competition and accountability would force 434 00:42:45.400 --> 00:42:51.760 true experts to handle the important decisions that must be made in any legal system. It 435 00:42:51.760 --> 00:42:58.760 is a statist myth that justice must be produced by a monopoly institution of organized violence. 436 00:42:59.640 --> 00:43:04.920 The arguments of this essay are admittedly incomplete. Surely more thought is needed 437 00:43:04.920 --> 00:43:11.100 before a move to market anarchy becomes feasible. However, I ask that the reader resist the 438 00:43:11.100 --> 00:43:18.380 temptation to dismiss my ideas as unworkable without first specifying in what sense the 439 00:43:18.380 --> 00:43:21.380 government legal system works.