Of all the libertarians who advocate free-market anarchism, or "anarcho-capitalism," the one with the most impressive credentials is Professor Murray N. Rothbard. He has written a monumental economic treatise, Man, Economy and State (1); he has studied under Ludwig von Mises; he teaches economics at Brooklyn Polytechnic Institute; and he has recently contributed articles to the New York Times. In 1970, Rothbard stated his case against the existence of government in the first chapter of a new book, Power and Market (2).
Rothbard's views on government merit an in-depth critical examination for several reasons: 1) Anarchism is becoming a popular and fashionable libertarian position. 2) Rothbard is the leading theoretician of that viewpoint. 3) Even though Chapter 1 of Power and Market is very short (a little over six pages), it presents the chief arguments used in everyday debate between free-market anarchists and advocates of limited government.
The first chapter of Power and Market, which this article will be concerned with, (3) is entitled "Defense Services on the Free Market." After a few introductory paragraphs, Rothbard says:
A supply of defense services on the free market would mean maintaining the axiom of the free society, namely, that there be no use of physical force except in defense against those using force to invade person or property. This would imply the complete absence of a State apparatus or government, for the State, unlike all other persons and institutions in society, acquires its revenue, not by exchanges freely contracted, but by a system of unilateral coercion called "taxation." Defense in the free society (including such defense services to person and property as police protection and judicial findings) would therefore have to be supplied by people or firms who (a) gained their revenue voluntarily rather than by coercion and (b) did not—as the State does—arrogate to themselves a compulsory monopoly of police or judicial protection. Only such libertarian provision of defense service would be consonant with a free market and a free society. Thus, defense firms would have to be as freely competitive and as non-coercive against noninvaders as are all other suppliers of goods and services on the free market. Defense services, like all other services, would be marketable and marketable only.
There are several things wrong with Rothbard's statements above. The most serious deficiency is his failure to define precisely what he means by "defense." Does he mean merely protection of an individual's property, or does he also subsume under the concept the property's recovery or replacement? Does it include incarceration of a criminal after a crime has been committed, or does it simply refer to the force used to prevent a criminal from carrying out his mission? These questions are crucial if one is to understand and attempt to apply anarchist (or any other) principles to society at large. Rothbard does not answer them.
When Rothbard states that defense firms must be "noncoercive against noninvaders," he is making the implicit assumption that it is known who is an invader and who isn't. This is not always the case, of course; and the system that Rothbard proposes, with its absence of the power of subpoena, can make it extremely difficult to discover and prosecute criminals after the fact.
To forestall confusion on another key issue, let us examine the sense in which the State has "a compulsory monopoly on police or judicial protection." In the United States, for example, private agencies exist which perform every type of police or judicial function imaginable. The government is a "compulsory monopoly" in only two senses: (a) citizens are forced to support it, via taxation, whether they want to or not, and (b) people are legally required to use the government as the sole agency for retaliatory (not immediate defensive) force. Under the Objectivist and some other libertarian concepts of limited government, only the second condition would apply.
Rothbard's next paragraph is notable mainly for a glaring error of omission:
Those economists and others who espouse the philosophy of laissez faire believe that the freedom of the market should be upheld and that property right must not be invaded. Nevertheless, they strongly believe that defense service cannot be supplied by the market and that defense against invasion of property must therefore be supplied outside the free market, by the coercive force of the government. In arguing this, they are caught in an insoluble contradiction, for they sanction and advocate massive invasion of property by the very agency (government) that is supposed to defend people against invasion! For a laissez faire government would necessarily have to seize its revenues by the invasion of property called taxation and would arrogate it itself a compulsory monopoly of defense services over some arbitrarily designated territorial area. The laissez faire theorists (who are here joined by almost all other writers) attempt to redeem their position from this glaring contradiction by asserting that a purely free market defense service could not exist and that therefore those who value highly a forcible defense against violence would have to fall back on the State (despite its black historical record as the great engine of invasive violence) as a necessary evil for the protection of person and property.
In making the above statements, Rothbard ignores the most prominent and influential libertarian advocate of limited government: Ayn Rand. (To my knowledge, he does not mention Rand in Power and Market at all!) Ayn Rand has stated that she is opposed to compulsory taxation and that she does not believe there is any such thing as a "necessary evil." This is the position taken by the majority of Objectivists and other libertarians who advocate limited government. Rothbard has attempted to discredit limited-government libertarians by attributing to them views of traditional laissez fairists which most advocates of limited government today do not hold.
Rothbard's statement that laissez faire theorists "strongly believe that defense service cannot be supplied by the market" is misleading. There are any number of defense services, from door locks to armed guards, that are supplied through the free market every day.
The laissez fairists offer several objections to the idea of free-market defense. One objection holds that, since a free market of exchanges presupposes a system of property rights, therefore the State is needed to define and allocate the structure of such rights. But we have seen that the principles of a free society do imply a very definite theory of property rights, namely, self-ownership and the ownership of natural resources found and transformed by one's labor. Therefore, no State or similar agency contrary to the market is needed to define or allocate property rights. This can and will be done by the use of reason and through market processes themselves; any other allocation or definition would be completely arbitrary and contrary to the principles of the free society.
Considering the fact that there is wide disagreement (even among libertarians) about the nature and implementation of property rights, it would be sheer folly to attempt to create a society in which there is no institution to settle disputes over property. Yet this is exactly what Rothbard proposes.
Let's take a look at Rothbard's proposed solutions to disputes within a society. Rothbard poses a "legal problem" as follows:
Suppose that Jones subscribes to Defense Agency X and Smith subscribes to Defense Agency Y.…Smith alleges that he has been assaulted, or robbed, by Jones; Jones denies the charge. How, then, is justice to be dispensed? Clearly, Smith will file charges against Jones and institute suit or trial proceedings in the Y court system, although there can be no subpoena power, since any sort of force used against a man not yet convicted of a crime is itself an invasive and criminal act which could not be consonant with the free society we have been postulating. If Jones is declared innocent, or if he is declared guilty and consents to the finding, then there is no problem on this level, and the Y courts then institute suitable measures of punishment. But what if Jones challenges the finding? In that case he can either take the case to his X court system, or take it directly to a privately competitive Appeals Court.…
Rothbard has not, in fact, solved the problem at all. Suppose Jones refuses to recognize or cooperate with Smith's Y court in any manner? Does this give the Y court the right to take action it deems appropriate against Jones? Must every individual in an anarchist society defend himself against every "private court" that initiates proceedings against him?
Let's return for a moment to Smith and Jones, who have taken their dispute to a private Appeals Court. What next?
The Appeals Court decision can then be taken by the society as binding. Indeed, in the basic legal code of the free society, there probably would be enshrined some such clause as that the decision of any two courts will be considered binding, i.e., will be the point at which the court will be able to take action against the party adjudged guilty.
Here, finally, is the key to Rothbard's system: a "basic legal code," and a monopoly code at that, which binds every member of the anarchist "society!" To discover just what kind of Pandora's Box Rothbard has now opened, let's turn the tables and ask the same kind of questions that anarchists are so fond of asking advocates of limited government:
Is this code binding on every member of the anarchist society, or is anyone free to "secede" from its application? Will the code apply to the entire world, or just to certain geographical areas? If the latter is the case, how will the boundaries of the various societies be determined? By what means will the code be established in the first place?
Actually, we are dealing here with a pseudo-concept. Rothbard explicitly rejects the idea of government; consequently, his "basic legal code" becomes a mere scrap of paper. Any attempt to enforce such a code, while retaining a society without government, will result in insoluble conflicts.
For instance, project a society with several defense agencies, each pledged to abide by the society's "basic legal code." In the midst of this society, a new defense agency is formed, which rejects this "basic legal code" and sets up its own "competing code." The other defense agencies are now faced with two choices: to allow this agency to remain in existence, or to forcibly remove it from the market.
If the new agency is allowed to remain in existence, arbitration will become unwieldy and eventually impossible. The new agency will be operating from a different set of principles, and it will be impossible to settle a dispute to the satisfaction of all parties involved through the use of "competing principles."
If the new agency is forced out of business by the others, then the established agencies will have acted as "coercively" as the governments they replaced.
Of course, there is no reason to assume that such a situation would even have a chance to develop. More likely, upon the establishment of a free market anarchist society, each of the new competing defense agencies would very quickly adopt its own "legal code" to satisfy its particular set of customers. These codes would "compete" with each other, as each company would claim that its own code contained the best means of achieving justice. Legal chaos would result.
Divorced from the concept of government, legality cannot have any meaning; without a lawmaking body, there can be no law (in the legal sense, as distinct from natural law). What would remain would be rules, regulations and procedures set forth by each of the defense agencies in an anarchist society.
Anybody can make up a set of proposed rules for social behavior and even implement these rules to the extent that others are willing to abide by them. But these proposed rules do not become laws by virtue of the fact that someone chose to promulgate them. Similarly, any number of free-market defense agencies can create and enforce any rules they choose to; but this action does not give such rules any legal status whatever.
In fact, the concept of legality can have no place in a free market anarchist society. Even if a situation exists in which 99 percent of the people and defense agencies subscribe to that society's "basic legal code," there is no logical means (given their premises) by which anarchists can claim that their code has any more legal standing than the code or codes which the other one percent of the population subscribe to. To be sure, they may claim that their code is morally superior; and they may even be right. But upon what basis can they claim that their code is the legal code? Tradition? The will of the majority? No way! Remove the concept of government, and the concept of legality cannot stand.
Rothbard's attempt to "enshrine" a monopoly legal code while rejecting monopoly government conjures up other troublesome implications. For instance, judicial procedures would be determined, not by objective and uniform standards, but by some mysteriously determined "social agreement." To quote Rothbard on judicial appeals:
Every legal system needs some sort of socially agreed upon cutoff point, a point at which judicial procedure stops and punishment against the convicted criminal begins.
In other words, every individual living in a given anarchist society, under a given "legal system," is bound by that "socially agreed upon cutoff point," whether he as an individual agrees with it or not.
Even if all the defense agencies agree to support a single "basic legal code," there may be as many interpretations of that code as there are agencies. The decisions of one agency would not necessarily set a "precedent" for the other agencies to observe. The uniformity of legal interpretation potentially available under a hierarchical system of government courts collapses in free market anarchism. An individual is subject to prosecution whenever any defense agency interprets his actions as violating the rights of one of its clients.
In a society with a libertarian limited government, a person would have the means of discovering how that government interprets its laws, through court decisions. In a free market anarchist society with a constitution (if such a mongrel were possible) the "basic legal code" might be objective, but interpretations of the code would vary among the defense agencies, making it impossible for anyone to discover or project how a law might apply in a given case. The lack of uniform standards and interpretations would create a situation in which truly irreconcilable differences would have to be settled by naked force.
The central contradiction in Rothbard's anarchism is the attempt to set up a legal system in the absence of government. Should anyone doubt the importance Rothbard attaches to legality, he says elsewhere in Power and Market (4):
Failure to establish such a code of law would tend to break down the free market, for then defense against invasion could not be adequately achieved.
If a code of law is necessary to maintain a free market, then so is its means of enforcement; in other words, government.
Charles Barr has a B.A. in History from the University of Georgia. He heads the Libertarian Alternative, an activist libertarian organization in Los Angeles, and also works as a computer programmer.
NOTES AND REFERENCES
 Published in hardcover and paperback by Nash Publishing Co., 9255 Sunset Blvd., Los Angeles, California 90069.
 Published in hardcover and paperback by Institute for Humane Studies Inc., Menlo Park, California.
 All quotations in this article are taken from Chapter 1 of Power and Market and are not otherwise cited herein by page number.
 Pg. 123 (paperbound edition).