The following essay is addressed to those discussions concerning the existence of the State; in particular to those arguments which deny the need for the State altogether; to those which advocate complete anarchism. It is the thesis of this essay that anarchism cannot be a viable, lasting system of social organization; indeed, that human society is not possible without the existence of a State. To put it more strongly, that what one calls society (peaceful cooperation of men under the principle of the division of labor) and what one calls the State (the social apparatus of compulsion and coercion which demands a monopoly of force over the area under its control) are so inseparably linked that it is a non sequitur even to advocate the elimination of the State as if it were just a matter of enlightened decision whether to have one or not.
When hypothetically considering the life of a completely autarkic existence of isolated individuals, questions of State and society become meaningless; for there is no essential difference between the type of interaction among human beings in such a State and that exhibited among animals in the jungle (all become enemies in a common struggle for survival). There is no peaceful cooperation; rather, there prevails pitiless biological competition (2). In such a state, autarkic man is not free; in order successfully to remove felt-uneasiness, he must continually adjust his endeavors to the conditions of his environment (which in the autarkic state also includes the enormously intelligent and cunning animal: man). Because of man's relatively small and weak physical stature, his ability to reason becomes the foremost tool in his struggle to survive.
Now to the extent that man's reason is capable of comprehending the benefits to be derived from peaceful cooperation under the principle of the division of labor, he then comes to view his fellow creatures not as enemies along with the gorillas and sharks, but rather as friends, as collaborators, whose rightly understood (long-run) interests are in harmony rather than in conflict. Thus, we have the nexus for society and its progressive intensification.
As exemplified by autarkic survival and societal division of labor, there are two fundamentally different kinds of interaction among human beings: peaceful, voluntary, mutual interaction; and coercive involuntary, nonmutual interaction. The former is the essential feature of the market process of the market economy. The basic interaction is one of exchange between two individuals which results in a situation that benefits both individuals (as they each view the situation). The theory of this process of exchange is a significant corollary of the theory of subjective value. To restate somewhat differently, each of two individuals acts to cooperate with the other individual so as to induce the other voluntarily to act in a mutually cooperative manner such that each individual views the result of this interaction as an improvement in his own welfare.
In contrast, the latter form of interaction is fundamentally different from the market principle discussed above. In this form of interaction, we have one individual acting to bring about a situation (requiring the involvement of another individual) which the initiating individual views as an improvement but which the other views as a detriment to his own welfare and thusly would not have supplied the interaction desired by the initiating individual but for the application or threat of violence by that individual. Thus, instead of mutual, voluntary (market) interaction, we have nonmutual, coercive (nonmarket) interaction.
We have thus far said that coercive interaction is a nonmarket activity (viz: that coercive interaction is itself nonmarket) but have not analyzed whether the market can successfully direct the use of this kind of activity the content of which is nonmarket in character. (3) Nor has it been questioned whether the use of coercive activity is necessary at all in human society. Let us assume with regard to the second question that every individual in our hypothetical world is fully committed to peaceful, mutual interaction; that there are no mentally sick whose actions might antagonize others; and that there are no antisocial individuals whose actions are intentionally antagonistic to others (stealing, killing, rape, etc.). (4) Nevertheless, there still arise in the normal course of market affairs conflicts the successful resolution of which requires a system of rules and an agency with the power to enforce those rules.
The most important of these conflicts are business contract disputes arising from unforeseen, unanticipated contingencies which render the prior agreement unacceptable to either one or both parties. (5) It is recognized that many of these conflicts (due to mistakes, unforeseen events, etc.) can be and are successfully resolved by the parties themselves (or with the aid of lawyers and other consultants), but there still remain a significant number of these disputes which, for many and varied reasons according to the particular circumstances, the involved parties are unable to resolve themselves. The former are simply renegotiated voluntary agreements, while the latter remain as disputes the resolution for which proved unsuccessful through a voluntary, transactional process: thus their resolution is beyond the market principle. (6)
Furthermore, agreements which involve conditions for renegotiation and ones which set up automatic arbitration procedures do not eliminate voluntarily unresolvable disputes; for there can arise unforeseen events and unanticipated contingencies of a nature to make some or all of the terms of the agreement unacceptable to one or both parties regardless of prior stipulated side conditions, re-evolution procedures, and automatic arbitration procedures.
The basis for the disputes thus far discussed (and also the reason for the impossibility of their elimination) is due to the inherent imperfection of human knowledge and uncertainty of the future, for it must be understood that the uncertainty of the future is not anything analogous to some auxiliary datum which, if recognized as a relevant factor, can be eliminated by means of prior arrangement procedures (such as automatic arbitration agreements). Such prior arrangements can indeed aid in resolution of possible disputes, but by no means can they eliminate the inherent future indeterminacy which may result in unanticipated events which could cause contract disputes not necessarily all of which can be voluntarily resolved in spite of the helpful foresight and previous commitments to voluntary settlement embodied in prior arbitration, etc. provisions. As long as this is the case, there will always arise such disputes some of which are unresolvable through voluntary renegotiation by the parties and their consultants. In order to illustrate, a few cases are chosen from those often cited in beginning legal texts: (7)
Wood v. Boynton (8) Here we have a mutual mistake by both parties involved in a business transaction; quoting Judge Taylor,
…it appeared that on and before the twenty-eighth of December 1883 the plaintiff was the owner of and in possession of a small stone of the nature and value of which she was ignorant; that on that day she sold it to one of the defendants for the sum of one dollar. Afterwards it was ascertained that the stone was a rough diamond and of the value of about $700. After hearing this fact the plaintiff tendered the defendants the one dollar, and ten cents as interest, and demanded the return of the stone to her. The defendants refused to deliver it, and therefore she commenced this action.
Sherwood v. Walker (9) is a similar case; in it, however, the court ruled differently than in the previous case). The dispute arose over a contract concerning the sale of a cow. The seller agreed to sell the cow at an unusually "low" price because that particular cow was thought to be barren. Before, however, the actual transfer of the cow, it was learned that the cow was not barren (rendering the cow of much greater market value), and the seller refused to sell the cow at the agreed price; whereupon, the buyer sued the seller for breach of contract.
Leonard vs. Howard (10). This case involved a dispute between two companies; one which contracted the other for plumbing work in a building constructed by the first company. The plumbing company made a mistake in its estimate resulting in a low unprofitable bid, and, upon realization of the error, refused to install the contracted services at the agreed bid. The construction company sued the plumbing company for performance of contract.
Geremia vs. Boyarsky (11) is similar to the above case, except that the buyer was aware during the settlement of the contract that the bid was too low, that the seller must have made a mistake; but the buyer went ahead, attempting to use the contract to force the sellers to honor the unprofitable bid. (The courts decided for the buyer in Leonard vs. Howard, but against the buyer in Geremia vs. Boyarsky.)
The following three cases more clearly represent examples of unanticipated events rather than of error and mistake.
Paradine vs. Jane (12). The buyer had rented some land from the seller but over a certain period of time refused to pay rents because an invading army had expelled him from the land, preventing him from realizing any income from the land during that period. The seller brought suit to recover unpaid rents.
Taylor vs. Caldwell (13). One party entered into an agreement to rent a hall from another party in order to have four concerts therein. However, in the meantime, before the beginning of the concerts, a fire destroyed the hall resulting in the cancellation of the concerts. The renters sued for losses suffered due to cancellation of the concerts.
Krell vs. Henry (14). A contract was entered into in which one party agreed to pay a sum to rent a flat from the other party on certain days on which it had been announced that the coronation process (for King Edward VII of England in 1902) would take place along the avenue passing beneath the flat. A deposit was paid when the contract was agreed upon. When the processions did not take place on the dates announced, the renting party refused to pay the balance of the agreed rent. The owner of the flat then sued for the unpaid rent.
All of the above cases represent actual disputes the resolution for which requires the decision of a court. (15) It should also be clear that these represent only the most minute fraction of the literally thousands and thousands of cases which could be laboriously cited. The important point is that there is no means of eliminating the unforeseen contingencies which make the performance of voluntary arrangements either unacceptable or impossible to either party or to both, and that in a significant number of these disputes, a system of law and courts, and some coercive apparatus to enforce the laws and court decisions, is necessary to resolve them.
Another related class of disputes are tort disputes which arise from the negligence of one or both parties of the dispute. They are related because the dissatisfaction to one or both parties resulting from the negligence would have been avoided (in the assumed world of nonintentionally antagonistic behavior) if the unforeseen events caused by the negligence had been anticipated—if the negligent party had foreseen the specific consequences (16) of his actions, that is, if knowledge of the future were perfect. The basic situation is one in which two parties (A and B) have not directly coercively interacted, but one of the parties (A) has experienced dissatisfactions related to an event at least partially contributed to by B for which A believes B ought to bear at least a portion of the responsibility (should at least partially contribute toward what A considers an acceptable removal of his dissatisfaction).
In both dispute classes, A and B are not directly, intentionally antagonistic but are nevertheless involved in a dispute (through prior contract or through negligent act) which would not have occurred if there were no uncertainty of the future.
Further similarities (and dissimilarities) could be pursued, but the above development on contract disputes is sufficient for the present discussion to analyze tort disputes. As above, either the tort originated dispute will be successfully worked out through voluntary, private negotiation between the involved parties or, this voluntary negotiation having failed, the resolution of the dispute will require a system of laws and courts, and coercive apparatus if necessary to enforce those laws and court decisions. Thus, in both contract and tort disputes, a system of laws, courts, and police is necessary to prevent coercive interaction between the parties of those disputes which could not be voluntarily resolved.
If we now drop the assumption of the absence of antisocial behavior on the part of some individuals due to sickness or due to antisocial intentions (theft, property and personal damage, etc.), then there is another additional source of conflict. In these cases, however, the postulate of antisocial behavior implies that there is no other method of resolution beside the threat or application of violence by some agency. (17) If this were not the case, then every individual would be at the mercy of his stronger fellows (whether intentional or due to some form of sickness).
In a broader context, it is because situations do arise for which, from the point of view of some individuals, coercive interaction is deemed appropriate that conflicts can and will arise again and again in human society. As long as the imperfection of knowledge and the uncertainty of the future remains as basic underlying datums of human action and so long as some individuals in some circumstances deem coercive action suitable, there will always necessarily arise the indispensable need for a system of laws, a court system, and the police apparatus to enforce the laws and the decisions of the courts.
The last and most significant question of the essay still remains. Can the market system handle these necessary coercive functions described above? (Could private protection agencies and private court systems provide a viable alternative to the State?) Much of the previous development has provided grounds for a negative answer to this question. Returning to our original world in which everyone is committed to peaceful, mutual interaction and in which there is no physical or mental sickness of a kind that could result in antagonistic behavior, we have seen that tort and contract disputes nevertheless arise and a significant portion are unresolvable through voluntary arrangement and renegotiation respectively. If we try to imagine a state of affairs in which there are only privately operated protection agencies and private courts from which disputing parties can procure services in the same manner as other services offered on the market, then unsolvable difficulties arise. Each party may attempt to secure the services of whatever court would favor his point of view and, consequently, there would be the emergence of courts seeking clients some of whom hold different, antagonistic beliefs and viewpoints (there might even emerge courts soliciting individuals with certain religious, political, and moral views along with courts emphasizing different principles in tort, liability, and contract disputes). The conflicting parties could also look for protection agencies which would enforce their views and opinions, and as it has already been shown that disputes do arise (and that there is very rarely if ever complete unanimity of ideas) then we can expect a variety of different private police agencies to emerge with each serving various parties some of whom hold antagonistic positions and ideas. In such a state of affairs, we do not have a system of rules and a court system with the power to enforce its decisions but, rather, we have separate conflicting courts and police agencies, each attempting to serve clients whose differing views could not be resolved through voluntary negotiation. This situation is analogous to the myriad of problems concerning jurisdictional disputes between individuals and courts of different geographical regions, states, and nations. For example: A does something antagonistic to B and then travels to another area (or hires the services of another police agency and court) where B cannot obtain acceptable legal redress (as he views it) short of the armies (or protection agency) of his area invading those of A, thus initiating conflict rather than successfully resolving the dispute.
If there is not a sufficient degree of coordination and consistency amongst these private courts and police agencies to the voluntary satisfaction of the vast majority of those individuals purchasing the services of these agencies, then one of two alternatives would result: warring factions, each with its own court and protection agency, where the result of these conflicts is the complete disintegration of societal bonds; or warring factions as above, but instead of leading to the disintegration of society, leading rather to the emergence of some dictator or band of men promising order and coordination (or the emergence of a large combination of individuals into a majority supporting a general apparatus of compulsion and coercion through parliamentary or democratic procedures). The significant understanding is that the successful functioning of a market court and police system requires a great degree of doctrinal and interjurisdictional coordination and consistency between the various privately run agencies. There must be some acceptable (to the vast majority) system of general rules and procedures relating and regulating the activities of these private agencies; without such a general overseeing system of rules and procedures, a system of private protection and private courts would not result in decisions which a nonnegligible proportion of disputing parties would voluntarily accept (thus resulting in coercive interaction among the parties bringing about either one of the two possibilities mentioned above).
It is precisely because in such a completely voluntary, market world, that the disputing parties have the unrestricted choice to select different courts whose decisions may not match and which may not be acceptable to either one or both parties that these disputes may not be resolved without coercive interaction of the parties. Even if there was for some reason only one privately operated court or if both parties chose the same private court and agreed to abide by its decision, this would not prevent either one of the parties from refusing to accept the court's decision. (The application of force on the refusing party would require for its successful functioning another system of general rules concerning agreements made with these private courts and an agency supported by the majority with the power to enforce these rules. Otherwise, conflicts would break out between the refusing parties and the private courts and police agencies on a sufficiently general scale to result in the pattern of warring factions described above.)
If one examines the private police agencies more closely, it is also the case that unless the activities of these police agencies are very carefully limited and coordinated into a general system of acceptable uses, applications, and purposes ascribed to by the majority of interacting individuals these agencies would not bring about "protection" and "resolution" but rather would also result in a general pattern of warring factions.
Therefore, we have a general system of laws and procedures which not only determine the legitimate use and application of coercive activity of the protection agencies but also arbitrate the decisions of the private courts into a system of continuity and consistency of legal principle; and we have a general agency of force with the power to enforce these laws and procedures if necessary. (We have a State, its laws, and the agency of government to enforce the laws.) To restate, the successful operation of a private police and court system requires an overseeing system of rules and procedures which function independently from the private agencies and whose successful operation requires the consent and support of the majority of interacting individuals (18) (viz. acts in accordance with the ideas of justice and equity of the large majority of individuals, not the funds of privately soliciting clients involved in disagreements.
What those people pass over who envision only a market system of law and protection is that the functioning of a market is based solely on voluntary mutual cooperation. But we are dealing in precisely those areas where there are actual disputes in which voluntary renegotiation has failed; in which one or both parties may consider some form of violence and coercion as necessary and justified; and most significantly in which there is no system of rules which the disputants must adjust their actions to or an arbitrating apparatus whose decisions they must follow. Indeed, in our completely market world there is no element which says the disputants must adjust to any limitation of conduct or consult any court regardless of the possibly antagonistic consequences of their actions. As long as there are some individuals who will not willingly adjust their actions to a range acceptable to the majority of those around them or will refuse to abide by the decisions of the private courts, then there will be continual disruption of social relations either resulting in the disintegration of the social system or in the majority of individuals grouping behind some general apparatus of compulsion and coercion which would determine the legitimate use of any conduct that is considered to be coercive (thus determining a system of rules and procedures which everyone, including the private agencies, must follow).
Now if one argues that the protection agencies would force the disputants to abide by the agreements with and the decisions of the private courts, then one is no longer describing a system of voluntary interaction but rather a system of coercive interaction comprised by agencies with the power to defy the wishes of its clients (or coerce individuals who are not clients who have for some reason antagonized other individuals who hired these agencies). The basic issue remains, we have not a system of smooth resolution of disputes but, to the contrary, have a system of private agencies coercively acting against the intentions of other individuals (there is no longer simply mutual interaction of the market) which, unless these agencies limit their coercive activities to usages acceptable to the vast majority, will result in conflict between those individuals and the agencies on a sufficiently general scale to result in the pattern of warring factions described previously.
Furthermore, all of the modern instances of privately operated coercive functions do not contradict the argument of this thesis. For example, it is possible for an individual to hire private detectives, private guards, and so forth; but the activities of these agencies must be in accordance with the body of laws and procedures determined by the courts, legal system, and enforced by the government. Thus, such activities as ransacking of rooms, "strong arm" tactics, and torture by private guards and private detectives are prohibited.
If we now introduce into our world the possibility of socially antagonistic conduct on the part of some individuals either intentionally or due to sickness, another significant area of social conflict arises. The important additional aspect with regard to this kind of behavior is, in light of the preceding discussion, however, only an extension of the logic already developed. This different aspect involves two differences from tort-contract disputes the second of which is most significant. First, the cause of directly antagonistic interactional disputes is not ultimately the imperfection of knowledge (uncertainty of the future) but is rather the motivation or intention of the antagonizer (19): the desire to interact with someone in a nonvoluntary, coercive manner. Indeed, this was precisely that which was abstracted from initially and from which such abstraction left the continual uncertainty of the future as the only remaining cause of disputes. The second important difference follows from the distinction of directly antagonistic interaction itself; that those antagonized will act to stop and deter the causer of the antagonism, which from the viewpoint of the antagonizer is itself coercive interaction. (viz: those who have been caused (possibly extreme) dissatisfaction by the antagonizer will attempt to confine, to obtain property from, to punish, and/or to prelimit the actions of the antagonizer all of which themselves cause dissatisfaction to the antagonizer.) This implies that the antagonizer will not voluntarily interact with the "counter" actions of those antagonized and in fact will likely endeavor to actively thwart those counteractions through further coercive interaction. (The interaction between the antagonizer and those antagonized may involve various hired agents and agencies, possibly similar to those mentioned above, which from the viewpoint of both parties represent extensions of the other's antagonistic interaction.)
Rephrasing to coordinate with previous development, those disputes originated through directly antagonistic interaction automatically, and particularly, in those instances of more extreme dissatisfaction, are those for which successful resolution through voluntary evaluation and negotiation is unlikely. Thus, whereas before with regard to contract-tort disputes only a fraction of those disputes may prove unresolvable through voluntary negotiation, contrarily, those disputes initiated through coercive interaction essentially and inherently involve the nonvoluntarily resolvable problem.
As was discussed in the previous sections, therefore, all of the problems leading to and ensuing from a general pattern of intersocietal warring factions is essentially and inherently involved in all those disputes fully or partially initiated through directly antagonistic interaction in the social system.
It seems evident, then, that the smooth functioning of the market process itself requires the existence of a coercive apparatus which prescribes the legitimate use of coercive interaction in the social system and that the market by its very, voluntary nature is incapable of providing the coercive apparatus itself (although it can provide agencies whose coercive elements operate within the system of rules and procedures prescribed by the State). If one stops to reflect that when disputes arise in market affairs then they are either resolved privately or, if this avenue proves unsuccessful, the disputants resort to the laws and courts; but if the laws, courts, and police are themselves also voluntary elements of the market, then by hypothesis these voluntary services (which of course may in many instances significantly aid in the resolution of these disputes) cannot resolve a dispute which has already proven unresolvable through voluntary renegotiation. In fact, these market police and court services are not essentially different from any other private consultant (lawyers, engineers, etc.) whose services the disputants might hire to aid themselves in voluntarily resolving the dispute. But again, if voluntary re-evaluation proves unacceptable (even with the aid of these private agencies) to either one or both parties, then the resolution of the dispute is beyond the services of the market; and at this stage, unless continual conflict is to arise, the majority must be prepared through some general nonmarket, coercive apparatus to prescribe the legitimate sphere of coercive interaction and to restrain those who are unwilling to so limit their actions.
In closing, a few comments concerning possible misconstrued implications of this essay are in order. The entirety of the above discussion in no way implies anything concerning the suitable scope of government policy, activity, and interference in the market system. It does not imply the State is "good," "bad," or "needed," only that the smooth functioning of the market process is not possible without the existence of the State. Furthermore, the essay does not comment on the morality of coercive activity; only that because the human mind is capable of comprehending this kind of behavior and thus employing it, that some method of successfully integrating such conduct with peaceful interaction is indispensable for the emergence and progressive intensification of societal relations. And lastly, that there is no conflict between the cognition that society requires the existence of a State (21) and all of the problems that are discussed in economics with regard to the unsuitability of government interference in the market.
NOTES & REFERENCES
(1) The author would like explicitly to acknowledge the writings of Ludwig von Mises which, in large measure, have provided the basis for the discussion of the essay. However Professor Mises bears no responsibility for any deficiencies of the present article.
(2) The autarkic state is, to re-emphasize, hypothetical. Even the most primitive known societies exhibit a great degree of cooperation and division of labor when contrasted with this hypothetical existence
(3) For example, totally private police agencies: the usage of the police action directed by the market; but the police coercion itself being nonmarket interaction
(4) It should be noted that the emphasis of this paper analyses what the author considers the more difficult case in which criminal (intentionally antagonistic) behavior is assumed absent. Consequently, disputes related to tort and criminal instances are developed primarily by extensions of the logic developed in the discussions concerning contract disputes.
(5) The usage of traditional legal terminology to facilitate readability does not weaken the reasoning of the essay (viz: does not beg the question by employing terms the meaning of which implicitly assumes the existence of the state).
(6) It should also be noted that virtually all such contract disputes, and tort and liability cases, are vigorously attempted to be resolved "out of court" (viz: short of a formal, binding court decision) but, nevertheless, a significant number still come before the decision of the courts.
(7) The following cases can be found in THE NATURE AND FUNCTIONS OF LAW, Berman, Harold J., Greiner, William A. (Foundation Press: N.Y., 1966), Chapters 8, 9. The author would recommend the reading of these chapters for those interested in the subject of this essay. In addition, chapter 18 from Hans J. Morgenthau's POLITICS AMONG NATIONS (Alfred A. Knopf, N.Y. 4th ed. 1967), is also recommended.
(8) Supreme Court of Wisconsin, 64 Wis. 265, 25 N.W. 42 (1885).
(9) Supreme Court of Michigan, 66 Mich. 568, 33 N.W. 919 (1887).
(10) Supreme Court of Oregon, 67 Ore. 203, 35 P. 549 (1913).
(11) Supreme Court of Errors of Connecticut, 1928. 107 Conn. 387, 104 A 749.
(12) King's Bench, 1647. Aleyn, 26, 82 English Reprint 897.
(13) Queen's Bench, 1863. 3 Best & Smith 826.
(14) King's Bench, (1903) 2 K.B. 740.
(15) The fact that in some of these cases the uncertainty involved was due to governmental interference does not affect the validity of the examples. Others could have been chosen which would not have involved this aspect, but it was hoped that the chosen cases would be easier to locate in basic law texts and anthologies rather than laboriously searching through many case records.
(16) The fact that a certain act might very possibly result in, for example, harm to someone else does not alter the understanding that if these harmful consequences were specifically known in advance for a given (potentially negligent) act, then the individual would have have so acted. (Completion of the act with this prior knowledge would either be criminal or mentally sick conduct, which, at this point in the discussion, is assumed nonexistent.)
(17) The mentally or physically sick individual whose actions are injurious to others must be restrained from his antagonistic actions even though most or all of the individuals who condone this restraint may not morally blame that individual; and this restraint is no less coercive interaction than the apprehension of criminals.
(18) Those readers who may have possible questions concerning governmental might and power used to dominate rather than to reflect the ideas of the majority of citizens are referred to HUMAN ACTION by Ludwig von Mises, pp. 187-91.
(19) Modifications of the discussion of the present section related to unintentionally antagonistic conduct due to mental sickness is deleted because the second difference discussed below is still involved. In fact, even though any antagonism to others may be unintentional or uncontrollable the desire to so act is nevertheless still there, though distorted in various "irrational" ways due to mental disorder.
(20) This is not meant to imply that the State must precede the origin of society but, rather, that the emergence of the State and the progressive intensification of societal relations occur simultaneously as part of the same pattern of collaboration which brings forth human civilization.