When attempting to solve a difficult problem, it is a good idea to solve the simplest special case first. The failure of libertarians to follow this procedure when discussing the protection of rights in a free society is responsible for a considerable amount of confusion; confusion which has led, among other factors, to the current ideological conflict between "anarcho-capitalists" on one hand, and supporters of limited government, with exclusive jurisdiction in some specified geographical area, on the other. Both sides have attempted to derive their position in the context of retaliation for crime, a situation complicated by the dubious status of the rights of a person intentionally violating the rights of another. Civil disagreement, in which neither party is trying or willing to abridge the rights of the other, provides a simple and symmetrical context in which to derive libertarian institutions. It will be shown that the conflict between the two libertarian positions is more apparent than real.
Let us consider the contest between two just men, each of whom believes himself to be the rightful owner of the same piece of property. Neither has any doubt about his case. Nonbinding arbitration, in which the arbitrator acts essentially as a joint consultant to both sides, has been tried, and failed to produce a mutually acceptable solution. Each party is sufficiently certain of its position to be willing to support its claim by armed force if necessary, but knows that an armed conflict might cost more than the contested item is worth. What can they do?
One partial solution, for which no permanent institutions are needed, is for the two to agree to settle their dispute by tossing a coin. However, since each believes himself justly entitled to the contested property, it is conceivable that the loser would renege on the agreement after the toss. This solution demands, therefore, that each side agree in advance to have the outcome of the toss enforced against him. In such an agreement, each individual risks losing all claim to an article he believes to be rightfully his. The predictable results of armed conflict being what they are, this risk is a price that a rational man would usually be willing to pay for avoiding a clash. Still, the probability that the holder of the valid claim will lose the toss is about 50%. There are ways of doing better than that.
RATIONAL JUDGE OR COIN TOSS?
People are neither omniscient nor infallible. If they were, civil disputes could not arise in the first place. If even one infallible arbiter could be found, we would not have to contend with the failure of nonbinding arbitration. However, infallible or not, human judges can do a lot better than chance. The coin would err half the time. A good human judge can hold his errors down to one percent or less. A rational judge, knowing that he can err, would not risk initiating force by ordering the enforcement of his verdict unless both sides agreed in advance to have the eventual verdict enforced against them. When such an agreement exists, and its verdict can be enforced without risking violation of rights, the court will be said to have jurisdiction over the case. Usually, this will not be a problem: if the two sides were likely to accept the 50% risk inherent in a coin toss, they are virtually certain to accept the much smaller risk of judicial error. If the two sides agree on a judge, their dispute is as good as settled. But what if they don't?
Suppose, for a moment, that you are a party to a civil dispute with a fellow libertarian. You have suggested several judges, but the other side has rejected them all. You are in a quandary as to what you should do next, and so you turn to libertarian books for advice. You know that any future libertarian society will either have to find a way to solve such problems, or a way to keep them from arising in the first place. What advice do you find?
Heinlein and Rothbard recommend that you, or your hired "protective agency", just go on ahead and submit the case to your chosen judge, and then proceed to execute his verdict. Heinlein appears to have given no thought to the possibility that your chosen court might err in your favor, in which case the rights of your adversary would be violated by the enforcement of a verdict your adversary never consented to have enforced. Rothbard gives your adversary a chance to appeal the verdict, but only to an appellate court recognized by the court of your choice. Rothbard realizes that even this appellate court might err, in which case the other guy's rights would still be violated; but he seems to feel that this risk is small and unavoidable.
From the other end of the "anarcho-capitalist" spectrum, Robert Le Fevre advises you that any risk of violating the rights of another person is unacceptable. You should avoid conflict, and let your adversary take the contested item. Well, you think, I might not mind doing it this once—the adversary looks like an honest guy anyway—but I remember my game theory: if I decide never to insist on defending my rights, I'm going to get stepped on. Both solutions to the problem of a dispute over which no court has jurisdiction look rather dismal.
Fortunately, any person living in a libertarian society would be free to anticipate and prevent the above quandary: free to make sure, in advance, that some court will have jurisdiction over every possible conflict in which one might be involved. The simplest approach is to identify the sources of possible future disputes, and to secure in advance appropriate agreements with others likely to be involved. For example, since many civil disagreements concern contracts, it is advisable to specify in every contract which court is to have jurisdiction in case of dispute. Other disagreements may arise from unilateral human action, or from questions about ownership of property. The only known method capable of making certain that every such dispute will be subject to rationally enforceable settlement by some court is territorial jurisdiction. What is territorial jurisdiction, and how would it work?
Every human action takes place in some specific location. Similarly, every object is located in some particular place, in a free society, all places will be privately owned. The owner of each location will be able to impose any conditions he wishes on the privilege of using his territory. One condition could be that any disputes between the owner and a user of the territory, or among users, be referred for binding and enforceable settlement to some particular court. Territorial jurisdiction is a system of such conditions, covering every possible dispute among people in a given area.
Let us examine the provisions necessary to make sure that every possible dispute will be covered. In addition to disputes between himself and the owner, the user would have to give the court authority to penalize him for any action, taken within the territory, which might be alleged to have caused harm to others. Similarly, the court would be given authority to adjudicate any damage to the user's person or property resulting from actions of others within the territory. Permission to place any property on the territory would be conditional on acceptance of the court's jurisdiction in any dispute over ownership of the property. The owner would also be asked to make any transfer conditional on acceptance of jurisdiction for as long as the property remains on territory assigned to the court. For example, if the owner died, the court would continue to have jurisdiction over the property even if none of the prospective heirs had ever set foot within its territory. To make sure that some court would have jurisdiction over unilaterally moved property, the court of A would reserve jurisdiction over the act of taking property from A to B. Other details, such as the posting of signs identifying the court with jurisdiction in one's territory, are obvious, and need no elaboration.
Any owner of territory would remain free not to impose territorial jurisdiction. We have seen, however, that disputes over which no court has jurisdiction lead to situations in which one has to choose between abandoning one's own rights, and risking the violation of somebody else's. Thus, a rational person is not likely to venture into territory over which no court has jurisdiction.
An owner might also insist that users of his territory accept the jurisdiction of more than one government. Rational reasons to do so are difficult to imagine, and the disadvantages of shared jurisdiction obvious. Since different courts could arrive at different verdicts, thus failing to resolve a conflict (and possibly fanning it instead) it is essential to shared jurisdiction that once some court has accepted a case the others disavow jurisdiction. Shared jurisdiction would encourage the initiation of lawsuits, since it would give an advantage (that of choosing the most convenient court) to the first to file. It is therefore likely that in a free society each government would enjoy a "monopoly" on the provision of enforceable verdicts within some specified geographical area. This area might change over time, since the owner of each territory would be entitled to assign jurisdiction over it to any legitimate government willing to accept it. Each government would of course insist on a clear proof of the owner's title before accepting jurisdiction.
Some libertarian writers, notably R.A. Childs Jr., have asserted that to maintain exclusive territorial jurisdiction, a government would have to
use force or the threat of it against (any competing) institution, in order to keep its monopoly status in the given territory, thus initiating the use or threat of physical force against one who has not himself initiated force.
Such assertions ignore the fact that in a free society an owner has the right to impose any condition he wishes on the use of his territory; and that, as we have seen, the acceptance of some particular government's exclusive jurisdiction is an eminently rational condition to impose. Admittedly, Childs may have been arguing against a permanent monopoly; but no libertarian advocate of limited government has ever implied that the territory within a government's jurisdiction must remain fixed overtime. (During the 1972 Spring Libertarian Conference at USC in Los Angeles, I asked Nathaniel Branden, a leading libertarian advocate of the limited-government position, whether in a free society the owner of a piece of a territory would be free to transfer jurisdiction over it from one government to another. His answer was, "I don't see why not." It caused a bit of a stir among anarcho-individualists in the audience, who may have realized that, in their zeal to attack the limited-government position, they had forgotten to make sure they understood what that position was.) At the same time, and contrary to the assertions of some advocates of limited government, economic competition would be a fact of life among governments in a free society. The owner of each piece of territory would have a strong incentive to assign jurisdiction over it to the government providing the best service at least cost.
By starting from the simple and symmetrical case of a civil disagreement, we have gained an insight into the institutions which would arise to deal with conflict in a free society. We have shown that rational institutions, such as governments with exclusive territorial jurisdiction, can be established and maintained without initiating force; and that their mandate to judge comes not from fear or coercion, but from an exercise of reason by free men.
Adam Reed is a Ph.D. candidate in mathematical psychology at the University of Oregon. He holds B.S. and M.S. degrees in electrical engineering and biology from MIT.
NOTES AND REFERENCES
 Robert Heinlein, THE MOON IS A HARSH MISTRESS (New York: Putnam, 1966).
 Murray N.Rothbard, POWER AND MARKET (Menlo Park, California: Institute for Human Studies, 1970).
 R.A. Childs, Jr.: "An Open Letter to Ayn Rand: Objectivism and the State," RATIONAL INDIVIDUALIST, August 1969.
This article originally appeared in print under the headline "Resolving Disputes in a Free Society".