Anarcho-Capitalism Stability

Robin Hanson (
Mon, 24 Feb 1997 10:49:54 -0800 (PST)

I've been wondering: what is the absolute minimum state that could
stabilize something like David Friedman's competing private laws?

I assume that you'd need a large scale "state" to manage national
defense. There would be serious free rider problems otherwise, and
there seem to be strong economies of scale to military coordination.

Given that this central defense system exists, I imagine
that it could be available to enforce contracts between competing
private laws. That is, two laws could pay this central system to
adjudicate the contract between them, "sending in the army" to
punish/disband a violator.

My first question is: is this enough to preserve local legal diversity?
Imagine some law held 40% of local customers, with the next highest
law holding 20% of customers. And imagine that this law is going to
try to get 95%+ local market share. This biggest law would seem to
have a lower monitoring/patroling cost. For the same number of patrol
cars it gets to swing by twice as many customers. So it might try to
lower prices to drive out competition.

More severely, it might notice when no other law was patrolling the
customer of a competing law, and make some "accidents" happen to those
other customers. The competing law might know it would cost it more
to compensate this with more monitoring, or retaliatory accidents, and
so be persuaded to leave the area. Is there a contract laws could
write with each other ahead of time to assure customers that this
scenario would be very unlikely?

Robin D. Hanson