Assuming that an organized crime group (OCG) could appear, engaging in banditry and robbery. As an example, I can provide such a situation: a citizen (territorially, since there is no state as such) decided to grow and sell vegetables and fruits, but in the absence of large starting capital, all his funds go only towards cultivation and care; he cannot afford security, as a result, an OCG with taped-over license plates and masks could drive up to him, and… I can only imagine such a situation: this citizen will sell his goods and services at a special market, where he will pay (tribute/taxes) for its protection. So the question is: how is it possible for a small business to grow under ancap conditions, given that criminal groups will arise that will rob and kill, and who will be interested in catching them?

анонимный вопрос

All growth in human well-being is based on the division of labor and its capitalization. The division of labor increases productivity because each participant in the system of division of labor does what they are more efficient at and does not do what they are less efficient at. The capitalization of labor is, in essence, the same division of labor, but not only among the immediate participants of the production process, but also across time and space. That is, it is not simply “Vasya digs holes, Masha plants seedlings,” but “a factory once produced a shovel somewhere, Vasya bought it, and now he digs holes faster — and Masha plants the seedlings.” A bunch of people participated in the division of labor, this labor is encapsulated in a conventional shovel, and as a result of such a division of labor, productivity in planting increased.

The flip side of the division of labor is that it is not always possible to organize it so that everyone does what they are best at and does not do what they are worst at. A bad manager (and a good locksmith) may end up being the boss of a bad locksmith (and a good manager) simply because of the way things historically unfolded — the career ladder, personal connections, and so on. The larger the business, the greater the probability of such inefficient sections appearing in it, reducing overall productivity. Also, since within one company the relationships between its employees are not market-based, the division of labor and the division of profit in it can differ greatly. These factors are amplified when scaling a business.

Small business is a form of organization with a low level of division of labor and/or a low level of its capitalization. It is effective only in those areas where the negative effect of scale is higher than the positive one. But no one knows in advance and cannot calculate all these effects — market knowledge is dispersed in nature and is acquired only in the course of activity. Therefore, new small enterprises will always be formed and old large ones will collapse.

And now, after a long theoretical preamble, let’s talk about solving the specific problem of protection for small business.

The capitalization of the business is low, so the entrepreneur grows and sells the product himself. Theoretically, he could protect himself from encroachments as well. For example, it is quite conceivable that a person sells the product he grows exclusively to friends and acquaintances, and as a result, simply remains invisible to a potential external aggressor. Trust is also a form of capitalization. A person invests effort into gaining connections, and then uses those connections to safely obtain profit.

Another possibility of using trust to ensure security is associations of small producers. Each invests relatively little in self-defense means (knowingly insufficient for independent protection against a typical gang), but at the moment of attack, combines their efforts with other members of the association and puts up a confident fight. The cry “they’re beating our people!” has been tested by centuries of practice and works splendidly.

A third possibility is also related to an association of producers, but the division of labor is added to it. A village hires seven samurai. No single peasant alone would be able to hire even one.

You described the fourth possibility yourself: producers purchase a safe sale service from the fairground owner.

The fifth possibility is to specialize only in production and sell the grown produce immediately to a wholesaler, who will come, buy, and take the goods away themselves. This is currently actively practiced by small agricultural producers in Russia, but not out of a good life, and often such a buyer is able to ensure a local monopsony, that is, a buyer’s monopoly. In other words, here is the obvious threshold that the division of labor in agricultural production hits: every producer is interested in selling the products personally to the final consumer, without losing money on intermediaries.

Under ancap, several systemic factors that hinder an agricultural producer from contacting the end consumer are abolished. First, in the absence of taxation, costs for accounting and record-keeping in retail sales are sharply reduced. Second, in the absence of urban planning regulation, the possibility of organizing trade in the city is sharply simplified — in essence, it is regulated only by consumer preferences (the consumer themselves, and not an external regulator for them, makes the choice between the cheapness of the product and the quality of service). Third, entrepreneurial initiative to ensure one’s own security is also not restricted by such a systemic factor as the state.

Of course, without a state, entry into the market for small-time bandits will also be simplified. In the example of the much-discussed Somalia, we see that entrepreneurs there have to invest quite a lot in their security, and yet its level remains low. Therefore, not only the relative size of investments in security is important, but also the level of capitalization in this sphere. Institutions that increase trust in society, a developed and diversified labor market providing potential bandits with plenty of opportunities for honest earnings, the purely technological cheapening of security — all these are measures that make the “war of all against all” scenario under ancap less likely.

Work can be done on this already now; there is no need to ask the state for permission.