Let us turn to a more detailed examination of how private agencies could work in a free society.

Remember, these are only possible ideas about how such agencies could work – I’m sure that you have many of your own, which may be vastly superior to mine. The purpose of this section is not to create some sort of finalized blueprint for a stateless society, but to show how the various incentives and methodologies of freedom can create powerful and productive solutions to complex social problems, in a way that will forever elude a statist society.

We will start with a few articles that I originally published in 2005, which go over my theory of Dispute Resolution Organizations – DROs. More details about this approach are available in my podcast series as well.

If the Twentieth Century proved anything, it is that the single greatest danger to human life is the centralized political State, which murdered more than 200 million souls. Modern States are the last and greatest remaining predators. It is clear that the danger has not abated with the demise of communism and fascism. All Western democracies currently face vast and accelerating escalations of State power and centralized control over economic and civic life. In almost all Western democracies, the State chooses:

  • where children go to school, and how they will be educated;
  • the interest rate citizens can borrow at;
  • the value of currency;
  • how employees can be hired and fired;
  • how more than 50% of their citizen’s time and money are disposed of;
  • who a citizen may choose as a doctor;
  • what kinds of medical procedures can be received – and when;
  • when to go to war;
  • who can live in the country;

…just to touch on a few.

Most of these amazing intrusions into personal liberty have occurred over the past 90 years, since the introduction of the income tax. They have been accepted by a population helpless to challenge the expansion of State power – and yet, even though most citizens have received endless pro-State propaganda in government schools, a growing rebellion is brewing. The endless and increasing State predations are now so intrusive that they have effectively arrested the forward momentum of society, which now hangs before a fall. Children are poorly educated, young people are unable to get ahead, couples with children fall ever-further into debt, and the elderly are finding their medical systems collapsing under the weight of their growing needs. And none of this takes into account the ever-growing State debts.

These early years of the twenty-first century are thus the end of an era, a collapse of mythology comparable to the fall of communism, monarchy, or political Christianity. The idea that the State is even capable of solving social problems is now viewed with great skepticism – which foretells the imminent end, since as soon as skepticism is applied to the State, the State falls, since it fails at everything except expansion, and so can only survive on propaganda.

Yet while most people are comfortable with the idea of reducing the size and power of the State, they become distinctly uncomfortable with the idea of getting rid of it completely. To use a medical analogy, if the State is a cancer, they prefer medicating it into remission, rather than eliminating it completely.

This can never work. If history has proven anything, it is the simple fact that States always expand until they destroy society. Because the State uses violence to achieve its ends, and there is no rational end to the expansion of violence, States grow until they destroy the host civilization through the corruption of money, contracts, civility and liberty. As such, the cancerous metaphor is not misplaced. People who believe that the State can somehow be contained have not accepted the fact that no State in history has ever been contained.

Even the rare reductions are merely temporary. The United States was founded on the principle of limited government; it took little more than a few decades for the State to break the bonds of the Constitution, implement the income tax, take control the money supply, and begin its catastrophic expansion. There is no example in history of a State being permanently reduced in size. All that happens during a tax or civil revolt is that the State retrenches, figures out what it did wrong, and begins its expansion again – or provokes a war, which silences all but fringe dissenters.

Given these well-known historical facts, why do people continue believe that such a deadly predator can be tamed? Surely it can only be because they consider a slow strangulation in the grip of an expanding State somehow better than the “quick death” of a society bereft of a State.

Why do most people believe that a coercive and monopolistic social agency is required for society to function? There are a number of answers to this question, but they tend to revolve around four central points:

1. Dispute resolution;

2. Collective services;

3. Pollution, and;

4. Crime.

We will tackle the first three in this section, and the last one in the next.


It is quite amazing that people still believe that the State somehow facilitates the resolution of disputes, given the fact that modern courts are out of the reach of all but the most wealthy and patient. In my experience, to take a dispute with a stockbroker to the court system would have cost more than a quarter of a million dollars and from five to ten years – however, a private mediator settled the matter within a few months for very little money. In the realm of marital dissolution, private mediators are commonplace. Unions use grievance processes, and a plethora of specialists in dispute resolution have sprung up to fill in the void left by a ridiculously lengthy, expensive and incompetent State court system.

Thus it cannot be that people actually believe that the State is required for dispute resolution, since the court apparatus is unavailable to the vast majority of the population, who resolve their disputes either privately or through agreed-upon mediators.


Roads, sewage, water and electricity and so on are all cited as reasons why a State must exist. How roads could be privately paid for remains such an impenetrable mystery that most people are willing to support the State – and so ensure the continual undermining of civil society – rather than concede that this problem is solvable. There are many ways to pay for roads, such as electronic or cash tolls, GPS charges, roads maintained by the businesses they lead to, or communal organizations and so on. The problem that a water company might build plumbing to a community, and then charge exorbitant fees for supplying it, is equally easy to counter, as mentioned above.

None of these problems touch the central rationale for a State. They are all ex post facto justifications made to avoid the need for critical examination or, heaven forbid, a support of anarchism.

It is completely contradictory to argue that voluntary free-market relations are “bad” – and that the only way to combat them is to impose a compulsory monopoly on the market. If voluntary interactions are bad, how can coercive monopolies be better?

State provision of public services inevitably leads to the following:

  • The granting of favorable contracts to political allies;
  • Tax-subsidized costs leading to over-use, and intergenerational debt;
  • A lack of renewal investment in infrastructure leading to expensive deterioration;
  • A growth in coercive pro-union legislation, which spreads inefficiencies to other industries;
  • A lack of innovation and exploration of alternatives to existing systems of production and distribution, and;
  • A dangerous social dependence on a single provider.

…and many more such inefficiencies, problems and predations.

Due to countless examples of free market solutions to the problem of “carrier costs,” this argument no longer holds the kind of water is used to, so people must turn elsewhere to justify the continued existence of the State.


This is perhaps the greatest problem faced by free market theorists. It is worth spending a little time on outlining the worst possible scenario, to see how a voluntary system could solve it.

However, it is important to first dispel the notion that the State currently deals effectively with pollution. Firstly, the most polluted land on the planet is State-owned, because States do not profit from retaining the value of their property. Secondly, the distribution of mineral, lumber and drilling rights is directly skewed towards bribery and corruption, because States never sell the land, but rather just the resource rights. A lumber company cannot buy woodlands from the State, just harvesting rights. Thus the State gets a renewable source of income, and can further coerce lumber companies by enforcing re-seeding. This, of course, tends to promote bribery, corruption and the creation of “fly-by-night” lumber companies which strip the land bare, but vanish when it comes time to re-seed. Selling State land to a private company easily solves this problem, because a company that was willing to re-seed would reap the greatest long-term profits from the woodland, and therefore would be able to bid the most for the land.

Also, it should be remembered that, in the realm of air pollution, States created the problem in the first place. In England, when industrial smokestacks first began belching fumes into the orchards of apple farmers, the farmers took the factory-owners to court, citing the common-law tradition of restitution for property damage. Sadly, however, the capitalists had gotten to the State courts first, and had more money to bribe with, employed more voting workers, and contributed more tax revenue than the farmers – and so the farmer’s cases were thrown out of court. The judge argued that the “common good” of the factories trumped the “private need” of the farmers. The free market did not fail to solve the problem of air pollution – it was forcibly prevented from doing so because the State was corrupted.

However, it is a sticking point, so it is worth examining in detail how the free market might solve the problem of air pollution. One egregious example often cited is a group of houses downwind from a new factory which is busy night and day coating them in soot.

Now, when a man buys a new house, isn’t it important to him to ensure that he will not be coated with someone else’s refuse? The need for a clean and safe environment is so strong that it is a clear invitation for enterprising entrepreneurs to sweat bullets figuring out how to provide it.

If a group of homeowners is afraid of pollution, the first thing they will do is buy pollution insurance, which is a natural response to a situation where costs cannot be predicted but consequences are dire.

Let us say that a homeowner named John buys pollution insurance which pays him two million dollars if the air in or around his house becomes polluted. In other words, as long as John’s air remains clean, his insurance company makes money.

One day, a plot of land up-wind of John’s house comes up for sale. Naturally, his insurance company would be very interested in this, and would monitor the sale. If the purchaser is some private school, all is well (assuming John has not bought noise pollution insurance). If, however, the insurance company discovers that Sally’s House of Polluting Paint Production is interested in purchasing the plot of land, it will likely spring into action, taking one of the following courses:

  • Buying the land itself, then selling it to a non-polluting buyer;
  • Getting assurances from Sally that her company will not pollute;
  • Paying Sally to enter into a non-polluting contract.

If, however, someone at the insurance company is asleep at the wheel, and Sally buys the land and puts up her polluting factory, what happens then?

Well, then the insurance company is on the hook for $2M to John (assuming for the moment that only John bought pollution insurance). Thus, it can afford to pay Sally up to $2M to reduce her pollution and still be cash-positive. This payment could take many forms, from the installation of pollution-control equipment to a buy-out to a subsidy for under-production and so on.

If the $2M is not enough to solve the problem, then the insurance company pays John the $2M and he goes and buys a new house in an unpolluted neighbourhood. However, this scenario is highly unlikely, since the insurance company would be unlikely to insure only one single person in a neighbourhood against air pollution.

So, that is the view from John’s air-pollution insurance company. What about the view from Sally’s House of Polluting Paint Production? She, also, must be covered by a DRO in order to buy land, borrow money and hire employees. How does that DRO view her tendency to pollute?

Pollution brings damage claims against Sally, because pollution is by definition damage to persons or property. Thus Sally’s DRO would take a dim view of her pollution, since it would be on the hook for any damage her factory causes. In fact, it would be most unlikely that Sally’s DRO would insure her against damages unless she were able to prove that she would be able to operate her factory without harming the property of those around her. And without a DRO, of course, she would be unable to start her factory, borrow money, hire employees etc.

It is important to remember that DROs, much like cell phone companies, only prosper if they cooperate. Sally’s DRO only makes money if Sally does not pollute. John’s insurer also only makes money if Sally does not pollute. Thus the two companies share a common goal, which fosters cooperation.

Finally, even if John is not insured against air pollution, he can use his and/or Sally’s DRO to gain restitution for the damage her pollution is causing to his property. Both Sally and John’s DROs would have reciprocity agreements, since John wants to be protected against Sally’s actions, and Sally wants to be protected against John’s actions. Because of this desire for mutual protection, they would choose DROs which had the widest reciprocity agreements.

Thus, in a truly free market, there are many levels and agencies actively working against pollution.

John’s insurer will be actively scanning the surroundings looking for polluters it can forestall. Sally will be unable to build her paint factory without proving that she will not pollute. Mutual or independent DROs will resolve any disputes regarding property damage caused by Sally’s pollution.

There are other benefits as well, which are almost unsolvable in the current system. Imagine that Sally’s smokestacks are so high that her air pollution sails over John’s house and lands on Reginald’s house, a hundred miles away. Reginald then complains to his DRO/insurer that his property is being damaged. His DRO will examine the air contents and wind currents, then trace the pollution back to its source and resolve the dispute with Sally’s DRO. If the air pollution is particularly complicated, then Reginald’s DRO will place non-volatile compounds into Sally’s smokestacks and follow them to where they land. This can be used in a situation where a number of different factories may be contributing pollutants.

The problem of inter-country air pollution may seem to be a sticky one, but it is easily solvable – even if we accept that countries will still exist. Obviously, a Canadian living along the Canada/US border, for instance, will not choose a DRO which refuses to cover air pollution emanating from the US. Thus the DRO will have to have reciprocity agreements with the DROs across the border. If the US DROs refuse to have reciprocity agreements with the Canadian DROs – inconceivable, since the pollution can go both ways – then the Canadian DRO will simply start a US branch and compete.

The difference is that international DROs actually profit from cooperation, in a way that governments do not. For instance, a State government on the Canada/US border has little motivation to impose pollution costs on local factories, as long as the pollution generally goes north.

For DRO’s, quite the opposite would be true.

There are so many benefits to the concept of State-less DRO’s that they could easily fill volumes. A few can be touched on here, to further highlight the value of the idea.

In a condominium building, ownership is conditional upon certain rules. Even though a man “owns”the property, he cannot throw all-night parties, or keep five large dogs, or operate a brothel.

Without the coercive blanket of a central State, the opportunities for a wide variety of communities arise, which will largely eliminate the current social conflicts about the direction of society as a whole.

For instance, some people like guns to be available, while others prefer them to be unavailable.

Currently, a battle rages for control of the State so that one group can enforce its will on the other.

That’s unnecessary. With DRO’s, communities can be formed in which guns are either permitted, or not permitted. Marijuana can be approved or forbidden. Half your income can be deducted for various social schemes, or you can keep it all for yourself. Sunday shopping can be allowed, or disallowed. It is completely up to the individual to choose what kind of society he or she wants to live in. The ownership of property in such communities is conditional on following certain rules, and if those rules prove onerous or unpleasant, the owner can sell and move at any time. Another plus is that all these “societies” exist as little laboratories, and can prove or disprove various theories about gun ownership, drug legalization and so on, thus contributing to people’s knowledge about the best rules for communities.

One or two problems exist, however, which cannot be spirited away. A person who decides to live “off the grid” – or exist without any DRO representation – can theoretically get away with a lot.

However, that is also true in the existing statist system. If a man currently decides to become homeless, he can more or less commit crimes at will – but he also gives up all beneficial and enforceable forms of social cooperation. Thus although DROs may not solve the problem of utter lawlessness, neither does the current system, so all is equal.


Crimes against persons, such as murder and rape, are generally considered separate and distinct from those against property. However, this is a fairly modern distinction. In the European system of common law, crimes against persons were often punished through the confiscation of property. A rape cost the rapist such-and-such amount, a murder five times as much, and so on. This sort of arrangement is generally preferred by victims, who currently not only suffer from physical violation – but must also pay taxes to incarcerate the criminal. A woman who is raped would usually rather receive a quarter of a million dollars than pay a thousand dollars annually to cage her rapist, which adds insult to injury. Thus, crimes against persons and crimes against property are not as distinct as they may seem, since both commonly require property as restitution. A man who rapes a woman, then, incurs a debt to her of some hundreds of thousands of dollars, and must pay it or be ejected from all the economic benefits of society.

Finally, one other advantage can be termed the “Scrabble-Challenge Benefit.” In Scrabble, an accuser loses his turn if he challenges another player’s word and the challenge fails. Given the costs of resolving disputes, DROs would be very careful to ensure that those bringing false accusations would be punished through their own premiums, their contract ratings and by also assuming the entire cost of the dispute. This would greatly reduce the number of frivolous lawsuits, to the great benefit of all.

On a personal note, it has been my experience that, in talking over these matters for the last twenty-odd years, people honestly claim that they cannot conceive of a society without a centralized and coercive State. To which I feel compelled to ask them: exactly how many lawsuits have you pursued in your own life? I have yet to find even one person who has prosecuted a lawsuit through to conclusion. I also ask them whether they maintain their jobs through threats or blackmail. None. Do they keep their spouses chained in the basement? Not a one. Are their friends forced to spend time with them? Do they steal from the grocery store? Nope.

In other words, I say, it is clear that, although you say that you cannot imagine a society without a coercive State, you have only to look in the mirror to see how such a world might work. Everyone who is in your life is there by choice. Everyone you deal with on a personal or professional relationship interacts with you on a voluntary basis. You don’t use violence in your own life at all. If you are unsatisfied with a product, you return it. If you stop desiring a lover, you part. If you dislike a job, you quit. You force no one – and yet you say that society cannot exist without force. It is very hard to understand. People then reply that they do not need to use coercion because the State is there to protect them. I then ask them if they know how impossible it is to actually use the court system. They agree, of course, because they know it takes many years and a small fortune to approach even the vague possibility of justice. I also ask them if they are themselves burning to knock over an old woman and snatch her purse, but fear the police too greatly. Of course not. They just think that everyone else is. Well, after twenty years of conversations, I can tell you all: it’s not the case. Most people, given the correct incentives, act entirely honourably.

Of course, evil people exist. There are cold, sociopathic monsters in our midst. It is precisely because of the human capacity for evil that a centralized State always undermines society. Due to our capacity for sadism, our only hope is to decentralize authority, so that the evil among us can never rise to a station greater than that of excluded, hunted criminals. To create a State and give it the power of life and death does not solve the problem of human evil. It merely transforms the shallow desire for easy property to the bottomless lust for political power.

The idea that society can – and must – exist without a centralized State is the greatest lesson that the grisly years of the Twentieth Century can teach us. Our own society cannot escape the general doom of history, the inevitable destiny of social collapse as the State eats its own inhabitants. Our choice is not between the State and the free market, but between death and life. Whatever the risks of dissolving the central State, they are far less than the certain destruction of allowing it to escalate, as it inevitably will. Like a cancer patient facing certain demise, we must reach for whatever medicine shows the most promise, and not wait until it is too late.

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