Liam's Blog on Philosophy and Governance


A Simple Version of Anarcho-Capitalism


Here is how I believe anarcho-capitalism will work:

  • Rights Enforcement Agencies (REA) will provide insurance policies protecting people and their property. If person A harms person B, person B will be reimbursed by his/her REA. Since person B’s REA has now lost money, it can hire a private security firm to force restitution from person A. If person A has an REA, then both REAs can either fight to the death or come to an agreement via arbitration.
    • If they decide to fight to the death, they will lose market share and waste capital. This will result in the growth of market share of peaceful REAs. The only possible exception is in an oligopoly.
    • If they decide to go to arbitration, this will create a common law system as various judges preside over cases between various agencies.
    • Also, keep in mind that most REAs will have reinsurance and most reinsurance companies will issue policies to multiple REAs. There will also likely be REA funds that allow people can own fractional ownership of a basket of REAs. Both of these factors will reduce the likelihood of violent conflict between firms.
  • Either the REAs or reinsurance providers will securitize their insurance policies and sell them on financial markets. Security companies can then buy bundles of these policies, probably grouped by geographic region, and provide free security services to lower the expected payout. This would provide preventative security services so that crimes don’t happen in the first place.
  • A common law system would develop wherein an REA that represents a victim can claim restitution from an REA that that represents an offender, provided it can be proven in court.
    • If a victim does not have an REA, in the spirit of transferrable tortes, he/she can hire an REA to take the case to court, retroactively adding them as a client, at a cost. Most likely the REA will take a large portion of the settlement.
    • If an offender does not have an REA and they are forced to give restitution (or threatened as much), they can make a case against whoever forced them to do so wherein they are the victim.
  • According to the FBI, there were 2,450.7 property crimes per 100,000 in the US in 2016. There were 7,919,035 property crimes total and $15.6 billion in total damages. Therefore, it would cost (2,450.7 / 100,000) * (15.6 billion / 7,919,035) = ~$48 per year for property crime insurance.
  • Also according to the FBI, there were 386.3 violent crimes per 100,000 in the US in 2016. There were 1,248,185 violent crimes total and 1.4 percent of them were murder. According to this seemingly reliable website, the average life insurance policy in the US is for $153,000, so assuming that other violent crimes get a payout at 10% the rate of homicide, it costs ( 386.3 / 100,000) * (.986 * 15,300 + .014 * 153,000) = ~$67 per year for violent crime insurance. Disclaimer: these numbers are on the low end, but even with higher numbers the cost is manageable for even low-income people.
  • Similar systems have existed historically such as in Iceland, Ireland, Somalia, Ghana, and Papua New Guinea to name a few (listed are relevant books that shed light on each respective example if you are interested in learning more — the article linked is written by yours truly).
  • National defense would likely be provided by volunteer militias, as in the case of the Karen State, treaties, as in the case of small nations, and assassination markets (more on this tricky subject in another article).

And that’s all folks. I wrote this off the top of my head while doing back of the napkin calculations so please feel free to give feedback and suggest corrections.

Most of this is taken from the very intelligent people linked in the article, but I think a few insights are my own — although it is more likely that someone has thought of all of this before.

Appearance: Read Rothbard (12/31/2016)



December 2016 has been a lot of firsts for me. My last post was my first ever debate… and now I would like to present to you my first ever podcast appearance. Today, I had the pleasure of joining the folks at Read Rothbard and we had an amazing discussion about the movie Ex Machina and how artificial intelligence relates to libertarianism.

Click here to go to the official show notes page.