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Anarcho-capitalism is a political philosophy and economic theory that advocates the elimination of centralized states in favor of self-ownership, private property and free markets. Anarcho-capitalists hold that in the absence of statute (which they describe as law by arbitrary autocratic decrees, or bureaucratic legislation swayed by transitory political special interest groups), society tends to contractually self-regulate and civilize through the spontaneous and organic discipline of the free market (in what its proponents describe as a "voluntary society").
In an anarcho-capitalist society, law enforcement, courts and all other security services would be operated by privately funded competitors selected by consumers rather than centrally through "confiscatory" taxation. Money, along with all other goods and services, would be privately and competitively provided in an open market. Personal and economic activities under anarcho-capitalism would therefore be regulated directly by consumers and their directly selected agents through market-based dispute resolution organizations[failed verification] under tort and contract law, rather than by statute through centrally determined punishment under political monopolies, which they believe tend to generate corruption through the collectivization of property and distortion of market signals.
Business regulations, such as corporate standards, public relations, product labels, rules for consumer protection, ethics, and labor relations would be regulated voluntarily via the use of competitive trade associations, professional societies, and standards bodies; this would, in theory, establish market-recourse for businesses' decisions and allow the market to communicate effectively with businesses by the use of consumer unions, instead of centralized regulatory mandates for companies imposed by the state, which anarcho-capitalists and other libertarians argue are inefficient due to regulatory capture.
Various theorists have espoused legal philosophies similar to anarcho-capitalism. However, in the mid-20th century the first person to use the term was Murray Rothbard, who synthesized elements from the Austrian School of economics, classical liberalism and 19th-century American individualist anarchists Lysander Spooner and Benjamin Tucker (while rejecting their labor theory of value and the norms they derived from it). A Rothbardian anarcho-capitalist society would operate under a mutually agreed-upon libertarian "legal code which would be generally accepted, and which the courts would pledge themselves to follow". This pact would recognize self-ownership, property, contracts, and tort law, in keeping with the universal non-aggression principle (NAP).
Anarcho-capitalists are distinguished from minarchists, who advocate a small Jeffersonian night-watchman state limited to protecting individuals and their properties from foreign and domestic aggression; and from anarchists that oppose private ownership of the means of production (tools, factories, raw materials, etc.), rent and other aspects of capitalism.
Anarcho-capitalists argue for a society based on the voluntary trade of private property and services (in sum, all relationships that they believe are not caused by threats or violence, including exchanges of money, consumer goods, land and capital goods) in order to minimize conflict while maximizing individual liberty and prosperity. However, they also recognize charity and communal arrangements as part of the same voluntary ethic. Although anarcho-capitalists are known for asserting a right to private (individualized or joint non-public) property, some propose that non-state public or community property can also exist in an anarcho-capitalist society. For them, what is important is that it is acquired and transferred without help or hindrance from the "compulsory state". Deontological anarcho-capitalists believe that the only just and most economically beneficial way to acquire property is through voluntary trade, gift, or labor-based original appropriation, rather than through aggression or fraud.
Anarcho-capitalists see free-market capitalism as the basis for a free and prosperous society. Murray Rothbard, who is credited with coining the term "anarcho-capitalism", said that the difference between free-market capitalism and "state capitalism" is the difference between "peaceful, voluntary exchange" and a collusive partnership between business and government that uses coercion to subvert the free market. "Capitalism", as anarcho-capitalists employ the term, is not to be confused with state monopoly capitalism, crony capitalism, corporatism, or contemporary mixed economies, wherein market incentives and disincentives may be altered by state action. They therefore reject the state, seeing it as an entity which steals property (through taxation and expropriation), initiates aggression, has a compulsory monopoly on the use of force, uses its coercive powers to benefit some businesses and individuals at the expense of others, creates artificial monopolies and restricts trade and personal freedoms via drug laws, compulsory education, conscription, laws on food and morality.
Many anarchists view capitalism as an inherently authoritarian and hierarchical system and seek the abolishment of private property. There is disagreement between anarchists and anarcho-capitalists as the former generally rejects anarcho-capitalism as a form of anarchism and considers anarcho-capitalism an oxymoron, while the latter holds that the abolishment of private property would require expropriation which is counterproductive to order and would require a state. On the Nolan chart, anarcho-capitalists are located at the extreme edge of the libertarian quadrant since they reject state involvement in both economic and personal affairs.
Anarcho-capitalists argue that the state relies on initiating force because force can be used against those who have not stolen personal property, vandalized private property, assaulted anyone, or committed fraud. Many also argue that subsidized monopolies tend to be corrupt and inefficient. Murray Rothbard argued that all government services, including defense, are inefficient because they lack a market-based pricing mechanism regulated by the voluntary decisions of consumers purchasing services that fulfill their highest-priority needs and by investors seeking the most profitable enterprises to invest in. Many anarcho-capitalists also argue that private defense and court agencies would have to have a good reputation in order to stay in business. Furthermore, Linda and Morris Tannehill argue that no coercive monopoly of force can arise on a truly free market and that a government's citizenry can not desert them in favor of a competent protection and defense agency.
Rothbard bases his philosophy on natural law grounds and also provides economic explanations of why he thinks anarcho-capitalism is preferable on pragmatic grounds as well. David D. Friedman says he is not an absolutist rights theorist, but is also "not a utilitarian". However, he does believe that "utilitarian arguments are usually the best way to defend libertarian views".Peter Leeson argues that "the case for anarchy derives its strength from empirical evidence, not theory".Hans-Hermann Hoppe instead uses "argumentation ethics" for his foundation of "private property anarchism", which is closer to Rothbard's natural law approach:
I define anarchist society as one where there is no legal possibility for coercive aggression against the person or property of any individual. Anarchists oppose the State because it has its very being in such aggression, namely, the expropriation of private property through taxation, the coercive exclusion of other providers of defense service from its territory, and all of the other depredations and coercions that are built upon these twin foci of invasions of individual rights.-- Murray Rothbard, Society Without A State
Rothbard used the term "anarcho-capitalism" to distinguish his philosophy from anarchism that opposes private property as well as to distinguish it from other forms of individualist anarchism. Other terms sometimes used for this philosophy, though not necessarily outside anarcho-capitalist circles, include:
While the Friedmanian formulation of anarcho-capitalism is robust to the presence of violence and in fact assumes some degree of violence will occur, anarcho-capitalism as formulated by Rothbard and others holds strongly to the central libertarian nonaggression axiom:
The basic axiom of libertarian political theory holds that every man is a self owner, having absolute jurisdiction over his own body. In effect, this means that no one else may justly invade, or aggress against, another's person. It follows then that each person justly owns whatever previously unowned resources he appropriates or "mixes his labor with". From these twin axioms - self-ownership and "homesteading" - stem the justification for the entire system of property rights titles in a free-market society. This system establishes the right of every man to his own person, the right of donation, of bequest (and, concomitantly, the right to receive the bequest or inheritance), and the right of contractual exchange of property titles.
Rothbard's defense of the self-ownership principle stems from what he believed to be his falsification of all other alternatives, namely that either a group of people can own another group of people, or the other alternative, that no single person has full ownership over one's self. Rothbard dismisses these two cases on the basis that they cannot result in a universal ethic, i.e. a just natural law that can govern all people, independent of place and time. The only alternative that remains to Rothbard is self-ownership, which he believes is both axiomatic and universal.
In general, the nonaggression axiom can be said to be a prohibition against the initiation of force, or the threat of force, against persons (i.e. direct violence, assault, murder) or property (i.e. fraud, burglary, theft and taxation). The initiation of force is usually referred to as aggression or coercion. The difference between anarcho-capitalists and other libertarians is largely one of the degree to which they take this axiom. Minarchist libertarians, such as most people involved in libertarian political parties, would retain the state in some smaller and less invasive form, retaining at the very least public police, courts and military. However, others might give further allowance for other government programs. In contrast, anarcho-capitalists reject any level of state intervention, defining the state as a coercive monopoly and--as the only entity in human society that derives its income from legal aggression--an entity that inherently violates the central axiom of libertarianism.
Some anarcho-capitalists, such as Rothbard, accept the nonaggression axiom on an intrinsic moral or natural law basis. It is in terms of the non-aggression principle that Rothbard defined anarchism, "a system which provides no legal sanction for such aggression ['against person and property']"; and said that "what anarchism proposes to do, then, is to abolish the State, i.e. to abolish the regularized institution of aggressive coercion". In an interview published in the libertarian journal New Banner, Rothbard said that "capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism".
Everyone is the proper owner of his own physical body as well as of all places and nature-given goods that he occupies and puts to use by means of his body, provided only that no one else has already occupied or used the same places and goods before him. This ownership of "originally appropriated" places and goods by a person implies his right to use and transform these places and goods in any way he sees fit, provided only that he does not change thereby uninvitedly the physical integrity of places and goods originally appropriated by another person. In particular, once a place or good has been first appropriated by, in John Locke's phrase, 'mixing one's labor' with it, ownership in such places and goods can be acquired only by means of a voluntary - contractual - transfer of its property title from a previous to a later owner.
Anarcho-capitalism uses the following terms in ways that may differ from common usage or various anarchist movements.
This is the root of anarcho-capitalist property rights and where they differ from collectivist forms of anarchism such as anarcho-communism, where the means of production are controlled by the whole community and the product of labor is collectivized in a pool of goods and distributed "according to need" (which is to be determined and enforced collectively). Anarcho-capitalists advocate individual or joint (i.e. private) ownership of the means of production and the product of labor regardless of what the individual "needs" or does not "need". As Rothbard says, "if every man has the right to own his own body and if he must use and transform material natural objects in order to survive, then he has the right to own the product that he has made".[non sequitur] After property is transformed through labor, it may then only exchange hands legitimately by trade or gift - forced transfers are considered illegitimate. Original appropriation allows an individual to claim any never-before used resources, including land and by improving or otherwise using it, own it with the same "absolute right" as his own body. According to Rothbard, property can only come about through labor, therefore original appropriation of land is not legitimate by merely claiming it or building a fence around it--it is only by using land and by mixing one's labor with it that original appropriation is legitimized: "Any attempt to claim a new resource that someone does not use would have to be considered invasive of the property right of whoever the first user will turn out to be". Rothbard argues that the resource need not continue to be used in order for it to be the person's property as "for once his labor is mixed with the natural resource, it remains his owned land. His labor has been irretrievably mixed with the land, and the land is therefore his or his assigns' in perpetuity". As a practical matter, in terms of the ownership of land anarcho-capitalists recognize that there are few (if any) parcels of land left on Earth whose ownership was not at some point in time obtained in violation of the homestead principle, through "seizure by the state or put in private hands with the assistance of the state". Rothbard says:
It is not enough to call simply for defense of "the rights of private property"; there must be an adequate theory of justice in property rights, else any property that some State once decreed to be "private" must now be defended by libertarians, no matter how unjust the procedure or how mischievous its consequences.
Rothbard says in Justice and Property Right that "any identifiable owner (the original victim of theft or his heir) must be accorded his property". In the case of slavery, Rothbard says that in many cases "the old plantations and the heirs and descendants of the former slaves can be identified, and the reparations can become highly specific indeed". He believes slaves rightfully own any land they were forced to work on under the "homestead principle". If property is held by the state, Rothbard advocates its confiscation and "return to the private sector", saying that "any property in the hands of the State is in the hands of thieves, and should be liberated as quickly as possible". For example, he proposes that state universities be seized by the students and faculty under the homestead principle. Rothbard also supports expropriation of nominally "private property" if it is the result of state-initiated force, such as businesses who receive grants and subsidies. He proposes that businesses who receive at least 50% of their funding from the state be confiscated by the workers. He says: "What we libertarians object to, then, is not government per se but crime, what we object to is unjust or criminal property titles; what we are for is not 'private' property per se but just, innocent, non-criminal private property". Likewise, Karl Hess says that "libertarianism wants to advance principles of property but that it in no way wishes to defend, willy nilly, all property which now is called private [...] Much of that property is stolen. Much is of dubious title. All of it is deeply intertwined with an immoral, coercive state system". By accepting an axiomatic definition of private property and property rights, anarcho-capitalists deny the legitimacy of a state on principle:
For, apart from ruling out as unjustified all activities such as murder, homicide, rape, trespass, robbery, burglary, theft, and fraud, the ethics of private property is also incompatible with the existence of a state defined as an agency that possesses a compulsory territorial monopoly of ultimate decision-making (jurisdiction) and/or the right to tax.
Although anarcho-capitalists assert a right to private property, some anarcho-capitalists also point out that common, i.e. community, property can exist by right in an anarcho-capitalist system. Just as an individual comes to own that which was unowned by mixing his labor with it or using it regularly, a whole community or society can come to own a thing in common by mixing their labor with it collectively, meaning that no individual may appropriate it as his own. This may apply to roads, parks, rivers and portions of oceans. Anarchist theorist Roderick T. Long gives the following example:
Consider a village near a lake. It is common for the villagers to walk down to the lake to go fishing. In the early days of the community it's hard to get to the lake because of all the bushes and fallen branches in the way. But over time the way is cleared and a path forms - not through any coordinated efforts, but simply as a result of all the individuals walking by that way day after day. The cleared path is the product of labor - not any individual's labor, but all of them together. If one villager decided to take advantage of the now-created path by setting up a gate and charging tolls, he would be violating the collective property right that the villagers together have earned.
Nevertheless, since anarcho-capitalists believe that property that is owned collectively tends to lose the level of accountability found in individual ownership to the extent of the number of owners--and make consensus regarding property use and maintenance decisions proportionately less likely--anarcho-capitalists generally distrust and seek to avoid intentional communal arrangements. Privatization, decentralization and individualization are often anarcho-capitalist goals. However, in some cases they not only provide a challenge, but are considered next to impossible. Established ocean routes, for example, are generally seen as unavailable for private appropriation.
Anarcho-capitalists tend to concur with free-market environmentalists regarding the "environmentally destructive tendencies of the state and other communal arrangements". Air, water and land pollution, for example, are seen as the result of collectivization of ownership. They believe that central governments generally strike down individual or class action censure of polluters in order to benefit "the many" and legal or economic subsidy of heavy industry is justified by many politicians for job creation within a political territory.
The Austrian School of economics argued against the viability of socialism and centrally planned economic policy. Eugen von Böhm-Bawerk, a colleague of Austrian school founder Carl Menger, wrote one of the first critiques of socialism in his treatise The Exploitation Theory of Socialism-Communism. Later, Friedrich von Hayek wrote The Road to Serfdom (1944), which states that a command economy lacks the information function of market prices and that central authority over the economy leads to totalitarianism. Another Austrian economist, Ludwig von Mises, wrote Human Action, an early exposition of the method he called praxeology.
Rothbard attempted to meld Austrian economics with classical liberalism and individualist anarchism. He wrote his first paper advocating "private property anarchism" in 1949 and later came up with the alternative name "anarcho-capitalism". He was probably the first to use "libertarian" in its current United States pro-capitalist sense. His academic training was in economics, but his writings also refer to history and political philosophy. When young, he considered himself part of the Old Right, an anti-statist and anti-interventionist branch of the Republican Party. In the late 1950s, he was briefly involved with Ayn Rand, but later had a falling-out. When interventionist Cold Warriors of the National Review, such as William F. Buckley Jr., gained influence in the Republican Party in the 1950s, Rothbard quit that group and briefly associated himself with left-wing antiwar groups. He believed that the Cold Warriors were more indebted in theory to the left and imperialist progressives, especially with respect to Trotskyist theory. Rothbard opposed the founding of the Libertarian Party, but joined in 1973 and became one of its leading activists.
The society envisioned by anarcho-capitalists has been called the "contractual society"--i.e. "a society based purely on voluntary action, entirely unhampered by violence or threats of violence" in which anarcho-capitalists assert the system relies on voluntary agreements (contracts) between individuals as the legal framework. It is difficult to predict precisely what the particulars of this society will look like because of the details and complexities of contracts.
One particular ramification is that transfer of property and services must be considered voluntarily on the part of both parties. No external entities can force an individual to accept or deny a particular transaction. An employer might offer insurance and death benefits to same-sex couples--another might refuse to recognize any union outside his or her own faith. Individuals are free to enter into or reject contractual agreements as they see fit.
Rothbard points out that corporations would exist in a free society as they are simply the pooling of capital. He says limited liability for corporations could also exist through contract: "Corporations are not at all monopolistic privileges; they are free associations of individuals pooling their capital. On the purely free market, such men would simply announce to their creditors that their liability is limited to the capital specifically invested in the corporation". However, corporations created in this way would not be able to replicate the limit on liabilities arising non-contractually, such as liability in tort for environmental disasters or personal injury, which corporations currently enjoy. Rothbard himself acknowledges that "limited liability for torts is the illegitimate conferring of a special privilege".
There are limits to the right to contract under some interpretations of anarcho-capitalism. Rothbard himself argues that the right to contract is based in inalienable human rights and therefore any contract that implicitly violates those rights can be voided at will and which would, for instance, prevent a person from permanently selling himself or herself into unindentured slavery. Other interpretations conclude that banning such contracts would in itself be an unacceptably invasive interference in the right to contract.
Included in the right of contract is the right to contract oneself out for employment by others. Unlike anarcho-communists, anarcho-capitalists support the liberty of individuals to be self-employed or to contract to be employees of others, whichever they prefer and the freedom to pay and receive wages. Some anarcho-capitalists prefer to see self-employment prevail over wage labor. For example, David D. Friedman has expressed preference for a society where "almost everyone is self-employed" and "instead of corporations there are large groups of entrepreneurs related by trade, not authority. Each sells not his time, but what his time produces". Others, such as Rothbard, do not express a preference either way but justify employment as a natural occurrence in a free market that is not immoral in any way.
Different anarcho-capitalists propose different forms of anarcho-capitalism and one area of disagreement is in the area of law. In The Market for Liberty, Morris and Linda Tannehill object to any statutory law whatsoever. They argue that all one has to do is ask if one is aggressing against another (see tort and contract law) in order to decide if an act is right or wrong. However, while also supporting a natural prohibition on force and fraud, Rothbard supports the establishment of a mutually agreed-upon centralized libertarian legal code which private courts would pledge to follow.
Unlike both the Tannehills and Rothbard who see an ideological commonality of ethics and morality as a requirement, David D. Friedman proposes that "the systems of law will be produced for profit on the open market, just as books and bras are produced today. There could be competition among different brands of law, just as there is competition among different brands of cars". Friedman says whether this would lead to a libertarian society "remains to be proven". He says it is a possibility that very unlibertarian laws may result, such as laws against drugs, but he thinks this would be rare. He reasons that "if the value of a law to its supporters is less than its cost to its victims, that law [...] will not survive in an anarcho-capitalist society".
Anarcho-capitalists only accept collective defense of individual liberty (i.e. courts, military or police forces) insofar as such groups are formed and paid for on an explicitly voluntary basis. However, their complaint is not just that the state's defensive services are funded by taxation, but that the state assumes it is the only legitimate practitioner of physical force--that is, it forcibly prevents the private sector from providing comprehensive security, such as a police, judicial and prison systems to protect individuals from aggressors. Anarcho-capitalists believe that there is nothing morally superior about the state which would grant it, but not private individuals, a right to use physical force to restrain aggressors. If competition in security provision were allowed to exist, prices would also be lower and services would be better according to anarcho-capitalists. According to Molinari: "Under a regime of liberty, the natural organization of the security industry would not be different from that of other industries". Proponents point out that private systems of justice and defense already exist, naturally forming where the market is allowed to compensate for the failure of the state: private arbitration, security guards, neighborhood watch groups and so on. These private courts and police are sometimes referred to generically as private defense agencies (PDAs).
The defense of those unable to pay for such protection might be financed by charitable organizations relying on voluntary donation rather than by state institutions relying on coercive taxation, or by cooperative self-help by groups of individuals.
Anarcho-capitalists believe that subrogation, which allows remuneration for losses and damages to be funded by the aggressors, reduces insurance costs and could operate as a business in itself--converting victims from paying customers into direct beneficiaries. The concept of restitution transfer and recoupment (RTR) has been explored by freenation theorist John Frederic Kosanke. RTR agencies would employ bonding agencies, private investigators, private dispute resolution organizations and private aggressor containment agencies as required. Instead of having to pay for restitution, victims sell restitution rights to the RTR agencies. This arrangement can be compared[weasel words] to the contractual nature of the Goðorð system employed in the Icelandic Commonwealth by competing chieftains.
Like classical liberalism and unlike anarcho-pacifism, anarcho-capitalism permits the use of force as long as it is in the defense of persons or property. The permissible extent of this defensive use of force is an arguable point among anarcho-capitalists. Retributive justice, meaning retaliatory force, is often a component of the contracts imagined for an anarcho-capitalist society. Some believe prisons or indentured servitude would be justifiable institutions to deal with those who violate anarcho-capitalist property relations while others believe exile or forced restitution are sufficient.
Bruce L. Benson argues that legal codes may impose punitive damages for intentional torts in the interest of deterring crime. For instance, a thief who breaks into a house by picking a lock and is caught before taking anything would still owe the victim for violating the sanctity of his property rights. Benson opines that despite the lack of objectively measurable losses in such cases, "standardized rules that are generally perceived to be fair by members of the community would, in all likelihood, be established through precedent, allowing judgments to specify payments that are reasonably appropriate for most criminal offenses". The Tannehills raise a similar example, noting that a bank robber who had an attack of conscience and returned the money would still owe reparations for endangering the employees' and customers' lives and safety, in addition to the costs of the defense agency answering the teller's call for help. However, the robber's loss of reputation would be even more damaging. Specialized companies would list aggressors so that anyone wishing to do business with a man could first check his record. The bank robber would find insurance companies listing him as a very poor risk and other firms would be reluctant to enter into contracts with him.
One difficult application of defensive aggression is the act of revolutionary violence (including anarcho-capitalist revolution) against tyrannical regimes. Many anarcho-capitalists admire the American Revolution as "the legitimate act of individuals working together to fight against tyrannical restrictions of their liberties". In fact, according to Rothbard, the American Revolutionary War was the only war involving the United States that could be justified. Some anarcho-capitalists, such as Samuel Edward Konkin III, feel that violent revolution is counter-productive and prefer voluntary forms of economic secession to the extent possible.
The two principal moral approaches to anarcho-capitalism differ in regard to whether anarcho-capitalist society is justified on deontological or consequentialist ethics, or both. Natural-law anarcho-capitalism (as advocated by Rothbard) holds that a universal system of rights can be derived from natural law. Some other anarcho-capitalists do not rely upon the idea of natural rights, but instead present economic justifications for a free-market capitalist society. Such a latter approach has been offered by David D. Friedman in The Machinery of Freedom. Unlike other anarcho-capitalists, most notably Rothbard, Friedman has never tried to deny the theoretical cogency of the neoclassical literature on "market failure", but openly applies the theory to both market and government institutions (see government failure) to compare the net result, nor has he been inclined to attack economic efficiency as a normative benchmark.
Kosanke sees such a debate as irrelevant since in the absence of statutory law the non-aggression principle (NAP) is naturally enforced because individuals are automatically held accountable for their actions via tort and contract law. Communities of sovereign individuals naturally expel aggressors in the same way that ethical business practices are naturally required among competing businesses that are subject to the discipline of the marketplace. For him, the only thing that needs to be debated is the nature of the contractual mechanism that abolishes the state, or prevents it from coming into existence where new communities form.
In both its social and individualist forms, anarchism is usually considered a radical left-wing and anti-capitalist ideology that promotes socialist economic theories such as collectivist. communism, syndicalism and mutualism. These anarchists believe capitalism is incompatible with social and economic equality and therefore do not recognize anarcho-capitalism as an anarchist school of thought. In particular, they argue that capitalist transactions are not voluntary and that maintaining the class structure of a capitalist society requires coercion, which is incompatible with an anarchist society.
Murray Rothbard argues that the capitalist system of today is indeed not properly anarchistic because it so often colludes with the state. According to Rothbard, "what Marx and later writers have done is to lump together two extremely different and even contradictory concepts and actions under the same portmanteau term. These two contradictory concepts are what I would call 'free-market capitalism' on the one hand, and 'state capitalism' on the other". "The difference between free-market capitalism and state capitalism", writes Rothbard, "is precisely the difference between, on the one hand, peaceful, voluntary exchange, and on the other, violent expropriation". He continues: "State capitalism inevitably creates all sorts of problems which become insoluble". Despite Rothbard's claims, Marxists do make a distinction between free-market capitalism and state capitalism. The term "state capitalism" was first used by Marxist politician Wilhelm Liebknecht in 1896 and Friedrich Engels, who developed Marxist theory, talked about capitalism with state ownership as a different form of capitalism.
Rothbard maintains that anarcho-capitalism is the only true form of anarchism--the only form of anarchism that could possibly exist in reality as he argues that any other form presupposes an authoritarian enforcement of political ideology, such as "redistribution of private property". According to this argument, the free market is simply the natural situation that would result from people being free from authority and entails the establishment of all voluntary associations in society, such as cooperatives, non-profit organizations, businesses and so on.
Moreover, anarcho-capitalists as well as classical liberal minarchists argue that the application of left-wing anarchist ideals would require an authoritarian body of some sort to impose it. Based on their understanding of anarchism, in order to forcefully prevent people from accumulating clarification needed or use correct term] there would necessarily be a redistributive organization of some sort which would have the authority to in essence exact a tax and re-allocate the resulting resources to a larger group of people. They conclude that this body would inherently have political power and would be nothing short of a state. The difference between such an arrangement and an anarcho-capitalist system is, what anarcho-capitalists see as the voluntary nature of organization within anarcho-capitalism contrasted with a centralized ideology and a paired enforcement mechanism which they believe would be necessary under a "coercively" egalitarian-anarchist system. On the other hand, anarchists argue that a state is required to maintain private property and for capitalism to function.[
However, Rothbard also wrote a piece, published posthumously, entitled "Are Libertarians 'Anarchists'?" in which he traced the etymological roots of Anarchist philosophy, ultimately coming to the conclusion that "we find that all of the current anarchists are irrational collectivists, and therefore at opposite poles from our position. That none of the proclaimed anarchist groups correspond to the libertarian position, that even the best of them have unrealistic and socialistic elements in their doctrines". Furthermore, he said: "We must therefore conclude that we are not anarchists, and that those who call us anarchists are not on firm etymological ground, and are being completely unhistorical. On the other hand, it is clear that we are not archists either: we do not believe in establishing a tyrannical central authority that will coerce the noninvasive as well as the invasive. Perhaps, then, we could call ourselves by a new name: nonarchist".
Classical liberalism is the primary influence with the longest history on anarcho-capitalist theory. Classical liberals have had two main themes since John Locke first expounded the philosophy: the liberty of man and limitations of state power. The liberty of man was expressed in terms of natural rights while limiting the state was based (for Locke) on a consent theory.
In the 19th century, classical liberals led the attack against statism. One notable was Frédéric Bastiat (The Law), who wrote: "The state is the great fiction by which everybody seeks to live at the expense of everybody else". Henry David Thoreau wrote: "I heartily accept the motto, 'That government is best which governs least'; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe, 'That government is best which governs not at all'; and when men are prepared for it, that will be the kind of government which they will have".[failed verification]
The early liberals believed that the state should confine its role to protecting individual liberty and property and opposed all but the most minimal economic regulations. The "normative core" of classical liberalism is the idea that in an environment of laissez-faire, a spontaneous order of cooperation in exchanging goods and services emerges that satisfies human wants. Some individualists came to realize that the liberal state itself takes property forcefully through taxation in order to fund its protection services and therefore it seemed logically inconsistent to oppose theft while also supporting a tax-funded protector. So they advocated what may be seen as[weasel words] classical liberalism taken to the extreme by only supporting voluntarily funded defense by competing private providers. One of the first liberals to discuss the possibility of privatizing protection of individual liberty and property was France's Jakob Mauvillon in the 18th century. In the 1840s, Julius Faucher and Gustave de Molinari advocated the same.
In his essay The Production of Security, Molinari argued: "No government should have the right to prevent another government from going into competition with it, or to require consumers of security to come exclusively to it for this commodity". Molinari and this new type of anti-state liberal grounded their reasoning on liberal ideals and classical economics. Historian and libertarian Ralph Raico argues that what these liberal philosophers "had come up with was a form of individualist anarchism, or, as it would be called today, anarcho-capitalism or market anarchism". Unlike the liberalism of Locke, which saw the state as evolving from society, the anti-state liberals saw a fundamental conflict between the voluntary interactions of people, i.e. society; and the institutions of force, i.e. the state. This society vs. state idea was expressed in various ways: natural society vs. artificial society, liberty vs. authority, society of contract vs. society of authority and industrial society vs. militant society, just to name a few. The anti-state liberal tradition in Europe and the United States continued after Molinari in the early writings of Herbert Spencer as well as in thinkers such as Paul Émile de Puydt and Auberon Herbert.
In the early 20th century, the mantle of anti-state liberalism was taken by the Old Right. These were minarchists, anti-war, anti-imperialists and (later) anti-New Dealers. Some of the most notable members of the Old Right were Albert Jay Nock, Rose Wilder Lane, Isabel Paterson, Frank Chodorov, Garet Garrett and H. L. Mencken. In the 1950s, the new "fusion conservatism", also called "Cold War conservatism", took hold of the right-wing in the United States, stressing anti-communism. This induced the libertarian Old Right to split off from the right and seek alliances with the (now left-wing) antiwar movement, and to start specifically libertarian organizations such as the Libertarian Party.
Rothbard was influenced by the work of the 19th-century American individualist anarchists (who were also influenced by classical liberalism). In the winter of 1949, influenced by several 19th century individualists anarchists, Rothbard decided to reject minimal state laissez-faire and embrace individualist anarchism. In 1965, he said: "Lysander Spooner and Benjamin R. Tucker were unsurpassed as political philosophers and nothing is more needed today than a revival and development of the largely forgotten legacy they left to political philosophy". He thought they had a faulty understanding of economics as the 19th century individualists had a labor theory of value as influenced by the classical economists and Rothbard was a student of Austrian economics which does not agree with the labor theory of value. He sought to meld 19th-century American individualists' advocacy of free markets and private defense with the principles of Austrian economics: "There is, in the body of thought known as 'Austrian economics', a scientific explanation of the workings of the free market (and of the consequences of government intervention in that market) which individualist anarchists could easily incorporate into their political and social Weltanschauung". He held that the economic consequences of the political system they advocate would not result in an economy with people being paid in proportion to labor amounts, nor would profit and interest disappear as they expected. Tucker thought that unregulated banking and money issuance would cause increases in the money supply so that interest rates would drop to zero or near to it.
Rothbard disagreed with this as he explains in The Spooner-Tucker Doctrine: An Economist's View. He says that first of all Tucker was wrong to think that that would cause the money supply to increase because he says that the money supply in a free market would be self-regulating. If it were not, then inflation would occur so it is not necessarily desirable to increase the money supply in the first place. Secondly, he says that Tucker is wrong to think that interest would disappear regardless because people in general do not wish to lend their money to others without compensation so there is no reason why this would change just because banking was unregulated. Tucker held a labor theory of value and as a result he thought that in a free market people would be paid in proportion to how much labor they exerted and that if they were not then exploitation or "usury" was taking place. As he explains in State Socialism and Anarchism, his theory was that unregulated banking would cause more money to be available and that this would allow proliferation of new businesses, which would in turn raise demand for labor. This led him to believe that the labor theory of value would be vindicated and equal amounts of labor would receive equal pay. As an Austrian economist, Rothbard did not agree with the labor theory and believed that prices of goods and services are proportional to marginal utility rather than to labor amounts in the free market. He did not think that there was anything exploitative about people receiving an income according to how much buyers of their services value their labor or what that labor produces.
Of particular importance to anarcho-capitalists and Tucker and Spooner are the ideas of "sovereignty of the individual", a market economy and the opposition to collectivism. A defining point upon which they agree is that defense of liberty and property should be provided in the free market rather than by the state. Tucker said: "[D]efense is a service like any other service; that it is labor both useful and desired, and therefore an economic commodity subject to the law of supply and demand; that in a free market this commodity would be furnished at the cost of production; that, competition prevailing, patronage would go to those who furnished the best article at the lowest price; that the production and sale of this commodity are now monopolized by the State; and that the State, like almost all monopolists, charges exorbitant prices".
Several libertarians have discussed historical precedents of what they believe were examples of anarcho-capitalism.
One case that has inspired both sorts of anarchists is that of the free cities of medieval Europe. The first weak link in the chain of feudalism, these free cities became Europe's centers of economic development, trade, art, and culture. They provided a haven for runaway serfs, who could often legally gain their freedom if they avoided re-capture for a year and a day. And they offer many examples of how people can form mutual-aid associations for protection, insurance, and community. Of course, left-anarchists and anarcho-capitalists take a somewhat different perspective on the free cities: the former emphasize the communitarian and egalitarian concerns of the free cities, while the latter point to the relatively unregulated nature of their markets and the wide range of services (often including defense, security, and legal services) which were provided privately or semi-privately.
According to the libertarian theorist David D. Friedman: "Medieval Icelandic institutions have several peculiar and interesting characteristics; they might almost have been invented by a mad economist to test the lengths to which market systems could supplant government in its most fundamental functions". While not directly labeling it anarcho-capitalist, he argues that the legal system of the Icelandic Commonwealth comes close to being a real-world anarcho-capitalist legal system because while there was a single legal system, enforcement of law was entirely private and highly capitalist; and so it provides some evidence of how such a society would function. "Even where the Icelandic legal system recognized an essentially 'public' offense, it dealt with it by giving some individual (in some cases chosen by lot from those affected) the right to pursue the case and collect the resulting fine, thus fitting it into an essentially private system". Commenting on its political structure, libertarian scholar Roderick Long remarks:
The legal system's administration, insofar as it had one, lay in the hands of a parliament of about 40 officers whom historians call, however inadequately, "chieftains". This parliament had no budget and no employees; it met only two weeks per year. In addition to their parliamentary role, chieftains were empowered in their own local districts to appoint judges and to keep the peace; this latter job was handled on an essentially fee-for-service basis. The enforcement of judicial decisions was largely a matter of self-help (hence Iceland's reputation as a land of constant private feuding), but those who lacked the might to enforce their rights could sell their court-decreed claims for compensation to someone more powerful, usually a chieftain; hence even the poor and friendless could not be victimized with impunity. The basis of a chieftain's power within the political order was the power he already possessed outside it, in civil society. The office of chieftaincy was private property, and could be bought or sold; hence chieftaincies tended to track private wealth. But wealth alone was not enough. As economic historian Birgir Solvason notes in his masterful study of the period, "just buying the chieftainship was no guarantee of power"; the mere office by itself was "almost worthless" unless the chieftain could "convince some free-farmers to follow him". Chieftains did not hold authority over territorially-defined districts, but competed for clients with other chieftains from the same geographical area.
Long observes how the system of free contract between farmers and chieftains was threatened when harassment from Norwegian kings that began around AD 1000 forced the people of Iceland to accept Christianity as the national religion, which paved the way for the introduction of a compulsory tax in AD 1096 which was to be paid to the local chieftain who owned a churchstead. This, he believes, gave an unfair advantage to some chieftains who at least in part did not need to rely upon the voluntary support of their clients in order to receive some income. This gradually lead to the concentration of power in the hands of a few big chieftains, enabling them to restrict competition and eventually establish effective monopolies. Although the Commonwealth was politically stable for over three centuries, longer than any democracy has lasted, its eventual downfall was brought about according to Long "not through having too much privatization, but through having too little". He notes:
[T]he Free State failed, not through having too much privatization, but through having too little. The tithe, and particularly the portion allotted to churchstead maintenance, represented a monopolistic, non-competitive element in the system. The introduction of the tithe was in turn made possible by yet another non-competitive element: the establishment of an official state church which everyone was legally bound to support. Finally, buying up chieftaincies would have availed little if there had been free entry into the chieftaincy profession; instead, the number of chieftains was set by law, and the creation of new chieftaincies could be approved only by parliament - i.e., by the existing chieftains, who were naturally less than eager to encourage competitors. It is precisely those respects in which the Free State was least privatized and decentralized that led to its downfall - while its more privatized aspects delayed that downfall for three centuries.
According to the research of Terry L. Anderson and P. J. Hill, the Old West in the United States in the period of 1830 to 1900 was similar to anarcho-capitalism in that "private agencies provided the necessary basis for an orderly society in which property was protected and conflicts were resolved" and that the common popular perception that the Old West was chaotic with little respect for property rights is incorrect. Since squatters had no claim to western lands under federal law, extra-legal organizations formed to fill the void. Benson explains:
The land clubs and claim associations each adopted their own written contract setting out the laws that provided the means for defining and protecting property rights in the land. They established procedures for registration of land claims, as well as for protection of those claims against outsiders, and for adjudication of internal disputes that arose. The reciprocal arrangements for protection would be maintained only if a member complied with the association's rules and its court's rulings. Anyone who refused would be ostracized. Boycott by a land club meant that an individual had no protection against aggression other than what he could provide himself.
According to Anderson, "[d]efining anarcho-capitalist to mean minimal government with property rights developed from the bottom up, the western frontier was anarcho-capitalistic. People on the frontier invented institutions that fit the resource constraints they faced".
In his work For a New Liberty, Murray Rothbard has claimed ancient Gaelic Ireland as an example of nearly anarcho-capitalist society. In his depiction, citing the work of Professor Joseph Peden, the basic political unit of ancient Ireland was the tuath, which is portrayed as "a body of persons voluntarily united for socially beneficial purposes" with its territorial claim being limited to "the sum total of the landed properties of its members". Civil disputes were settled by private arbiters called "brehons" and the compensation to be paid to the wronged party was insured through voluntary surety relationships. Commenting on the "kings" of tuaths, Rothbard states:
The king was elected by the tuath from within a royal kin-group (the derbfine), which carried the hereditary priestly function. Politically, however, the king had strictly limited functions: he was the military leader of the tuath, and he presided over the tuath assemblies. But he could only conduct war or peace negotiations as agent of the assemblies; and he was in no sense sovereign and had no rights of administering justice over tuath members. He could not legislate, and when he himself was party to a lawsuit, he had to submit his case to an independent judicial arbiter.
Some libertarian historians[failed verification] have cited law merchant, admiralty law and early common law as examples of anarcho-capitalism. In his work Power and Market, Rothbard states:
The law merchant, admiralty law, and much of the common law began to be developed by privately competitive judges, who were sought out by litigants for their expertise in understanding the legal areas involved. The fairs of Champagne and the great marts of international trade in the Middle Ages enjoyed freely competitive courts, and people could patronize those that they deemed most accurate and efficient.
Economist Alex Tabarrok claimed that Somalia in its stateless period provided a "unique test of the theory of anarchy", in some aspects near of that espoused by anarcho-capitalists David D. Friedman and Murray Rothbard. Nonetheless, many anarcho-capitalists argue that Somalia was not an anarchist society.
Many anarchists like Brian Morris argue that anarcho-capitalism does not in fact get rid of the state. He says that anarcho-capitalists "simply replaced the state with private security firms, and can hardly be described as anarchists as the term is normally understood". As anarchist Peter Sabatini notes:
Within [right] Libertarianism, Rothbard represents a minority perspective that actually argues for the total elimination of the state. However Rothbard's claim as an anarchist is quickly voided when it is shown that he only wants an end to the public state. In its place he allows countless private states, with each person supplying their own police force, army, and law, or else purchasing these services from capitalist vendors ... Rothbard sees nothing at all wrong with the amassing of wealth, therefore those with more capital will inevitably have greater coercive force at their disposal, just as they do now.-- Peter Sabatini, "Libertarianism: Bogus Anarchy"
Likewise Bob Black argues that an anarcho-capitalist wants to "abolish the state to his own satisfaction by calling it something else". He states that they do not denounce what the state does, they just "object to who's doing it".
Some critics argue that anarcho-capitalism turns justice into a commodity; private defense and court firms would favour those who pay more for their services.Randall G. Holcombe argues that defense agencies could form cartels and oppress people without fear of competition. Philosopher Albert Meltzer argued that since anarcho-capitalism promotes the idea of private armies, it actually supports a "limited State". He contends that it "is only possible to conceive of Anarchism which is free, communistic and offering no economic necessity for repression of countering it".
Robert Nozick argues that a competitive legal system would evolve toward a monopoly government--even without violating individuals rights in the process. In Anarchy, State, and Utopia, Nozick argues that an anarcho-capitalist society would inevitably transform into a minarchist state through the eventual emergence of a monopolistic private defense and judicial agency that no longer faces competition. He argues that anarcho-capitalism results in an unstable system that would not endure in the real world. While anarcho-capitalists such as Roy Childs and Murray Rothbard have rejected Nozick's arguments, John Jefferson actually advocates Nozick's argument and states that such events would best operate in laissez-faire. Paul Birch argues that legal disputes involving several jurisdictions and different legal systems will be too complex and costly, therefore the largest private protection business in a territory will develop into a natural monopoly.Robert Ellickson states that anarcho-capitalists "by imagining a stable system of competing private associations, ignore both the inevitability of territorial monopolists in governance, and the importance of institutions to constrain those monopolists' abuses".
Anarcho-capitalists counter that this argument is circular because they believe monopolies are artificial constructs that can only be maintained by political immunity to natural market processes, or by perpetual provision of superior quality products and services. Unless competitors are prevented from entering a market, they believe that the profit incentive, which is fueled by "constant demand for improvement", proportionately draws them into it. Furthermore, they believe that the medieval systems in Ireland and Iceland demonstrate that treating the right to justice as a property means that it is sold (not purchased) by victims.[non sequitur] Some libertarians propose a restitution system of justice in which the right to restitution created by the violation of the victims' property could be homesteaded by bounty hunters that would bring criminals to justice, thus creating the incentive for people to work defending the rights of victims that otherwise would not be able to pay for the service.[full ]
Negative and positive rights are rights that oblige either action (positive rights) or inaction (negative rights). Anarcho-capitalists believe that negative rights should be recognized as legitimate, but positive rights should be rejected as an intrusion. Some critics, including Noam Chomsky, reject the distinction between positive and negative rights:
Anarcho-capitalism, in my opinion, is a doctrinal system which, if ever implemented, would lead to forms of tyranny and oppression that have few counterparts in human history. There isn't the slightest possibility that its (in my view, horrendous) ideas would be implemented, because they would quickly destroy any society that made this colossal error. The idea of "free contract" between the potentate and his starving subject is a sick joke, perhaps worth some moments in an academic seminar exploring the consequences of (in my view, absurd) ideas, but nowhere else.-- Noam Chomsky, "On Anarchism"
Most anarchists argue that certain capitalist transactions are not voluntary and that maintaining the class structure of a capitalist society requires coercion, which violates anarchist principles.David Graeber noted his skepticism about anarcho-capitalism along the same lines:
To be honest I'm pretty skeptical about the idea of anarcho-capitalism. If a-caps imagine a world divided into property-holding employers and property-less wage laborers, but with no systematic coercive mechanisms [...] well, I just can't see how it would work. You always see a-caps saying "if I want to hire someone to pick my tomatoes, how are you going to stop me without using coercion?" Notice how you never see anyone say "if I want to hire myself out to pick someone else's tomatoes, how are you going to stop me?" Historically nobody ever did wage labor like that if they had pretty much ANY other option.[unreliable source?]
Some critics argue that the anarcho-capitalist concept of voluntary choice ignores constraints due to both human and non-human factors, such as the need for food and shelter, and active restriction of both used and unused resources by those enforcing property claims. For instance, if a person requires employment in order to feed and house himself, the employer-employee relationship could be considered involuntary. Another criticism is that employment is involuntary because the economic system that makes it necessary for some individuals to serve others is supported by the enforcement of coercive private property relations.
Some philosophies view any ownership claims on land and natural resources as immoral and illegitimate.
Some libertarian critics of anarcho-capitalism who support the full privatization of capital, such as geolibertarians, argue that land and the raw materials of nature remain a distinct factor of production and cannot be justly converted to private property because they are not products of human labor. Some socialists, including other market anarchists such as mutualists, adamantly oppose absentee ownership. Anarcho-capitalists have strong abandonment criteria - one maintains ownership (more or less) until one agrees to trade or gift it. Anti-state critics of this view tend to have comparatively weak abandonment criteria; for example, one loses ownership (more or less) when one stops personally occupying and using it. Furthermore, the idea of perpetually binding original appropriation is anathema to socialism and traditional schools of anarchism as well as to any moral or economic philosophy that takes equal natural rights to land and the Earth's resources as a premise.
Anarcho-capitalists counter that property[which?] is not only natural, but unavoidable, citing the Soviet Union as an inevitable result of its prohibition[clarification needed] and collectivization, which they claim eliminates the incentives and accountability of ownership and blackens markets. Kosanke further challenges what he perceives as "egalitarian dogma" by attempting to demonstrate that all costs of living are naturally determined, subject to a variety of factors and cannot be politically manipulated without net negative consequences.[non sequitur]
The following is a partial list of notable nonfiction works discussing anarcho-capitalism.
Anarcho-capitalism has been examined in certain works of literature, particularly science fiction. An early example[according to whom?] is Robert A. Heinlein's 1966 novel The Moon Is a Harsh Mistress in which he explores what he terms "rational anarchism".
Cyberpunk and postcyberpunk authors have been particularly fascinated by the idea of the breakdown of the nation-state. Several stories of Vernor Vinge, including Marooned in Realtime and Conquest by Default, feature anarcho-capitalist societies, sometimes portrayed in a favorable light and sometimes not.[failed verification]Neal Stephenson's Snow Crash and The Diamond Age, Max Barry's Jennifer Government and L. Neil Smith's The Probability Broach all explore anarcho-capitalist ideas. The cyberpunk portrayal of anarchy varies from the downright grim to the cheerfully optimistic and it need not imply anything specific about the writer's political views. In particular, Neal Stephenson refrains from sweeping political statements when deliberately provoked.
In Matt Stone's (Richard D. Fuerle) novelette On the Steppes of Central Asia, an American grad student is invited to work for a newspaper in Mongolia and discovers that the Mongolian society is indeed stateless in a semi-anarcho-capitalist way. The novelette was originally written to advertise Fuerle's 1986 economics treatise The Pure Logic of Choice.
Sharper Security: A Sovereign Security Company Novel, part of a series by Thomas Sewell, is "set a couple of decades into the near-future with a liberty view of society based on individual choice and free market economics" and features a society where individuals hire a security company to protect and insure them from crime. The security companies are sovereign, but customers are free to switch between them. They behave as a combination of insurance/underwriting and para-military police forces. Anarcho-capitalist themes abound, including an exploration of not honoring sovereign immunity, privately owned road systems, a laissez-faire market and competing currencies.
It is all the more curious, incidentally, that while laissez-faireists should by the logic of their position, be ardent believers in a single, unified world government, so that no one will live in a state of "anarchy" in relation to anyone else, they almost never are.
Usually considered to be an extreme left-wing ideology, anarchism has always included a significant strain of radical individualism, from the hyperrationalism of Godwin, to the egoism of Stirner, to the libertarians and anarcho-capitalists of today
(...) as long as within society a possessing and non-possessing group of human beings face one another in enmity, the state will be indispensable to the possessing minority for the protection for its privileges.
But if we define anarchy as places without governments, and we define governments as the agencies with a legal right to impose violence on their subjects, then whatever else occurred in Haiti, Sudan, and Somalia, it wasn't anarchy. For there were well-organized gangs (e.g., governments) in each of these places, demanding tribute, and fighting others who made similar impositions. Absence of government means absence of government, whether well established ones, or fly-by-nights.