Paul Miller avatar

I make projects which help developers to build awesome things. I solve problems related to online businesses at Hell Yeah. I adore travelling around the world and learning more about free markets & infosec. You can ping me on twitter or send me an email. My PGP is 46BEEF337A641ABB.

Libertarianism: how it works

My current thoughts on anarcho-capitalism and libertarianism (russian version).

Every section has description of how the life area will work, advantages of such way and responses to frequently appearing counter-arguments to anarcho-capitalists model.

Note that anarcho-capitalism essentially means things may go other way. I’m not really making predictions, I try to show how the society may work.


  • Definition
  • On efficiency of competition
  • Private law (police and courts)
  • Private roads, land and ocean
  • Private money
  • Life in general
  • Conclusion


Libertarianism is a set of related political philosophies that uphold liberty as the highest political end. It is the antonym to authoritarianism.

Libertarianism draws both on ethical theory and on utilitarian policy proposals. As an introduction, there are four major pillars of libertarian ethics:

  1. Self ownership - you own yourself and as long as you are a peaceful individual no one may legitimately violate (initiate aggression against) your body.
  2. Private Property - You may peacefully and absolutely hold property which you have made from previously unowned resources or which was given to you as a gift or in a contract.
  3. Contract theory - you may, by means of explicit and enforceable contracts, arrange for the exchange of property for services or other property
  4. Non-aggression principle - you may not initiate aggression against anyone’s property or self.

Libertarianism concludes that modern governments are aggressors, and everything they do can be done more efficiently on a free market.

It is a pragmatic philosophy that doesn’t require a change in human nature, it concludes that there will always be bad people and that in general people behave better when they have freedom as compared to when they don’t.

(as a side note, there are two types of libertarianism — socialist anti-private-property and capitalist, we’ll only discuss the second).

On efficiency of competition

If any property is privatised and receives holders, it starts to receive the best possible care. Because this is profitable to holder, with proper management. It is not important who actually controls the property. The important thing is that no-one interferes with it involuntarily (for example, state or bandit that takes 50% of profits).

If this really happens, in free market good and efficient entrepreneurs purchase more and more property, because their profits are higher and terms are better, and bad / inefficient entrepreneurs purchase less. As a result, the overall quality of all property rises. Without politics, the market itself punishes inefficient companies and promotes good ones.

You can often hear that “people are not prepared for freedom”. But you can only feel freedom when you have it. Someone may say that soviet people were not ready for capitalism and slaves were not ready for wage labour, but such steps (abolitionism, dissolution of the Soviet Union) move the world.

Private law (police and courts)

That the public is willing to pay private providers so much shows that the government has already lost a part of its monopoly in violence and that certain functions that the government has usurped are being re-privatized. — Hans-Hermann Hoppe

Usually libertarians are minarchists or anarcho-capitalists. Minarchists think we still need the state — minimal, just for protection. Anarcho-capitalists think that security production can be performed more effectively in the free market. This particular section expresses ancap point.

How it works

  • Privatised police / private defence agencies (“roofs”) will provide security and aggression insurance services. They compete with other security providers and comply to privately emerged set of laws.
  • Privatised courts do arbitration only in such rare cases when PDAs could not reach an agreement with each other, because involving third party is more expensive than addressing the problem in place. PDAs are forced by market to comply with their judgement, otherwise they’ll lose customers and market share as these which don’t adhere to standards.
  • There will be no modern prisons, because they’re tremendously inefficient. Prisons today just maintain convicts with taxpayers money. In a free society, private companies will be forcing aggressors to pay fines for damage done to private property or individuals. Private companies won’t be interested in paying for convicts, so they’ll be forced to pay for themselves. This does not mean they’ll be contained in boxes, as there are much more efficient ways to earn money to pay penalties.
  • Because of voluntary nature of private firms, different people will be able to choose different law codes. For example, muslims will be able to use Sharia Law defence agencies. Of course, it will be applying if only other person uses islamic defence agency too. Otherwise, a common market law code will be applied, just like today with international crimes.
  • There will be no laws, prohibiting gun ownership. Private defence agencies are not interested in disarming their clients because in that case a possibility that client will be subjected to aggression rises. And the firm is forced to pay insurance for these cases.
  • As for national defence, anarcho-capitalist society will not have national compulsory army. Instead, big defence agencies will protect the whole territory from states and other enemies. Perhaps, even with nukes. Cost of such insurance will be bigger within state borders and smaller in other places. Such protection should not be hard, since private security providers are interested in ending all wars with minimal risks, which means they will immediately send someone who will punish individuals (government officials), responsible for the war. In contrast to modern states, which prefer full-fledged war.


  • Quality of security providers and courts will rise. They won’t have territorial monopolies as before and will be forced to comply at least with industrial standard. When some corporation won’t be able to protect its clients, it will lose them and money.
  • There will be less corruption in courts and defence agencies, because private companies are less interested in it.
  • Law-abiding citizens won’t be forced to pay for prisoners. Today USA spends 30K$/year on each convict. Norwegian people spend 100K$/year.

Real-life examples

  1. Important people and especially state servants (top-level politics) today usually hire private security firms for personal security.
  2. Many states are already hiring private armies. For example, USA hired Blackwater during Afghan war.

In 1990s, in Russia, state collapsed and was not been able to protect citizens and businesses. Private defence firms (roofs) had emerged.

At first, most firms were protection racketeers, requiring a toll for ensuring that they don’t touch payer’s property.

But then, because of competition, only those agencies had survived, which cared more about their long-term relationships with clients.

You can read more about this in Vadim Volkov’s book: Violent Entrepreneurs: The Use of Force in the Making of Russian Capitalism


State had always provided security

Nah. Sovereign nation warfare-welfare-states emerged after Peace of Westphallia (1648).

PDAs will defend only those people who will pay them more

We can draw an analogy with other industries. Why does Samsung care about all customers and not just about these which pay it more? Because they’ll lose profits from others that quit using Samsung products because of that.

On the other hand, today, when law is monopolised, those which can afford it, have more chances to win cases, as state does not have pressure of reputation and competition.

PDAs will be at constant war with each other

Only initially and only if transition will be fast instead of gradual. More precisely, only for the first several years, if we’ll look at how things worked out for Russia in 1990s. In the end only efficient PDAs will survive and security production will become much better than now. War always has very big costs and it’s unfavourable to fight for long-established firms.

Someone will create a PDA that will be radically fanatically defend its clients regardless of their rightness

Other PDAs wouldn’t tolerate loss of profits as their clients will be disadvantaged. Then other firms will likely be cooperating in order to defeat bad PDA.

Poor people, who can’t afford security, will be constant victims of aggression

  1. Some companies will have lower prices than other that poor people will be more likely able to afford.
  2. Some companies will want to provide their services for free to some people in order to increase their reputation.
  3. As there will be no gun control laws, everyone will be able to buy some pocket gun for self-protection.

Private roads, land and ocean

All roads, land and ocean in free society will have its owners.

How it works

  • As property owners want to get profits from their roads, every car will have a device that will be calculating how much the car had passed and then driver will need to pay a price for this.
  • Highway code will be a standard, which owners may voluntarily accept.
  • This does not mean you will need to pay for any movement, many property folks will be allowing it for free, just like today shopping centre owners don’t charge users. Instead, they charge tenants and shop owners.


  • Overall road quality will increase. Owners won’t be interested in bad roads, because there will be less drivers driving on these so profits of road owners will be less.
  • Ecology will be better. One might imagine a street owner that’s constantly sued by people who live on the street in condos because of massive car pollution. As a consequence, street owner will be forced to charge cars which pollute air more than those which pollute less. Sea or forest owner is interested in decreasing pollution for bigger long-term profits.

Real-life example

Today there are many successful highways in the world, so this works already.

London centre had big traffic problems. They’ve sort of solved it with charging cars for using the centre.


Ah, one more thing for which I need to pay.

You’re already paying for it via your taxes. In fact, you’re paying more, because state’s provision of these goods is not quite effective. Also, you won’t need to pay for every single movement.

Some road owner will use weird and bad rules

Then the road will become unprofitable because no one will use it.

A nice book called “The Privatization of Roads and Highways” by Walter Block describes how roads will function in free market, their problems and solutions to these problems.

Corporation will buy all road around district and create a blockade for all citizens.

We have a lot of similar examples in other areas of life today and they aren’t considered as blockades. For example, a company that owns office building leases some space to those who cannot afford the whole building. Theoretically, the company can disallow leasers from getting out of the building, but somehow no one does this and even the possibility seems to be funny for us.

The problem is easily solved by adequate lawyers. Lawyer, which will allow something like this will instantly lose reputation and be fired.

Furthermore, land owning does not mean owning of space in the depths of the earth or owning all airspace under the earth. So you will be always available to get away by an aircraft or tunnel under the property.

Private money

In libertarian society there will be no fiat printed-by-state money. Instead of this, market will adopt some voluntary industry standard.

How it works

There are several options:

  1. Classical: some real resource which has a value in itself will be used as money.
  2. Digital a.k.a. virtual currency.

It is most likely that no one will be able to do issue almost unlimited amount of private money, like governments do today.


  • There will be no inflation (if issuing won’t be free either)
  • State won’t be able to control monetary flow and create various related disasters, like it did with money of Cyprus citizens in March 2013.

Real-life example

Bitcoin is a nice example of real-world currency that is not controlled or issued by any central government. Although it’s primarily used today by various activists and black market (arms, drugs), mainstream slowly adopts it too.

Bitcoins are mined just like gold, but virtually, on PCs. There won’t ever be more than 21M bitcoins.

Check this nice small article about bitcoins for more info.

Life in general

Life in general will be much more free.


  • Legalisation of prostitution will increase its quality, greatly decrease sexual slavery.
  • Legalisation of drugs will decrease drug price and increase their quality. Heroin folks won’t be robbing ordinary citizens as before, because their drug will be extremely cheap (the reason for this is heroin net cost, it’s like aspirin’s).
  • One more reason for private defence agencies to be more effective is that they don’t need to capture pseudocriminals that don’t actually harm anyone (victimless crimes.)
  • Abolishing state standards and others will increase significance of their private and more effective counterparts. For example, there can be a rating agency that will check restaurants, cafes, hotels etc. for quality of their food. Businesses will be competing with each other, so getting a certificate of this institution will be a competitive advantage. There’s clearly zero need for public institutions like FDA in that case.
  • Abolishing patents (another coercive government monopoly that can’t exist in free market) will allow for two individuals to independently come up with some idea without fear of repression.

Real-life example

Many countries has legalised marijuana and other drugs or prostitution and everything is fine there.


Decriminalisation of heavy drugs will decrease society life expectation

With this logic, extreme sports should be prohibited, because those who practice it live less.

If drugs are someone’s free choice, it’s absolutely up to him, but he must not be treated as convict.

Free market does not work for public goods or natural monopolies

It’s popular today to treat monopolies in some areas of life (gas, water, public transport, electricity) as natural. It is considered that privatisation of such enterprises will create less effective and more costly products.

Their efficiency was not proved, in fact, it was disproved in the past and present. These enterprises are simply a symbiosis of big business and government. For more details and historical facts see “The Myth of Natural Monopoly”.


There are hundreds of facts that freedom is more efficient that regulations. Unfortunately, mainstream political movements still prefer Big Government.

We (libertarians) should educate people about the benefits, this is the only legit way libertarian society can be reached in our lifetimes.

There are plenty of books written on libertarianism and if you are interested in any, I recommend to read my post on the recommended literature.