Perhaps one of the most difficult concepts for a liberty novice to grasp is that of courts in a free market. Having only had experience with a coercive monopoly controlling courts, people rarely consider alternatives. This article will attempt to explain why a laissez-faire system is preferable to government in the market for law.
Why law is a market
When considering services which the state holds a monopoly on, people often fail to realize that there is a market which has been taken over. This is true especially in law, in which people see the State as the only possible provider. Law is, in essence, a set of rules which people expect others to follow and to be punished if they do not. Private agencies are certainly capable of making and setting rules, and seeing as private security currently outnumber police, the enforcement of those rules would not be anything the free market could not deliver.
Courts, profit and competition
Agencies in a free society would arise which would have different sets of rules. These agencies, courts, would hear cases which could not be settled privately between parties. These cases would be sent to the department which dealt with that issue, whether it be theft, property damage, trespassing, etc. Depending on the case, a paid judge or jury would be brought in to hear each side and provide a ruling.
Judges, in this case, would be paid for their impartiality. Courts and judges would need to keep a reputation as being fair in order to keep getting business. It would be beneficial for courts to subject themselves to third party inspection or to publish company statistics and transactions in order to prove impartiality. Courts which took such measures would be seen as more reputable. This competition between courts to demonstrate their lack of bias would result in the fairest outcomes for those who go to court.
How to bring everybody to court
It is often difficult for people to understand what forces would drive guilty parties to come to court. If you had stolen the car, why show up to court? Most free market anarchists believe something called Rights Enforcement Agencies (REA) would come into play. People would pay some sort of premium or have it included in their job benefits or insurance. These REAs would involve things like police. In situations where both parties were covered by the same REA, the REA would simply pick a court and they would go there to settle it.
If the conflicting actors were covered by different REAs, the REAs of the accusing and accused parties would likely clash often, and make a protocol and list of courts which they each believed to be just. This principle in economics is called the discipline of constant dealings.
In order to not waste time and move forward efficiently, each would collect evidence, conduct an investigation, and decide what the truth was. Should they agree that the accused is guilty, the guilty party would likely see a rise in premiums and pay reparations. Were they to agree the accused is innocent, the REA of the injured party would compensate their client and pursue the guilty party. If the REAs disagreed, they would go to court and bring lawyers to present their respective cases. The ruling would be followed because they would agree to it beforehand and wish to keep their reputations as reliable REAs.
Diversified bodies of law
A frequent objection to the institution of private courts is that of varying laws. Generally, in a free market, people care more about being allowed to do something, rather than to restrict the rights of others to do so. This would provide that laws in a free society bend towards freedom.
Local communities, however, may not have enough demand for a court with certain laws. If a town only had religious laws, people who do not share that religion would not move there. The reverse of this problem would not happen because in a highly populated area, it is likely religious laws would have courts. Courts with laws that had very unpopular or controversial laws, such as sharia law, would likely not be covered by any respectable REA that could survive in the marketplace.
People who have the means to relocate would go to areas with the most preferable laws. The more people go there, the better the quality of life and economy of that area would be. This would result in a more advanced society that concentrated in areas with laws friendly to business and freedom. Over time, the laws in a free society would be refined to maximize the freedom of the individual to achieve his own ends.
The abolition of a violent monopoly improves the quality of the product for everyone. The same is true in the market for law.