Anarcho-capitalists are frequently asked, “How will there be law and order in a free society? Without the state, wouldn’t there be chaos?” Given what we know about human nature and praxeology, we answer this with how we expect the market to work in these industries in the absence of the state. But many interpret our examples as being mere hypotheticals, and instead seek empirical evidence to show that our ideas would be practical. So let’s give it to them.
Frederic Bastiat defined justice as the negation of an injustice. An injustice occurs when one’s rights are infringed upon by another individual. This comes by way of theft, assault, murder, or a breach of contract. Since we live in an imperfect world, these injustices are bound to happen, and therefore there exists a demand for third-party arbitrators to provide justice.
In the game of baseball, players and coaches agree to a certain set of rules, voluntarily entering contracts with one another. Since there is bound to be a breach of these rules, a third-party is needed to settle disputes. The MLB hires umpires to do just this, and they officiate the game to the best of their ability.
Umpires often face greater scrutiny than the players, and are under a more watchful eye since they are tasked with getting the calls right. It is their job to bring justice to the game. And when they fear they have made an incorrect call, they go to the replay monitor to ensure that they get it right.
Those wary of free market arbitration often believe that in the absence of the state, private courts would either sellout to the highest bidder, or try to screw over their customers. But if this is the case, then why don’t umpires attempt to do the same thing? Why do they try so hard to get the calls right instead of trying to screw over the players?
The answer to this lies in the incentives of the market. An umpire has the incentive to be as close to perfect as possible because he will get paid more if he does a good job. The best of the best will have the privilege of officiating playoff games, and a select few will get to umpire the World Series. Some will even be inducted into the Baseball Hall of Fame, and be as memorialized as some of the players.
An umpire has little incentive to try screwing over the players, because if he does this, he will lose his job very quickly. No one will want to pay him to umpire a game if they know he can’t get calls right. If the umpire were to make up his own rules that made no sense to the game, he’d be run out of town even quicker. And if he operated in the manner that governments do and tried holding a gun to people’s heads to accept his bad calls and made-up rules, he’d be severely outnumbered by the hundreds of players and thousands of fans who want umpires to make the right calls.
It is part of our human nature to want to maximize our utility. Umpires, like anyone else, wish to maximize theirs as well. It is apparent that it is much easier for them to maximize their paychecks and reputation by officiating fairly, rather than by intentionally making bad calls or being bought out by the highest bidder. What holds the system in check and balance is the constant threat of competition from other umpires who are willing to take your job if you’re ever fired for making bad calls. If there were no competition, umpires would have less of an incentive of making sure they get the calls right. This is why the justice system is corrupt and inefficient when serviced by the state.
The game of baseball is just one of the many examples of private arbitration existing (and flourishing) in the absence of state intervention. The onus of proof is therefore on the skeptic to prove that law in a free society would be inefficient and disorderly, otherwise they are the ones who are speaking in hypotheticals. If arbitration which exists outside of the control of the state is already orderly and efficient, then why would it be any different in the complete absence of the state?