The Market for Liberty

Linda & Morris Tannehill

[Online Editor: Despite falling in love with this book, I wound up with various points of contention with the Tannehills, and as such, choose to spell out these points of disagreements by placing Post-it notes on various pages.  What you find below chapter eight of this fantastic work; but also you will find, in pale yellow, my comments, clarifications, and disagreements therewith.]

Buy the Book Here




Chapter 8.

Protection of Life and Property

Because man has a right to life, he has a right to defend that life.  Without the right to self-defense, the right to life is a meaningless phrase.  If a man has a right to defend his life against aggression, he also has a right to defend all his possessions, because these possessions are the results of his investment of time and energy (in other words, his investment of parts of his life) and are, thus, extensions of that life.

Pacifists deny that man may morally use force to defend himself, objecting that the use of physical force against any human being is never justifiable under any circumstances.  They contend that the man who uses force to defend himself sinks to the same level as his attacker.  Having made this assertion, they offer no evidence based on fact to prove it but merely treat it as an arbitrary primary, a given standard by which everything else must be judged.


PacifistsEvil or UnjustEvil or Unjust
ObjectivistsEvil or UnjustGood and Just
LibertariansEvil or UnjustNeutral, but Just

Others (e.g. liberals, conservatives)



To say that all use of force is evil is to ignore the moral difference between murder and self-defense and to equate the actions of a crazed thrill-killer with those of a man defending the lives of himself and his family.  Such an absurd view, though supposedly based on a moral principle, actually completely disregards the moral principle of justice.  Justice requires that one evaluate others for what they are and treat each person as he objectively deserves.  One who has an uncompromising regard for justice will grant his respect and admiration to men of virtue, and his contempt, condemnation, and rational opposition to men whose behavior is harmful to human existence.  To object verbally while non-violently submitting to an aggression is the behavior of a hypocrite whose talk and actions are diametrically opposed.  In fact, hypocrisy is the pacifist’s only real protection against his “moral” code.

To ignore the principle of justice is to penalize the good and to reward the evil.  Pacifism encourages every thug to continue his violent ways, even though the pacifist may devoutly wish he wouldn’t (wishes don’t create reality).  Pacifistic behavior teaches the aggressor that crime does pay and encourages him to more and bigger aggressions.  Such sanctioning of injustices is immoral, and because it is immoral it is also impractical.  A “free society of pacifists” would be short-lived, if it could come into existence at all.  Such a society of helpless sheep would unwittingly call every wolf in the world to come and dine at their expense.  Justice is indispensable to the perpetuation of a free society.

Since pacifism’s failure to actively oppose injustice is immoral, it follows that every man has not only the right but the moral obligation to defend his life and property against aggression whenever it is feasible for him to do so.  This is a personal obligation, because only the individual himself can know just what he values, how much he values it, and what other values he is willing to part with in order to defend it.

The fact that self-defense is a personal responsibility doesn’t mean that every man must turn his home into an armed fortress and wear a six-shooter whenever he steps outside.  Taking care of one’s health is a personal responsibility, too (certainly no one else is responsible for seeing that I remain healthy), but this does not mean that every individual must take an extensive course in medical school, build his own hospital and perform surgery on himself whenever he needs an operation.  A man assumes his resposibilities [sic] by either taking care of the matter himself or, if that is impossible or impractical, hiring someone else to do it for him.  This means that a man’s right and responsibility to defend himself and his other values can be exercised for him by a hired agent so long as he, himself, designates that agent.  The agent may take any actions which the man himself would have the right to take but may not do anything which the man would not have the right to do (such as the initiation of force against someone else).

Several advocates of liberty have proposed that this agent should be (or even must be) a “voluntary” government.  By this they mean that the individuals in a society, seeing that they needed an agency of self-defense, would band together and set up a government which would be limited to acting as an agent to defend them.  Each would then agree to forgo using retaliatory force on his own behalf (except in emergency situations) and to let the government defend him and be the final arbiter in any disputes he might have.  Such a “voluntary” government, acting as nothing more than an agent of individual self-defense, may sound good on the surface but on examination proves to be unworkable because government, even the most limited government, is a coercive monopoly.  An institution cannot at the same time be both coercive and voluntary.  Even if it could manage to support itself without taxation, and even if it did not force people to buy its services, it would still have to prohibit competition in its area or it would cease to exist as a government.  This “voluntary” government would be in the same position as a grocer who said to the people in his town, “You may voluntarily buy your groceries from me; you are free not to buy your groceries from me; but you may not buy them from anyone else.”  Thus, a “voluntary” government would “defend” its citizens by forcing them (either openly or subtly) to forgo defending themselves and to buy their defense only from it . . . at which point the citizens might be badly in need of someone to defend them from their “defenders.”

The right to self-defense and the responsibility to defend oneself go hand in hand.  A man can enter into a voluntary transaction, hiring someone else to do the job for him, but he cannot cede the responsibility to a coercive monopoly and still be free to exercise the right.  The man who “hires” a government to be his agent of self-defense will, by his very act of entering into a relationship with this coercive monopoly, make himself defenseless against his “defender.”  A “voluntary government, acting as an agent of self-defense,” is a contradictory and meaningless concept.

Advocates of government have objected that self-defense could not be the object of a market transaction because “force is different from all other goods and services—it is by its very nature an extra-market phenomenon and can never be a part of the market.”  This claim is based on two factors—when force is used, 1—the exchange is not a willing one, and 2—there is no mutual benefit to those involved in the exchange.

The error in this assertion springs from a failure to distinguish between initiated force and retaliatory force.  A market phenomenon is a willing exchange of goods and/or services which does not involve the use of coercion by the parties to the transaction against anyone.  It is true that initiated force is not and can never be a market phenomenon because it acts to destroy the market.  But, retaliatory force not only does not act to destroy the market, it restrains aggressors who would destroy it and/or exacts reparations from them.

When an individual uses retaliatory force on his own behalf, his action is, of course, not a market phenomenon, any more than it is a market phenomenon when he fixes his own car.  But if he hires an agent to protect him (with the use of retaliatory force if necessary), this action is a market phenomenon, just as the hiring of a mechanic to fix his car is.

For example, suppose a hard-working, private enterprise coin minter believes that he may be attacked and his business robbed.  The minter performs a market transaction—he hires a big, husky guard.  The contract between the minter and the guard involves the willing exchange of the minter’s money for the guard’s services.  The guard’s services consist of protection and, if necessary, active defense of the minter’s person and property; that is, the guard agrees to take whatever retaliatory action is feasible to protect and defend his new employer from possible harm whenever force may be initiated against him.  The next night an armed burglar breaks into the mint and attacks the minter, who is working late.  The guard successfully wards off the attack by the use of retaliatory force and captures the burglar.  In doing so, the guard fulfills in this particular instance his contractual agreement with the minter.  It is obvious that the retaliatory force used by the guard is a part of a market phenomenon, by virtue of his contract with the minter.

Those who claim that “force is not a market phenomenon” consider the “exchange” of force between the guard and the burglar in complete isolation from the other circumstances of the case (they are guilty of dropping the context).  It is true that the “exchange” between the guard and the burglar is not a willing one and that there is no mutual benefit derived from it—in fact, it is not even an exchange in the market sense.  The exchange which is a market phenomenon is the coin minter’s money for the guard’s services; this exchange is a willing one, there is mutual benefit to both parties to the transaction, and neither of them initiates the use of physical force against anyone.  The relationship between the minter and the guard is clearly a market phenomenon—a willing exchange of values which does not involve the use of coercion by the parties to the transaction against anyone.

Though force per se is not a market phenomenon, the hiring of an agent for self-defense is.  The claim that “force can never be a part of the market” is so unclear that it has no intelligible meaning.

In a laissez-faire society, there would be no governmental police forces, but this does not mean that people would be left without protection except for what they could furnish for themselves.  The market always moves to fill customers’ needs as entrepreneurs look for profitable innovations.  This means that private enterprise defense agencies would arise, perhaps some of them out of the larger private detective agencies of today.  These companies have already proved their ability to provide efficient and satisfactory service, both in protection of values and the detection of crooks.

Compared (or contrasted) with a governmental police force, how well would a private enterprise defense agency perform its functions?  To answer this question, one must first determine what are the functions of a private defense agency and of a governmental police force.

The function of a private defense service company is to protect and defend the persons and property of its customers from initiated force or any substitute for initiated force.  This is the service people are looking for when they patronize it, and, if the defense agency can’t provide this service as well or better than its competitors, it will lose its customers and go out of business.  A private defense service company, competing in an open market, couldn’t use force to hold onto its customers—if it tried to compel people to deal with it, it would compel them to buy protection from its competitors and drive itself out of business.  The only way a private defense service company can make money is by protecting its customers from aggression, and the profit motive guarantees that this will be its only function and that it will perform this function well.

But, what is the function of a governmental police force?  In dictatorships, it is obvious that the police force exists to protect the government.  What little protection (if it can be called that) the citizens are given from private thugs is only to keep the society on an even keel so the rulers won’t be shaken out of their comfortable positions.  And, of course, the citizens aren’t protected from their government at all.

It is commonly held that in democratic countries the function of the police is to protect the citizens.  The police, however, don’t actually protect people (except high ranking government officials—e.g., the President)—they only apprehend and punish some of the criminals after an act of aggression has been committed.  If you suspect that a thug is planning to rob your home, the police will tell you, “Sorry, but we can’t do anything until a crime has been committed.”  Only after you’ve been robbed and beaten can you call on the police to take action.  And then, if they catch the thug, they won’t even make him pay your hospital bills . . . they’ll just lock him up for a while in a “school for crime,” where he’ll learn to do the job of robbing you more successfully next time.

Still, it is held that the police do protect honest citizens in an indirect way, because their very presence discourages crime (although the rapidly rising crime figures are beginning to make people wonder about this, too).  But this theory fails to take into account the fact that governmental prohibitions, enforced by the police, create black markets, and black markets foster large-scale, organized crime (see Chapter 11).  A black market is nothing more than a normal area of trade which the government has forbidden (usually under the pretense of “taking care of the people,” who are presumably too stupid to look after themselves).  People who trade on a black market are simply doing what they should never have been forbidden to do in the first place—they are trading for goods and services which they believe will increase their happiness, and they aren’t bothering to ask permission from the politicians and bureaucrats.  But a black market, though there is nothing intrinsically wrong with the goods being traded, is a forbidden market, and this makes it risky.  Because of the danger, peaceful individuals are driven out of this forbidden area of trade, and men of violence, who dare to take the risks for the sake of the high profits, are attracted to it.  Black markets attract, create, and support criminals, and especially large criminal gangs.  In fact, organized crime finds its main support in black markets such as gambling, prostitution, and drugs.  By enforcing laws which forbid men to trade peacefully as they please, the police create a social environment which breeds crime.  The small-time burglar who is frightened away by the police is far outweighed by the Mafia boss who makes millions off the black market in prostitution and gambling, which activities are fraught with violence because of government prohibitions.

Not only do governmental police make possible more crime than they discourage, they enforce a whole host of invasive laws designed to make everyone behave in a manner which the lawmakers considered morally proper.  They see to it that you’re not permitted to foul your mind with pornography (whatever that is—even the courts aren’t too sure) or other people’s minds by appearing in public too scantily clad.  They try to prevent you from experiencing the imaginary dangers of marijuana (in the ’20s they protected you from liquor, but that’s not a no-no any more).  They even have rules about marriage, divorce, and your sex life.

No, the police don’t offer the citizen any protection from such invasions of privacy . . . they’re too busy enforcing the invasive laws!  Nor do they protect him from the many governmental violations of his rights—if you try to evade being enslaved by the draft, the police will help the army, not you.  The police prevent the establishment of an effective, private enterprise defense system which could offer its customers real protection (including protection from governments).  In fact, they often prevent you from protecting yourself, as in New York City, where women, even in the most crime-ridden areas, are forbidden to carry effective self-defense devices.  Guns, switch-blade knives, tear gas sprayers, etc., are illegal.  Of course, the criminals ignore these laws, but the peaceful citizens are effectively disarmed and left at the mercy of hoodlums.

In addition to failing to protect citizens from either private criminals or the government, making it almost impossible for the citizens to protect themselves, encouraging crime by creating black markets, and invading privacy with stupid and useless “moral” laws, the police compel citizens to pay taxes to support them!  If a citizen requests to be relieved of police “protection” and protests by refusing to pay taxes for the upkeep of the government and its police, the police will initiate force by picking him up and the government will fine and/or imprison him (unless he attempts to defend himself against the police's initiated violence, in which case his survivors will be forced to bury him at their expense).  With the entire weight of the law behind them, this gives the police the safest protection racket ever devised.

If the police in a democracy don’t exist to protect the citizens, what is their function?  It is essentially the same as that of the police in a dictatorship—to protect the government.  Since in a democracy the current government is always the product of the established social order, the function of police in a democracy is to protect the government by protecting the established social order—the Establishment—whatever it may be.  And the police usually perform this function very well.

The superiority of a private enterprise defense service company springs from the fact that its function—its only function—is to protect its customers from coercion and that it must perform this function with excellence or go out of business.

Since the main aim of defense service companies would be to protect their customers, their primary focus would be on preventing aggression.  They would furnish guards for factories and stores, and men to “walk the beat” on the privately owned streets.  They would install burglar alarms with a direct connection to their office in both businesses and private homes.  They would maintain telephone switchboards and roving patrol cars and perhaps even helicopters to answer calls for help.  They would advise customers who felt themselves to be in danger on the most efficient and safest protective devices to carry in their particular case (from tear gas pens to pistols) and would offer help in obtaining them.  They would probably eventually offer any client a small, personal alarm device which could be carried about in a pocket and would sound an alarm at the defense service’s offices when activated.  Besides these more ordinary services, each company would strive to develop new protective devices that were better than anything its competitors had . . . which would lead to tremendous frustration for would-be crooks.

For a private enterprise defense agency, prevention of aggression would be a profitable business, whereas punishment of aggressors in jails, government-style, would be a losing proposition.  (Who would pay for the convicts’ food and other upkeep if the revenues couldn’t be forced out of taxpayers?1)  But in a governmental society, the police don’t reap any extra profits from the prevention of crime.  In fact, too much crime prevention would reduce the police department’s business (since their business is to apprehend and punish criminals, which requires a good supply of criminals).  In spite of propaganda to the contrary, the police can hardly be expected to be too eager to get rid of the high crime rate and overflowing jails—after all, a lot of police jobs are at stake.

But, because no amount of protection, no matter how excellent, can prevent all aggression, the defense service companies would have to be prepared to deal with initiated force and fraud.  So, they would maintain detective bureaus, excellent criminal laboratories, extensive files on all known aggressors, and they would keep staffs of experts in all fields of scientific crime detection.  They would also have the men and equipment to apprehend dangerous aggressors, as well as secure facilities for holding and transporting them.  They might also have a part in running the correctional institutions.  All these services would not only be efficient and effective, in contrast to those forced on us by governmental police, they would be considerably less expensive, too.  Companies competing in a free market would be forced to produce at the lowest feasible cost—i.e., they would keep their prices at market level—or their competitors would run them out of business.  This is in sharp contrast to socialized institutions which have no competition.  Also, private defense service companies would not have to waste their resources enforcing all those foolish and tyrannical laws designed to compel everyone to “live a decent and moral life” (as, for example, the laws against liquor, drugs, gambling, prostitution, and nudity), to “protect the public” (licensing and anti-trust laws), or to support the vast structure of bureaucracy itself (tax laws).

See Serpico for the level of police corruption existing under government.  This would not exist under a competitive system, as jobs and pay would be dependent upon successful protection—and not corruption.

Private defense service employees would not have the legal immunity which so often protects governmental policemen.  If they committed an aggressive act, they would have to pay for it, just the same as would any other individual.  A defense service detective who beat a suspect up wouldn’t be able to hide behind a government uniform or take refuge in a position of superior political power.  Defense service companies would be no more immune from having to pay for acts of initiated force and fraud than would bakers or shotgun manufacturers.  (For full proof of this statement, see Chapter 11.)  Because of this, managers of defense service companies would quickly fire any employee who showed any tendency to initiate force against anyone, including prisoners.  To keep such an employee would be too dangerously expensive for them.  A job with a defense agency wouldn’t be a position of power over others, as a police force job is, so it wouldn’t attract the kind of people who enjoy wielding power over others, as a police job does.  In fact, a defense agency would be the worst and most dangerous possible place for sadists!

Government police can afford to be brutal—they have immunity from prosecution in all but the most flagrant cases, and their “customers” can’t desert them in favor of a competent protection and defense agency.  But for a free-market defense service company to be guilty of brutality would be disastrous.  Force—even retaliatory force—would always be used only as a last resort; it would never be used first, as it is by governmental police.

In addition to the defense agencies themselves, there is one type of business which has a particular, vested interest in seeing that values are protected and aggressive violence held to a minimum, and which would, in a laissez-faire society, have a natural connection to the business of defense.  This is the insurance industry.

There are two main reasons for the insurance companies’ interest in the business of defense: 1—acts of aggressive violence result in expenses for insurance companies, and 2—the more secure and peaceful the society, the more value-production there will be, and the more value-production there is, the more things there will be which require insurance coverage, which means more insurance sales and more profits (which is the primary business aim of insurance companies).  Furthermore, the concern of the insurance companies for a secure and peaceful environment is economy-wide; that is, their interest extends as far as their market is or is likely to be.

In a laissez-faire society, insurance companies would sell policies covering the insured against loss resulting from any type of coercion.  Such policies would be popular for the same reason that fire and auto insurance are—they would provide a means of avoiding the financial disaster resulting from unexpected crises.  Since the insurance companies couldn’t afford to insure poor risks at the same rates they charged their other customers, insurance policies would probably specify certain standard protective measures which the insured must take in order to buy the policy at the lowest rates—burglar alarms connected to the defense service company’s office, for example.  Policies would also state that the insured must buy his protection from a defense agency which met the standards of the insurance company, to avoid having him hire an inefficient or fly-by-night defense agency at a cheap price while counting on his insurance to make up for any loss which their ineffectiveness caused him.

A man who carried insurance against coercion could call on a defense company for help in any emergency covered by the policy, and his insurance would pay the bill.  Even if a man had no coercion insurance and no contractual arrangement with any defense company, if he were attacked by a thug he would be helped by any nearby defense company agent and billed later.  This is no more a problem than is emergency medical care.  Accident victims are always rushed to a hospital and given emergency care, regardless of whether they are able to ask for help and to pay for it.  Victims of hoodlum attack would be aided by defense companies in much the same manner, both because of a respect for human life and because it would be good publicity for the defense companies involved.

Because of the close connection between insurance and defense, some of the larger insurance companies would probably set up their own defense service agencies in order to offer their clients the convenience of buying all their protection needs in the same package.  Other insurance companies would form close ties with one or more independent defense service agencies which they had found to be effective and reliable, and they would recommend these agencies to their insurance customers.  This close affinity between insurance and defense would provide a very effective check on any defense agency which had an urge to overstep the bounds of respect for human rights and to use its force coercively—i.e., in a non-defensive manner.  Coercive acts are destructive of values, and value-destruction is expensive for insurance companies.  No insurance company would find it in its interests to stand idly by while some defense agency exercised aggression, even if the values destroyed were insured by a competing company—eventually the aggressors would get around to initiating force against their own insureds . . . with expensive results!

Insurance companies, without any resort to physical force, could be a very effective factor in bringing an unruly defense agency to its knees via boycott and business ostracism.  In a laissez-faire, industrialized society, insurance is vitally important, especially to business and industry, which are the most important segment of the economy and the biggest customers for any service.  It would be difficult, indeed, for any defense company to survive if the major insurance companies refused to sell insurance not only to it, but to anyone who dealt with it.  Such a boycott would dry up the major part of the defense company’s market in short order; and no business can survive for long without customers.  There would be no way for a defense agency to break such a boycott by the use of force.  Any threatening or aggressive actions toward the insurance companies involved would only spread the boycott as other businesses and individuals attempted to stay as far away from the coercive agency as possible.  In a laissez-faire society, where individuals are always free to act in their own rational self-interest, the gun cannot win out over the mind.

Of course, insurance companies would be reluctant to undertake such a boycott because it would be troublesome and would be likely to lose them a few customers.  This means they would not take such a course unless they could clearly show that the defense agency in question was really at fault; if they could not prove its guilt, the boycott might turn against them instead, and they would have sawed off the limb they were sitting on.  But where there was clear evidence of coercive intent, their fear of further aggressions would sooner or later overwhelm their caution and they would make an investigation, marshall [sic] their facts, and take a stand.  The news media would be eager for the story, of course, and would be a great help in spreading the word.

The powerful insurance companies, with their vast and varied resources and their vested interest in seeing values protected and aggressive violence held to a minimum, would act as a natural check upon the defense service agencies.  (Other such checks will be examined in Chapter 11.)  This is an example of how the market, when left unhampered, constantly moves toward a situation of maximum order and productivity.  The market has its own built-in balancing mechanism which automatically keeps it running smoothly with the best long-range results for every peaceful individual.  This mechanism would work as well in the area of value protection as it does in any other market area . . . government is only so much sand in the gears.

Back to Chapter Seven

Forward to Chapter Nine


1 The correctional institutions which would develop in a laissez-faire society will be examined in Chapter 10.

Copyright © 1970 by Morris and Linda Tannehill

All Rights Reserved

I’ve provided this free online-text of the Tannehills’ book, despite the copyright status, but because it is, in my opinion, such a great primer on the functions of the stateless society.  I felt comfortable making this chapter available in .html format because the Ludwig von Mises Institute has already made the entire book available in .pdf format.  If the copyright-holder contacts me with the demand I remove this chapter from the site, I will comply.