This is something I haven’t really seen disproved.
If we have achieved Murray Rothbard’s idea of an anarchy utopia. 'a system of protection agencies compete in a free market and are voluntarily supported by consumers who choose to use their protective and judicial services. Anarcho-capitalism would mean the end of the state monopoly on force.
In this utopia, the State seems as if it would be eradicated altogether, which means the only thing stopping people from committing crimes are the protection agencies.
Now, lets say a widespread economic crisis hit, and some of these protection agencies were going bankrupt. While people do learn from their bad investments, they generally aren’t aware of making them at first. If a protection agency grew really big, and then its leaders made bad investments there would be an economic impact of it. As a result of their bad investment, people would lose trust in them and the company may not recover from the crisis.
If this became a trend, where a systematic risk was unleashed, then it would come to a point where people don’t trust the protection agencies anymore, or even each other, and thus the natural law would collapse and then the need for a Government to maintain order would be relevant. If a Government is once again established, then it is no longer Anarcho-Capitalism.
Don’t forget without a safety net, there’s nothing protecting us from the impacts of a bad investment from a big company. While a safety net doesn’t always succeed in this, the only thing punishing bad investments is the natural law of the free market, but as I said, people naturally make bad investments at some point.
So how do you disprove this situation without making Anarcho-Capitalism look completely flawed?
A truly free society based upon private property rights when all human interactions are voluntary is not flawed, in fact it sounds quite good and I hope to see it in my lifetime. It is certainly better than the current situation in the USA where the various levels of government continue to consume resources, involve themselves in the most personal decisions people make, and commit acts of aggression and violence against peaceful people.
As for it all crashing down like the current monopoly government violent societies eventually do, there are good reasons why this is much more unlikely in this society:
Systematic risk-There is no systematic risk other than maybe a giant meteor wiping out most of human life on the planet. There certainly could not be an economic crisis of the current type as there would not be central bank inflation generated business cycles and without a monopoly currency, people could simply change to different forms of money as old forms become useless. So people who make money would not be able create inflation as the market would simply switch to other forms of money.
If some of the protection agencies got themselves into a situation where the risk they cover puts them out of business then other agencies would see opportunity and step in. This would be the rule even today except for the vast bureaucracies regulating competition out of the protection and insurance markets. To make matters worse, government uses force to provide police, fire and other emergency services with the result that there is no competition to provide these services and there is no mechanism to establish the amount of services society requires or set the price of these services.
The unsafe “Safety Net” would be unnecessary. Without monopoly government stealing wealth through taxes and inflation, people would have significantly more wealth at their disposal to perform charitable activities. Furthermore, prices would be significantly lower without regulation.
Without monopoly government, people would respect contracts more and the adjudication would be fairer and more respected as well.
The justice system would be so much more just as the goal of the justice system would be to have the perpetrator provide restitution to the victim. Crimes would be real violations of person or property instead of the thousands of rules made by monopoly government.
THis seems to only work if EVERYONE chooses to interact, what makes you think people would want to interact if they lose trust in other people? A voluntarism society would fall apart the day everyone stopped trusting each other.
Well a cluster of errors are a result of the monetary inflation measures of the Fed. If central banking would dissolve then boom and busts would be rare. So in a free market, perhaps there will be a business failure but there won’t be a whole sector failure.
So if all concepts of property rights were to disappear, how would a contractual form of government be able to ensue?