I never said that infinite retaliation was appropriate. If someone gives you an accidental nudge, then you give a nudge back. If a drunk driver crashes into your parked car, you’re entitled to a replacement car plus a reasonable amount of punitive damages.
Free market justice is about proportional retaliation and not infinite retaliation. Disputes escalate to infinite retaliation only in the presence of a government, which prevents people from fair redress of grievances. For example, a policeman conducts a no-knock raid of your residence and shoots you. That’s too bad for you. The policeman is protected by sovereign immunity. In that case, if a biased judge acquits the policeman of murder, then you have no further recourse.
As another example of infinite retaliation, some small pretext is used as an excuse for war. Insiders profit from war, so they have an incentive to let small disputes escalate.