"A radically liberal society might be imaginable in which there is nothing left for government, a monopoly of the use of force, to do. The legal services government now provides could be provided competitively, according to the laws of supply and demand. According to free-market anarchism, all the fundamental institutions necessary for the market to function—money, police protection, and even justice—would themselves be "for sale on the market." Of course, to say justice would be "for sale on the market to the highest bidder" is to invite ridicule. If a court is deciding law according to which party to the dispute can pay better, then the "service" it is supplying does not deserve the name "justice." But as with any good, everything depends on what specifically the suppliers and demanders actually want. It is imaginable that the demand for legal services could be well-defined, so that competitive pressures could force suppliers to offer fair adjudication according to widely understood principles of the rule of law....
Whether Rothbard or Friedman's imagined schemes for competitive legal institutions—and indeed whether any particular government-supplied legal system—can work depends completely on what Hospers calls "ideology," and what I prefer to call the "political culture." It depends on what the general public in this particular society considers morally acceptable behavior. To this, Rothbard answers: Of course, everything does depend on such general beliefs. I agree with this concession by Rothbard, but I think it suggests that radical liberals have been ignoring what is really the most important issue in the question of the state: the political culture.
The source of the difficulty with the anarchists' argument, as well as the arguments of their critics, is, in my view, the economistic vice of analyzing individual human beings as autonomous, cultureless "agents." In practice, each of the disputants presupposes a set of beliefs that seem reasonable to him, beliefs which his critics charge beg the question. The solution is not to pretend to avoid discussion of beliefs altogether, but to make the issue of such beliefs the central theme of political discourse.
What makes a legal system, any legal system, work is a shared system of belief in the rules of justice—a political culture. The culture is, in turn, an evolving process, a tradition which is continually being reappropriated in creative ways in the interpersonal and public discourses through which social individuals communicate. Anarchism seems workable to its advocates only because they implicitly assume a certain democratic political culture will prevail. Unless anarchists begin to say something about the kind of political culture that would be necessary for a stateless legal order, they will never get very far.
Everything depends here on what is considered acceptable social behavior, that is, on the constraints imposed by a particular political culture. Where slavery is considered offensive, those who attempt to practice it are easily overwhelmed by the horror of the public. Where it is thought by the general public to be justifiable, no amount of constitutional design will prevent it. Where taxes are accepted as morally defensible, they will be deployed; where they are equated with slavery, they will be impossible to collect. The feasibility of slavery or taxation does not fundamentally depend on the (concentrated) opinion of the designated representatives of the public, but on the (distributed) opinions of the public itself.
Leaving aside the practicability of the anarchist idea, though, the idea itself is relevant to the thesis of this essay in that it raises in a striking manner the question of democratic politics. The issue of the market supply of legal services is especially interesting, in that law lies at the intersection of the two great ideals of liberalism, democracy and markets. Law is at once the most important precondition of effective market processes and the most important topic of democratic political discourse. How should a liberal legal order be secured? Radical liberals appear caught on the horns of a dilemma. Is the provision of legal services one of the few legitimate functions of government, or is it susceptible to the usual liberal arguments against government and in favor of markets? If the provision of such services is left open to democratic influence, then markets may lose their institutional underpinnings; if it is immunized from democratic influence, then democracy may lose its significance.
Just as socialism resolved the conflict between democracy and markets by rejecting markets, liberalism ends up marginalizing democracy. The limited-government position to which classical liberals have historically adhered boxes in the role of the democratic state in order to ensure that market processes are not obstructed by the minimal government it permits. It thereby seems to put severe restrictions on the realm of democratic decision making. The anarchist position seems even worse. By trying to take a principled approach to free markets, anarchism winds up apparently rejecting politics, and therefore democracy, altogether. After all, as radical liberals say, if everything is decided by market forces, what is there to vote about?
In that question is contained, I suspect, a fundamental misreading of the nature of both market forces and democratic principles. First of all, as I have been saying, democracy is more an issue of open discourse than it is an issue of voting. And secondly, when decisions are "left to the market" there is plenty to talk about.
The provision of legal services for a liberal polity can be thought of nonpolitically, as the private-sector supply of legal services on the market, no different in principle from the supply of electricity. Here it is conceived as the impersonal satisfaction of the preferences of separate individuals, seemingly having nothing to do with culture. Or it can be thought of noneconomically, as belonging to the public sector, to (democratic) government.
Here it is a matter of explicit conscious control over social outcomes and thus an issue wholly separated from (and, of course, only apt to interfere with) the decentralized market sphere. In the debates over the supply of justice services, the anarchists have tended to picture the legal order nonpolitically, and the limited governmentalists to picture it noneconomically. I think both of these ways of thinking about the legal order need to be challenged. Each is a one-sided way of viewing political economy, which should be seen as an inseparable whole.
Rothbard and Friedman are a case in point. They take the position that politics (and hence any positive notion of democracy) is by definition a matter of government, so that the whole topic is, as it were, summarily dismissed. There is no need for political discourse in the Utopias of these authors, since agents simply "buy" justice services on an impersonal competitive market. Friedman's approach leaves the enforcement, interpretation, and definition of rights to be "decided by the market." In Rothbard's case, enforcement and interpretation are left to private police and courts, but the legal rules are supposed to be derived from natural law, established once and for all by a deductive science of ethics.
In either case, there is no room in these Utopias for politics. At most, political discourse is only needed in order to drive the process that brings about a radically liberal society, but once the free society exists, all the work of politics is over. The definition of rights is decided without the need for discourse, either by the force of an impersonal market, or by the force of an unquestionable logic.
Liberals cannot resolve the issue of whether a legal system could be supplied by a free market because the issue depends on what is happening in the political culture, in the ongoing discourses about mutual rights and obligations, which individualist liberalism, in both limited-government and anarchist versions, utterly ignores. Radical liberals have been so intent on establishing a universal system of individual rights that they have failed to address the cultural conditions in which socialized individuals would demand this or that kind of legal services.
To say we should leave everything to be "decided by markets" does not, as radical liberals suppose, relieve liberalism of the need to deal with the whole realm of politics. And to severely limit or even abolish government does not necessarily remove the need for democratic processes in nongovernmental institutions.
- Don Lavoie, Democracy, Markets, and the Legal Order: Notes on the Nature of Politics in a Radically Liberal SocietyThe reason liberals in general have had trouble convincing others of the desirability of extending markets—and the reason anarchist liberals have had trouble convincing limited governmentalists to extend them to law—is that they have all lacked an adequate theory of politics. Since markets are assumed to be essentially apolitical, their radicalization seems to imply the end of politics. Extending the market, according to individualist liberals, seems to mean that we would become the atomistic monads Marx thought we were becoming.
The weakness of both sides in the debates over anarchism is their neglect of what lies behind the legal order. Why does anybody obey the law, whether it is conceived as being supplied in a competitive or monopolistic manner? Limited-government advocates assume that it is the ultimate threat of force by a monopoly state that ensures that individuals will obey the law. Anarchists assume that there is a demand for genuine justice on the part of individual agents, so that competitive courts will profit most from behaving in a properly liberal manner. Both beg the question of the political culture. What gives legitimacy to a legal system is neither the force of threat by the police, nor the force of pure logic, but the force of public opinion, of the distributed political discourse about rights and responsibilities."