Brief outline of how restoration, arbitration, and security would function in a libertarian society (extract from “New Libertarian Manifesto”)

First, always leaving out these who choose not to participate, one insures oneself against aggression or theft. One can even assign a value to one’s life in ase of murder (or inadvertent manslaughter) which may range from the taking of the violence initiator’s life to taking replaceable organs (technology willing) to restore life to the payment to a foundation to continue one’s life’s work. What is crucial here is that the victim assigns the value to his life, body and property before the mishap. (Exchangeable goods may simply be replaced at market rate. See below.)

A finds property missing and reports it to the insurance company IA. IA either through another division or through another division or through a separate detective agency (D) investigates. IA promptly replaces the object to A so that loss of use of good is minimized. [6] D Now may fail to discover the missing property. In that case, the loss to IA is covered by the premiums paid for the insurance. Note well that in order to keep premiums low and competitive, IA has a strong incentive to maximize retrieval of stolen or lost goods. (One could wax eloquent for volumes on the lack of such incentive for monopoly detection systems such as State police forces, and their horrendous social cost.)

IF D does discover the goods, say in B’s possession, and B freely returns them (perhaps induced by reward), the case is closed. Only if B claims property right in the object also claimed by A does conflict arise.

B has insurance company IB which may perform its own independent investigation and convince IA that D erred. Failing that, IA and IB are now in conflict. At this point, the standard objections to market anarchy have been brought up that the “war” between A and B has been enlarged to include large insurance companies which may have sizeable protection divisions or contracts with protection companies (PA and PB). But wherein lies the incentive for IA and IB to use violence and destroy not only its competitor’s assets but surely at least some of its own? They have even less incentive in a market society long established; the companies have specialists and capital tied up in defense. Any company investigating in offense would become highly suspect and surely lose customers in a predominantly Libertarian society (which is what is under discussion).

Very cheaply and profitably, IA and IB can simply pay and arbitration company to settle the dispute, presenting their respective claims and evidence. If B has rightful claim, IA drops the case, taking its small lose (compared to war!) and has excellent incentive to improve its investigation. If A has rightful claim, the reverse is now true for IB.

Only at this point, when the matter has been fully contested, investigated and judged, and still B refuses to relinquish the stolen property, would violence occur. (B may have only been bothered so far as being notified of IB’s defense on B’s behalf, and B may have chosen to ignore it; no subpoena could be issued until after conviction.) But PB and IB step aside and B must now face a competent, efficient team of specialists in recovery of stolen property. Even if B is near-mad in his resistance at this point, he would probably be neutralized with minimum fuss by a market agency eager for a good public image and more customers – including B himself some day. Above all, PA must act so as not to invoke anyone else or harm other’s property. B or IB is now liable for restoration. This can be divided into three parts: restitution, time preference, and apprehension.

Restitution is the return of the original good or its market equivalent. This could be applied even to parts of the human body or the value set on one’s life. Time preference is the restitution of the time-use lose and is easily determined by the market rate of interest which IA had to pay to immediately restore A’s property. Apprehension is the sum of the cost of investigation, detection, arbitration and enforcement. Note how well the market works to give B a high incentive to restore the loot quickly to minimize apprehension cost (exactly the opposite to most statist systems) and to minimize interest accrued.

Finally, note all the built-in incentives for swift, efficient justice and restoration with a minimum of fuss and violence. Contrast this with all other systems in operation; note as well that in parts all this system has been tried successfully throughout history. Only the whole is new and exclusive to Libertarian Theory.

This model of restoration has been spelled out so specifically, even though it may be improved and developed, because it solves the only social problem involving any violence whatsoever. The rest of this Libertarian society can be best pictured by imaginative science fiction authors with a good grounding in praxeology (Mises’ term for the study of human action, especially, but not only, economics.)

Some hallmarks of this society – libertarian in theory and free-market in practice, called agorist, from the Greek agora, meaning “open marketplace” – are rapid innovations in science, technology, communication, transportation, production and distribution. A complementary case can be made for rapid innovation and development in the arts and humanities to keep up with the more material progress; also, such non-material progress would be likely because of total liberty in all forms of non-violent artistic expression and ever-more rapid and complete communication of it to willing recipients. The libertarian literature extolling these benefits of freedom is already a large body and growing rapidly.

One must conclude this description of restoration theory by dealing with some of the arcane objections to it. Most of these reduce to challenges to ascribing value to violated goods or persons. Letting the impersonal market and the victim decide seems most fair to both victim and aggressor.

Reprinted from here