What would happen without any central authority?
Many people are aware of the destructive power of central authority and some decide that it is altogether worthless as a result. Yet, it does have one redeeming factor.
First, let’s analyze an anarchist society. Many people would find it difficult to defend themselves through personal physical force anytime they faced a dispute with another. These people would likely hire others to protect them so that they could lead their lives in relative peace. This tendency would likely lead to large companies who’s purpose is the protection of their clients. There would be competition among these companies so they would likely be more efficient than government at achieving this goal.
However, what would occur when a dispute arises between the clients of two of these large companies. Each company would seek to protect their client or risk losing their credibility. In the interest of the client claiming harm done, his company would likely attempt to force the other party into compensation. The company of the other party would attempt to protect him from this use of force. A "battle" would likely ensue until one side is victorious, as refraining from such a fight would constitute failure for the side claiming harm. Such a battle would cause to great violence and destruction.
This scenario clarifies the benefit of a centralized authority as an arbiter. The mess could be avoided altogether by the employment of a powerful centralized authority to resolve all disputes involving physical force. Obviously, this would lead to other problems that must be taken into consideration, such as the difficulty of limiting the power of such an entity. Still, it’s role as an arbiter is a very worthy one.
What is the cause of this distinction in the case of protection, or authority, from the usual efficiency found in free market? Why can't people settle disputes without any centralized arbiter? It is inherent in the use of force that free market principles cannot be applicable. In true free market, every transaction is made with the consent of both parties, meaning that both parties expect to benefit from it. On the other hand, a transaction that results from the use of coercion is made at the expense of one party for the benefit of another. This distinction becomes clear if the previous senario is considered on a larger scale in a longer period of time. After each “battle” one side is victorious, while the other suffers. This is inherent in any transaction resulting from force. After many such battles, the sides that are most often victorious will continually become more powerful; the others will become more irrelevant. Ultimately, one company will be by far the most powerful and all others relatively irrelevant.
This process has been illustrated repeatedly throughout history up until the current state of society. In fact, it existed even before man in the pack structure of wolves and other animals. It has thus been both logically and empirically proven that the natural path of authority is towards central rule. This is a direct result of the nature of coercive transactions, that there must be one winner and one loser.
With this knowledge, it is easy to understand why free market principles of competition and efficiency cannot be applied to coercion. There is a reason that governments have had a monopoly on physical force throughout history. It is not necessarily a bad thing for power to be centralized, so long as that power is used for protection against, not for the initiation of, physical force. However, such a centralized power has rarely, if ever, existed in the history of man.
Obviously, it would be nice if physical force was never used between men. Yet, this is not the case in reality and will never be the case. Unfortunately, the best way to deal with this evil is through a limited centralized authority.
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