Before I begin, let me clarify what I mean by “national defense.

” By national defense I
don’t mean to imply that there is any “nation” in a stateless society. I mean to imply that
firms providing “national defense” are engaged providing a service which includes but is
not limited to: deterring an invasion and hostile takeover of a relevant region by an
opposing army, as well conducting defensive wars which respond tic for tat to foreign or
domestic aggression.

The operational parameters of national defense firms may also include dismantling and
protecting civilians against other unconventional security threats such terrorist
organizations that unlawfully use violence or threat of violence to coerce or to intimidate
societies in the pursuit political or ideological goals.

I also mean to suggest that National defense providers are not in the business of
protecting civilians from common criminals or criminal syndicates; that issue is dealt
with by “local defense.”

Before I go into the issue of the free rider problem, I think it would be useful to
operationally define what: “public goods” and “private goods” are; to make clear how the
free rider problem is inherent (in different ways) to the issue “public goods.” I will do
this because it seems that many anarchists don’t seem to understand the distinction
between public and private goods.

What is a public good? In economics, a public good is any good or service that is both
non-rival and non-exclusive.

What do I mean by “non-exclusive?” I meant that one cannot be excluded from

consuming the good regardless if one pays for it or not.

-Radio stations currently are good example of this. If I purchase any standard radio, I can
tune into any AM or FM radio station within range of my radio, and the radio station
can’t exclude me from listening as long as they provide their service.

What do I mean by “non-rival?” By this I mean that consumption of this good or service
by one consumer does NOT prevent simultaneous consumption of that unit by other
consumers.

- If I listen to my radio, does this prevent or exclude others from listening to their radio
broadcast? No. My consumption of radio broadcasts does not interfere with their
consumption of their radio broadcasts.

Let’s contrast “public goods” with “private goods.” A private good is any good that is
rival and excludable.

-A good is “rival” in the sense that if I consume a cheeseburger, this fact precludes other
people consuming my cheeseburger. A good is “excludable” it is so in the sense that if I
don’t pay for it, I don’t receive it. If I don’t pay for a cheeseburger, then I don’t get a
cheeseburger. Unlike public goods, firms and individuals can deny people private goods
if they don’t pay for them.

It’s worth noting that types of goods such as public goods aren’t necessarily static. New
technology can sometimes be used to turn what used to be a public good into a private
good or another type of good. For instance, we know traditional radio stations can’t
prevent anyone from listening to their broadcasts; if I listen to the radio, this doesn’t
prevent others from doing the same, and if I don’t pay for the service, I still get to listen.

However, the invention of the technology of satellite radio stations such as: XM Satellite
Radio require the use of special digital radio receivers to tune in to their broadcasts. This
development allowed the exclusion people from listening who don’t pay a fee. Thus,
through technology, the Sirius XM Radio Corporation was able to turn a public good into
a “club good” (a non-rival, but excludable good).

Now, let’s move onto the free rider problem with defense in a stateless society, which
should appear somewhat obvious at this point.

National Defense is a public good. If I don’t pay for it I don’t get excluded. For instance,
if I free ride, and if an imperialist army invades my region, the national defense firms
can’t decide to protect all the other houses but mine, they have to protect the entire area,
or they’ll lose. Hence, I get the benefit of defense while paying none of the cost. National
defense is non-rivalrous because my consumption of it doesn’t preclude other people
from that same defense.

Now, suppose for the sake of argument that in a stateless society paying for national
defense cost $500 dollars a year. Suppose also, that the end of the financial year I have
$500 extra in disposable income. Suppose the following are my only options to: either
pay for defense, or pay for a flat screen TV.

In this circumstance, what is the opportunity cost of paying for defense? It’s a flat screen
TV and all the utility I would derive from having it. What is the opportunity cost for
buying a flat screen TV to me and to society? To me the cost is nothing, because I receive
benefits of national defense whether or not I pay for it.

To society the cost of me not paying for defense is almost nothing; it isn’t statistically
significant. National defense has extremely high fixed costs. The average annual absolute
expenditure of the top 10 military spending states is $118,689,000,000. [1] Of those very
same countries the average per capita military spending is $766. So our assumption of
$500 is 266 dollars less than the current per-capita average of those countries. In modern
society as well in a stateless society, $500 is a grain of sand in the desert. If I don’t pay
for defense it doesn’t affect anything in the grant scheme of things.

Thus we say that it is individually rational for me to become a free rider, and it is
individually irrational for me to pay for defense. This is because if I spend my money on
defense I will receive no additional services that cause me utility. If I instead spend my
money on other things which do cause me utility, I will be happier and better off.

The problem is if everyone thinks this way, i.e. acts rationally, then no one will pay for
defense. In the event of a hostile invasion, the relevant region or sub-national unit will be
screwed, taken over, and plundered, and it will constantly be “at risk” for invasion.

The problem for national defense entails that although it is individually rational not to
pay for defense; it is still collectively rational to pay for defense in order to ensure
enough domestic security required for the economy to function efficiently, and to avoid
the terrors, wealth destruction, and bloodshed of war.

The problem of free riders and national defense entails that when people in society are all
being individually rational regarding national defense, that the collective result is a very
irrational un-optimal solution.

A similar problem of rationality is with democracy. In a democratic government it is

collectively rational if everyone who votes is informed, so that they choose leaders who
create policies to best support their interests and the health of the society in general.
However, as there are millions upon millions of voters, the likelihood that one individual
vote will influence an election statistically approaches zero. Thus it is individually
rational for all citizens not to vote, or if they do vote, to be ignorant of the person they’re
voting for. This is because the more time they spend learning about the candidates (which
gives them no benefit as their vote doesn’t matter), the less time they can spend gaining
utility from doing other things.

Its worth mentioning that the state does have a solution for this problem: the state uses
force and the threat of force to insure that its citizens pay taxes. With part of the tax
revenue the state collects, they pay for their own military. Thus, since people are forced
to pay the balance of military costs year after year, the service of defense is provided.
Now do I think this the state the only solution to the free rider problem? No, but its worth
remembering that the state’s solution is one way to solve it.

Now that we have defined what problem for national defense in a stateless society, let’s
move on to why the answers anarchists have proposed to this problem are wrong.

As a quick note, I’ll be referring to National Defense Firms by the abbreviation NDF, and
by to the National Defense Industry by the abbreviation NDI.

1) Donations

The first solution to this proposed by anarchists to address the free rider problem is what I
call: “The Donation Argument for Defense.” Advocates of this position point out that
Americans currently give about 300 billion dollars to charity every year. They argue that
in a stateless society, individuals would have more disposable income to donate as they
wouldn’t be paying taxes. They could then use this extra income to donate to their
preferred national defense provider.

Advocates point out that donations to national defense would increase when the society
was under the threat of war, and that in times of peace they substantially decease. Thus
(goes the argument) the threat of conflict coupled with donations would hopefully
provide enough resources to mount an effective defense.

Now let’s tip over this house of cards shall we? This idea is a non-solution for several
reasons. First and foremost, if we assume NDF’s are funded exclusively by donations,
(like charities currently are today) then we have to assume that the market for NDF’s will
look similar to market for charities. The market for charities is a market of monopolistic
competitors. The characteristics of the market for charities are as follows:

-There are a large number of relatively small charities

-Charities produce differentiated goods
-There is free exit and entry into the charities market in the long run
-Charities have control over the type and amount of donations they accept

If we assume that NDF’s (in a stateless society) are like charities, this is bad news for the
defense firms. National defense is an economy of scale. This means that the average cost
per unit of defense fall as the scale of output is increased for NDF’s. In other words, the
NDI will be more efficient by being large instead of being small.

If the NDF’s in a stateless society are relative small and have different interests, then they
can easily be overcome by a large well funded state army that takes advantage of the
economy of scale inherent to the industry. The small stateless NDF’s will always be at a
comparative disadvantage in terms of combat ability relative to large state defense firms.

If this wasn’t enough, there are additional problems. Proponents of the donations
argument for national defense admit that in times of peace, donations will be scarce, and
in times of war or the threat of war, they will probably be increased.

However, this causes yet another problem. Effective modern militaries have huge fixed
costs, and are very large and complicated institutions. They take a long time and a lot of
money to organize, run, and maintain.

This means that in times of peace, if donations are low, the much of the NDI is likely to
go bankrupt, and will not have the funds required to organize and maintain a sufficient
large force capable of defending the area. After a perceived time of peace ends, a
stateless society whose NDI is funded exclusively by donations will be ill prepared to
deal with credible military threats that emerge in the present. A reactionary flood of
donations comes too late to purchase and organize most of what needs to be done ahead
of time.
Modern militaries cannot be formed at the drop of a hat. Military hardware has to be
produced, research programs have to be organized and funded, a chain of command has
to be formed, different kinds of troops have to be trained and organized, the principle-
agent problems, communication problems, and cooperation problems have to be dealt
with and overcome. This takes years and years of large sustained capital investment, and
huge organization efforts, which cannot be consistently sustained through donations.

Thirdly, never in the history of the word has a totally voluntarily funded effective NDI
existed in the long run. Not only this, but states that have near universal support for war
by their own population have never been able to fund their military entirely though those
donations. The US military has always accepted donations. In early 2003, US citizen
support for the Iraq was about 75%. At the time, the US military despite getting record
numbers of donations was no where close to paying for the budget from the donations
they received. World War One and World War Two, had over 90% public support,
however everyday citizens were never willing to donate enough to fund the wars.

History gives us no reason to think that patriotic donation giving would ever constitute a
sufficient reliable basis to pay for national defense. To assume otherwise is to assume a
huge number of people would suddenly display severe altruistic behavior, while doing so
in a way is individually irrational (as they deliberately make themselves worse off, and
receive no individual benefit). This would be a huge assumption that has no historical
precedent whatsoever.

Furthermore, people who argue this view seem to commit the fallacy of “wishful
thinking.” They seem to think that because believe something would be the case, or want
something to the case, that it will-infact be the case (when we have no reason to think
this). This is a classic example of a non-sequitur. I wish that I had a billion dollars and I
want to have the power to be irresistible to any women of my choosing. Yet, sadly, (like
the argument of the anarchists) this is not the case.

2) Ostracism

Let us move on. The second response given by anarchists in response to the free rider
problem of national defense is: “The Ostracism Argument for National Defense.” The
argument goes as follows: a majority of individuals and firms in society will use social
pressure and will: ostracize, refuse to do business with, and will disassociate from free
riders. If free-riders understand that they will be unable to get jobs or buy food, that
they’ll be unable to sell goods or conduct business, that eventually they’ll wise up and
pay for defense, as it will be rational for them to do so. Furthermore (goes the argument)
firms that sell to free-riders will be ostracized by the general public and other firms; so, to
avoid loosing revenue by being ostracized, firms will conform to the mob’s preferences
and will ostracize free riders.

There are several problems with this. The first problem is what I call “The Problem of the
Orwellian Society.” In order for businesses and firms to discriminate against free riders,
they have to figure out a way of discovering who is paying for defense, and who isn’t;
otherwise, there will be no effective way to discriminate against free riders.

To do this effectively requires implementing several huge assumptions

1) The entire NDI has to be willing to release the name of all people in the area currently
paying for defense
2) All those names have to somehow be added to a publically accessible data-base
3) Someone somehow will have to acquire a list of name of everyone who lives in the
area (presumably through spying)
4) The vast majority of firms and individuals who pay for defense have to be both willing
and able to discriminate against free riders
5) All firms must have an electronic E-Verify system with a card scanner and consumer
software that allows employees to cross-reference every customers ID with an online
database to verify if such persons were free-riding on defense or not.
6) Most firms would have to perform this E-Verify “check” on every customer during
every single business transaction.
7) The vast majority of firms and individuals would have to have already paid for defense
8) Households and firms would need to spy to learn if and when other households and
firms are doing business with free riders.

The problems with this should be obvious and are as follows:

1) Individuals who pay for national defense may have privacy concerns and may not want
firms releasing their personal information to a publically accessible database

2) Firms might not want to release the names of their customers to their competitors for
fear of loosing them to their competitors

3) Who is going to pay for the publically accessible database full of national defense
customers; what incentive do they have to provide this service?

4) It is irrational for both individuals and firms to discriminate against and ostracize other
individuals and firms.

Now this is a very important point. As we have mentioned earlier the cost of a single
individual (not paying for national defense) to firms or other individuals is virtually zero;
because one person not paying for defense makes almost no statistical difference in the
grand scheme of providing national defense.

This raises the question: what incentives do firms have to discriminate against free-
riders? Imagine for a minute that I’m Safeway and a single free rider who lives in my
community walks into my store. Suppose for a minute that the average person who lives
in my community spends $1,000 a year in my store. Now the cost of the dude in my store
free-riding in terms of my total revenue as a business is zero; however, I know that his
likely potential revenue is $1,000 a year. Thus, if I discriminate against this person, the
opportunity cost of doing so would likely be $1,000. If I do business with him, my
opportunity cost is extremely low (as I don’t give up anything). Thus as a profit-seeking
firm, it is rational for me to not discriminate against free-riders.

What anarchists are really proposing by saying that firms will discriminate and ostracize
individuals who don’t pay for goods is that that all firms would form a cartel. The
problem for them is: since the society in question is a free market with no barriers to
entry or exit; would-be entrepreneurs have an incentive to start new firms that don’t
discriminate against free-riders, because their total revenues would be higher than firms
that do discriminate. Furthermore, all firms currently in the cartel will have an incentive
to break ranks, and to stop discriminating thus undercutting the competition for the sake
of additional profit.

Firms receive no additional revenue by ostracizing free riders, and actually loose revenue
by discriminating; therefore if they are rational they generally will not do it. To assume
that most or all firms would do this to their customers is to assume that all or most of
firms in society would behave consistently in an irrational way.

As a side note, I find it amazing that many anarchists are just find with using the free-
rider problem as an argument against communism and communal property, but ignore
their past arguments entirely when someone points out it’s a problem for their own
system of defense. Market anarchists such as Thomas De Lorenzo in his book: “How
Capitalism Saved America” says in his book quoting US Historians: [QUOTE]

“The first American settlers arrived in Jamestown in May of 1607. There, in the Virginia
Tidewater region, they found incredibly fertile soil and a cornucopia of seafood, wild
game such as Deer and Turkey of all kinds. Nevertheless, within six months, all but 38 of
the original 104 Jamestown settlers for dead, most having succumbed to the famine. Two
years later, the Virginia Company sent 500 more “recruits” to settle in Virginia, and
within six months, a staggering 440 were dead.”

In his book De Lorenzo points point that the famine was induced by the settlers system of
collective property and collectivized agriculture production. In this system every settler
received an equal share of food from the harvest. Thus no individual settler had any
incentive to plant or tend more crops, since no one individual would receive any
noticeably larger quantity of food from doing so. The result of this free rider problem was
the slow painful death of almost all the settlers. De Lorenzo also mentions that the famine
stopped almost immediately when the Settlers implemented systems of private property
which gave individuals an incentive to increase their levels of farming.

The settlers in Jamestown used extreme levels of social pressure to encourage people to
work by harvesting crops, yet not even extreme social pressures solved free rider problem
in Jamestown enough to prevent the deaths of hundreds of early American sellers from
the perverse incentives inherent to their system of property. If social pressure didn’t work
for them, why would it be an end-all solution for anarchists?
 5) Fifthly it costs money to implement a system of E-Verification; a firm has to purchase
machines, card readers, software, and pay employees to implement the process; money
that could be better spent on other things that actually provide a marginal benefit.

6) It collectively takes a lot of time for to run an ID-check on every single customer for
every single business transaction; time that could be better spent doing other things.
Furthermore, it makes the business atmosphere very awkward and Orwellian for both the
employees and customers.

7) Proponents of the ostracism argument already assume a majority of people would be

willing to pay for defense so as to discriminate against others who don’t. In doing so they
are assuming most of that they are trying to prove (i.e. begging the question).

8) Lastly, it would be irrational for firms and households to waste: time, money, and
effort, spying on other firms and households, for the sake of effectively ostracizing
people; as they receive no benefits by doing so. To assume this, is to assume most of
society will consistently be irrational.

Now to gauge the strength of the ostracism argument, let us use the principle of
parsimony [6] to evaluate if ostracism solution to the free-rider problem of defense is
stronger, or if the statist solution is stronger. The principle of parsimony states that the
argument which makes the fewest number of assumptions is more likely to be true,
because it is less likely that one of the argument’s assumptions is false.

The ostracism argument makes 8 large assumptions. The statist argument to solve the
free-rider problem makes two: 1) that the state will effectively force individuals to pay
taxes, and 2) that part of the state’s tax revenue will be used to pay for national defense.
The statist argument makes 6 fewer assumptions than the argument of the anarchists;
therefore it is a stronger argument that is more likely to be correct.

3) War Insurance

Another argument made by market anarchists as a way to address the free-rider problem
can be called “The War Insurance Argument for National Defense.” The argument goes
like this: in society, there are individuals who are concerned about loosing their property
during a war. To meet the demand, “war insurance companies” will emerge on an open
market to sell insurance policies which cover life, limb, and property in the event of a
war. [7]

War Insurance Companies don’t want war; just like car insurances companies don’t want
car crashes. War is bad for business. To deter other invading states from invading, war
insurance companies would finances national defense with a portion of the revenue they
acquire from people who purchase war insurance; or, in the event of an invasion, such
companies would finance an NDF to drive back the invading army in order to mitigate
losses caused by having to pay out money to consumers on their insurance policies.
While this argument may sound plausible, it is fatally flawed and does not address the
free-rider problem at all.

First, if I know that lots of other people have purchased war insurance; and, I also know
that the war insurance companies finance defense providers who protect my life and
property regardless if I pay or not, then why would I buy war insurance or national
defense? I’ll know that in any event my life and property will be at least defended, so, I’d
be acting rationally if I spend my money on other thing.

If everyone thinks this way and behaves rationally, then no one will buy war insurance,
and the NDF’s wont be financed. War insurance is just a continuation of the free-rider
problem, not a solution to it.

Furthermore, War Insurance Companies can only hire NDI protection out of profit they
make selling insurance policies. States have no such financial limit when financing a war.
For states, the ability to finance as war is based largely on that state’s ability to: tax,
borrow, or print enough money, (as well as the political will to conduct war). Hence, the
minimal financing the NDI receive from the War Insurance Company profits will pale in
comparison to the potential revenue state’s can give to their military through deficit
spending, taxation, and inflation. Thus a stateless society’s NDI will always be at a
comparative disadvantage in terms of funding with a conventional state military.

Also, paying for an ongoing national defense is extremely costly for War Insurance
Companies, because of the high fixed costs of National Defense. Thus, insurance
companies that offered individuals insurance protection without hiring a NDF could
consistently offer consumers comparatively lower prices than those insurance companies
who paid for defense. Therefore, war insurance companies who paid for defense would
always be at a competitive disadvantage relative to insurance companies that did not; and
such companies would be quickly weeded out of the marketplace.

We see similar phenomenon with Hurricane insurance today. Hurricanes are devastating
and rack up huge costs for insurance companies. However, do insurances companies
today hire thousands and thousands of aircrafts and purchase thousands of tons of silver
iodide to cloud seed a hurricane when it’s over the open ocean: to reduce the size the
hurricanes? No they don’t. Why? Primarily because it’s too expensive, and the result is
uncertain. However it is also because firms that cloud seeded would quickly go out of
business because the others firms would free-rider on their efforts. Hurricane insurance
companies are better off paying for damages if and when the hurricane destroys homes,
instead of trying to prevent hurricanes themselves. The same is true of war insurance
providers hiring national defense firms to fight or prevent war.

4) War Bonds

These so-called “solutions” just get worse and worse. A fourth argument anarchists give
to solve the free-rider problem I shall call: “The War Bonds Argument for National
Defense.” The argument is quite simple; and it goes like this: to finance day to day
operations, NDF’s will issue “War Bonds.” Bonds will cover the balance of the
extremely high fixed costs of the NDI.

Let us remember that a bond is a kind of debt security, in which the bond issuer legally
owes the bond holder’s debt. Depending on the terms of the bond, the bond issuer is
legally obliged to pay interest over time on the principle amount lent to the purchaser,
and then to finally to repay the principal amount at a later date, called the bond’s
“maturity.” [8]

People only buy bonds from people who they have good reason to believe will be able
pay them back. If one has good to believe that a bond issuer won’t pay back the principle
amount plus interest, then it is a stupid idea to give the issuer money.

Since National Defense is a public good with a free rider problem, if we assume society
is acting rationally on an individual level, the total revenue of firms will be zero. If we
assume society acts irrationally a small amount of the time (which is the predominant
assumption of economics today) then only a few people do buy defense; from this we can
safety infer that the total revenue of the NDI will be very small.

Why would anyone in their right mind buy bonds from an industry they have no reason to
believe would be able to pay the debt back? Furthermore, if most of the NDI was
financed by bonds, the result would be a Ponzi-Scheme, where debt from one bond was
used to pay the coupon and maturity of another, all of which was financed by debt from
yet another bond, and so on and so fourth.

In this event, the whole system would collapse in the long run. The credibility of the NDI
would be eroded as NDF’s would at some point fail to pay back their debts due to of
Ponzi schemes stacking up on each other. Thus in the long run no one would be willing to
buy bonds from the NDI, and defense would not be provided in such a stateless society.

5) Rules of Anarchism, the NAP, and the Inter-subjective Consensus

The next argument is one of the silliest. I call it the “Naive Natural Rights Solution to
National Defense.” It goes like this: in a stateless society, everyone will accept the non-
aggression principle, and self-ownership; thus national defense isn’t a problem because
everyone will behave morally and there will be an intersubjective consensus that national
defense is not needed.

This is yet another example of fallacious wishful thinking. In other-words, proponents of

this argument “wish” that everyone accepted and followed their moral system. However,
merely wishing that society would accept and follow one’s own morals does not logically
entail that people will accept and follow one’s moral system (as there are other kinds of
moral systems they could follow). One’s own morals do not determine how people
behave in the world.
If I think wearing disgusting looking ear gauges is immoral, it does not follow that other
people won’t wear them if I wish they didn’t wear them.

6) Wishful Market Fundamentalist Thinking About the Unknown Future

The sixth argument for solving the free rider problem anarchists use I shall call the “The
Argument for Naive Market Optimism About the Unknown Future.” The argument is
fairly straightforward. It goes like this: the future is uncertain; many of the attempts of
humans to predict the future and future societies have failed, but since markets in the past
have done a efficient job at allocating goods and services, the market will hopefully be
able to work out a good solution with the right incentives required to overcome the free
rider problem in a stateless future.

This answer is a non-answer to the free rider problem for two reasons. First, while it is
true that markets have a long history of successfully allocating private goods and services
in an efficient manner (without shortage or surplus), it is not true that markets have
historically been able to deal with public goods in an efficient manner because of
collective action problems.

This is because firms cannot exclude people from receiving the benefits of their public
good if they don’t pay; hence, people have never had any incentive to pay firms for
public goods. Thus this analogy between past successes leading to future successes is
false because it extrapolates a kind of market success that did not actually occur in the
past onto the future.

Furthermore, this view appears to be a form of naïve market fundamentalism, where it is

just assumed without proof that ordinary market functioning will always lead to an
optimal solution.

If someone came to me and said: “there is such and such a problem with society” and I
replied “don’t worry, the state will pass a law to fix it,” I could rightly be accused of
statist fundamentalism. The same is true with religion, if someone came to me in an
existential crisis, and I said “ah don’t worry, god will take care of it;” I could rightly be
accused of religious fundamentalism, or “magical thinking. The same here criticism can
be accurately levied on anarchists who use this as a knee-jerk response to the free rider
problem of statelessness and national defense.

7) Guerilla War and Militias

The seventh argument for overcoming the free rider problem is: what I call “The
Argument for National Defense by Guerrilla War and Militias.” The argument goes as
follows. In the even of an invasion by a foreign hostile power, people in a stateless
society will be so moved by their love of liberty and their hatred of the invading army,
that many of them will voluntarily form militias. These militias will conduct a long
bloody Guerilla war of attrition to bog down the enemy and break their will to fight so as
to repel them eventually.
This argument (like so many others) rests on a large number of bad assumptions:

1) That a substantial minority or majority of anarchists in the event of an invasion are

willing and able (out an insane level of patriotism) to: make themselves worse off, to put
their life, health, property, family and friends at risk, in order to fight a Guerilla War
against a large invading state army.

2) That the militias have enough men, arms, training, and logistical ability to drive out the
invading armies.

3) That the militias are both willing and able to conduct a violent prolonged war of
attrition with huge losses on both sides to break down the enemies will to fight gradually
over time.

4) That many attempts to pacify the stateless society by the invading state, using
pacification methods which have worked throughout history will be ineffective

5) That in the event of every new invasion all the pervious assumptions will hold.

6) That large security threats from say terrorist groups who are not conventional armies
can be effectively tackled by militias.

Now, let us go through these assumptions one by one and challenge their soundness.
Then, let us compare parsimoniously this anarchist solution to the free rider problem, to
the statist solution.

1) Concerning the first assumption, it would be good to point out that militias use
voluntary conscription to recruit soldiers whom they pay either little or nothing in
compensation for time spent soldiering. It is also worth noting that one individual solider
makes no statistically significant difference in a war between two huge armies. Thus,
from an individual level, people who join militias to combat an invading armies or states
are acting irrationally. They put their lives, their health, their property, their friends, and
their families at great risk; and they do so with little or no payoff, as they get nothing in
wages, and make no important difference to the war effort (if that is indeed their goal).

Thus, to make the National Defense argument for Guerilla War and Militias, we have to
assume a majority or large minority of people in a stateless society will behave in a way
that generally is individually irrational (though collectively rational). We must also
assume they will do this “often.” This assumption requires a strong argument; and is not
born out by history, thus we have no reason to believe it.

Furthermore, there are additional cultural concerns in the United States as to the viability
of this option. According to Hofstede’s Index of Individualism which is the best
respected index measuring individualism by country in the social sciences today, the US
was measured at number 1 for individualism (relative to other countries). [10] People in
individualist societies tend to act more in their own individual self interest whereas
people collectivist societies that have a sense of group duty and obligation (such as China
or Japan), are more likely to act in a way that is rational for the collective. We can
therefore conclude that because our culture is an individualistic culture, the Guerilla War
and Militias option would be very unlikely to emerge, because more people in the US are
motivated by individual rationality.

2) Secondly, since militias are funded by voluntary donations instead of state taxation or
inflation, militias have a comparative disadvantage at providing defense against states
because: they cannot meet their costs as well as well as states can. Furthermore, militias
are reactionary solutions; they form or gain most of their soldiers in the event of a
conflict; not prior to a conflict. So any solution that involves militias will be reactionary
solution and not pro-active solution (like conventional militaries are). Hence, militias will
not be able to retain the military advantage of purchasing large numbers of arms and
organizing large numbers of men before a war.

3) It is highly unlikely that an immense group of brainwashed uber-anarchists would be

willing to fight a long horrible, bloody, wealth destroying, protracted war of attrition,
which would make them individually worse off in the long run.

4) State’s a have a remarkable to ability to employ the calculated use of force to crush,
overwhelm, and pacify rebellions. State armies or police forces have very often
throughout history been able to pacify populations with remarkable success. In American
history we can see examples of the state doing this in the Whiskey Rebellion [11] and in
Shay’s Rebellion [12].

Furthermore, the Nazi’s were able to employ pacification techniques with wide success
throughout Western Europe. When the Nazi’s invaded cities in Western Europe, they
were often instructed to not damage any property, or initiate violence against any passive
citizen. They were told that if they did these things, they would face a firing squad.

Nazi soldiers were given training in etiquette, and were instructed to be very polite to the
native population. Also, the Nazi State would set an official exchange rate between the
currency of the country they took over and the German deutschemark. Then, they would
give their soldiers 4-6 months extra pay and instruct them to splurge it amongst the local
businesses to win the support of the business community.

Prior to invasion, German army intelligence would gather a list of names of

revolutionaries and intellectuals who were likely to oppose the regime. When the Nazi’s
invaded, these dissenters would “mysterious vanish” (i.e. be killed) in the night in large
numbers. That way, the Nazi’s could crush acts of dissent before they even began,
without anyone knowing about it.

Later, the Germans would erect signs and issue public service announcements, saying
that the civilized way the Nazi’s were currently treating occupied citizens would
disappear if they resisted; or, if partisans attacked or sabotaged the Germany army. In the
event of their resistance (the occupied population was told) the German high command
would let their army, steal, rape, and murder, seize property, brutalize, and assault the
population, and do all manner of horrible things to them. This pacification tactic was so
remarkably successful that no Nazi occupied state was ever overthrown by
revolutionaries, and the most occupied cities, townships, and regions offered little to no
resistance.

Hence, anarchists who support the militia argument have make the very unlikely
ahistorical assumption that an invading foreign power would be totally unable to pacify
the native population.

5) It is unlikely for Militias to receive continued ongoing support in the long run. Sane
people generally don’t want to fight a long bloody war of attrition, they want to make the
best of their circumstance and get on with their lives.

6) Militias are generally not equipped or designed to deal with non-conventional warfare
such as terrorist security threats; these would present a real problem for militias.

Moving onto number 8) PDA’s

The 8th argument proposed by anarchists to overcome the free rider problem is what I
call: “The Private Defense Agencies Solution to National Defense.” The argument goes
like this: people demand local defense, they want their homes and families protected.
Stateless PDA’s will provide local defense. Their service will be a private good. It will be
rival and exclusive; i.e. firms will not respond to the crime scenes and inquiries of people
who don’t pay for defense; and, the services PDA agents grant through investigation or
direct protection of a single customer cannot be simultaneously consumed by other
people. In addition to local defense, PDA’s will also use their resources to provide
national defense.

If this seems to you like this argument doesn’t address the free rider problem of national
defense, then you are absolutely right. The argument for PDA’s does not propose any
solution to transform national defense (a public good) into a private good.

If some PDA’s provide national defense with the revenue they get from providing local
defense, they will be outcompeted by PDA’s who only provide local defense and don’t
spend their resources on other things that don’t generate additional revenue (i.e. national
defense).

Alright, now that we’ve examined all these solutions, what can we conclude from them? I
think we can conclude that that anarchists have not offered any plausible solution to solve
the free-rider problem of national defense. I think we can also say that if anarchists ever
want to make their ideal society a reality, they will have to either find a solution to this
fundamental free rider problem, or let their ideas be relegated to closet of history; a closet
full of failed ideas.
Before I end this video I’ll briefly mention my proposal, which I hope to be able to go
into in future videos.

My proposal is as follows:

A stateless societies’ polycentric legal order will pass common law making it illegal for
firms who provide: either local defense or legal services, not to bundle their service with
national defense.

- In other-words, under the law, all people who purchased local defense or legal
services would have to also purchase national defense; otherwise, they would not
receive local defense or legal services.
- New firms or existent firms who tried to provide local defense or legal services
without bundling it with national defense would be shut down and prevented from
doing so by the polycentric legal agencies.

While this may seem harsh, the horrible consequences caused by domestic security
threats, and foreign imperialist states in the absence of national defense are too great.
There is too much potential for death, economic depression, bloodshed, terrorism, wealth
destruction, suffering, and cultural destruction, to ignore national defense.

Furthermore, no one would be against prohibiting legal agencies or local defense

agencies that made it legal to: brutally murder people, torture people, molest infants, to
steal money from poor people, or detonate nuclear weapons in a city. Similarly no would
be against prohibiting legal agencies which made it illegal to defend yourself,

Every sane person would be fine with using force to prohibit deviant agencies which
allowed for a greater social harm such as these. Not having national defense, is a greater
social harm. Therefore, since we would accept in the aforementioned cases, it makes
sense to accept it also for national defense.

At the end of the day, people are anarchists, or anti-statists, not because they think that
anarchism is the final goal, but because think the set of theories and propositions
proposed by anarchists would if implemented lead to a better life. If we have good reason
to believe that some current anarchist theory would not lead to a better life (and we do),
then it makes good sense to either change the theory so that it would lead to a better life,
or, to abandon it outright. In this case, I think a change is necessary.

References

1) Average Absolute Annual Expenditure for the top 10 military spenders

List: http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures#cite_note-
The_SIPRI_Military_Expenditure_Database-0
Source: http://milexdata.sipri.org
2) Average Per-Capita Annual Expenditure for the top Absolute Military Spenders:
List:
http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures_per_capita
Source: http://milexdata.sipri.org/

3) XM Satellite Radio’s Pay Scheme:

http://www.siriusxm.com/ourmostpopularpackages-xm

4) Americans currently give 300 billion dollars annually to charity

http://www.usatoday.com/news/nation/2007-06-25-charitable_N.htm

5) About 3/4ths of the country “initially” supported the war in Iraq

http://pewresearch.org/pubs/770/iraq-war-five-year-anniversary

6) Principle of Parsimony (Occum’s Razor)

http://plato.stanford.edu/entries/simplicity/
http://www.theness.com/index.php/the-razor-in-the-toolbox/

7) War Insurance:

http://www.lewrockwell.com/orig8/bryan4.html

8) “Bond” Definition:

O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in action. Upper

Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 197, 507.

9) Problem of Rational Ignorance and Democracy

http://wikisum.com/w/Downs:_An_economic_theory_of_democracy

10) Hofstede’s Index of Individualism

http://www.geert-hofstede.com/hofstede_united_states.shtml

11) The Whiskey Rebellion

http://en.wikipedia.org/wiki/Whiskey_Rebellion#cite_note-0

12) Shay’s Rebellion

http://en.wikipedia.org/wiki/Shays%27_Rebellion
13) How Capitalism Saved America (Quotes the Death of Early US Settlers)

http://books.google.com/books?
id=_YaS18_3nlQC&printsec=frontcover&dq=how+capitalism+saved+america&hl=en&e
i=qCx2TNiTCMKclgfL6_mzCg&sa=X&oi=book_result&ct=result&resnum=1&ved=0C
CwQ6AEwAA#v=onepage&q=Jamestown&f=false

14) The Rise and Fall of the 3rd Reich

http://books.google.com/books?id=sY8svb-MNUwC