David Friedman - Law and Law Enforcement without the "Government"

Nope... We Don't Need "Government" for Law or Law Enforcement Either... Another Episode from Liberty on the Rocks - Sedona - The Voluntaryism Conference

In this insightful episode from Liberty on the Rocks - Sedona - The Voluntaryism Conference, economist and law professor David Friedman challenges the idea that law and law enforcement must be government functions. Drawing on historical examples, including feud law in medieval Iceland and present-day private legal systems in rural California, David discusses how societies can effectively self-regulate and enforce justice without central authorities. He explains key concepts such as feud law, where compensation and deterrence replace punitive government measures, and shares unique models like Somalia’s pre-government legal structures and the potential of modern technologies to create contract enforcement and private arbitration. David also introduces the concept of competitive “rights enforcement agencies” in a future stateless society, where individuals could choose the agency that best aligns with their values and needs. This market-driven legal system, he argues, would foster fairer, more responsive laws and minimize conflict. Exploring practical examples of private law and governance, this episode invites listeners to envision a society where law is shaped not by central authorities but by voluntary, market-based mechanisms!

Full Transcript

David Friedman:

“Most modern people take it for granted that law and law enforcement are essential government functions. However, I am going to argue that this is not true. Historically, this has not been the case, and I will be discussing the past of private law, which I call feud law, and then move on to the elements of private law enforcement that exist in modern societies or could exist shortly. Finally, I’ll talk about the institutions I’ve imagined, which, as I later discovered, are a modern version of institutions that have existed. These institutions could be used to create an entirely stateless society.

But let me start with the past because that's what I’ve learned about most recently. By the time I finished writing my most recent book, I concluded that when I wrote my first book 50 years ago, I was essentially reinventing the wheel. In other words, I was trying to imagine how a society could function without government-enforced law, and there were, in fact, real-world examples from the past of societies that worked this way.

The basic logic of feud law is this: If you wrong me, I will harm you unless you compensate me. For this to be a workable system, it must solve four key problems:

1. Ensuring justice: There must be a way to ensure that I can only force you to compensate me if you’ve harmed me. This is about distinguishing law enforcement from extortion. The mechanism here is one where right makes might — it’s practical to threaten you if you’ve harmed me, but not if you haven’t.

2. Commitment mechanism: I need to ensure that when I say you’ve harmed me, I will follow through on my threat if you don’t compensate me. This means having a way to make me carry out my threat of harm if you refuse to comply.

3. Protection for the weak: What if I don’t have the resources to harm you? In the past, this meant having the social or physical backing to enforce my rights. How are weaker members of society protected in such a system?

4. Ending the feud: If I think you’ve wronged me and you disagree, refusing to compensate me, and we start injuring each other in retaliation, how do we stop this cycle? There needs to be a way to terminate this back-and-forth chain of violence.

Real legal systems in the past have all of these problems. One example is the legal system of Saga-period Iceland. Iceland was settled around 870 by Norsemen, who established a unique legal system. I could give a whole talk on that system, but the key point here is that it had courts but no government law enforcement.

Here’s how it worked: There was a single court system, but once a verdict was delivered, it was up to the individuals to enforce it. What made it possible to do this was that if the court ruled that you owed me damages and refused to pay, I could return to the court and have you outlawed. Once someone was declared an outlaw, it became legal to kill them, and illegal to defend them. If your friends tried to fight mine, every time someone on my side was hurt, it would result in another legal case against your side. However, if your people got hurt, that was your problem — they were breaking the law.

It is legal to kill an outlaw. It is illegal to defend an outlaw. So, if your friends try to fight mine, every time someone on my side gets hurt, it results in another legal case against the people on your side. However, if your people get hurt, that’s their problem — they’re breaking the law. This was one example of a system we know about.

More generally, for a feud system to work, there needs to be a mechanism so that all the interested third parties in society — the people around you — can recognize whether what you’re doing is, in fact, law enforcement or extortion. The court system is one way to establish this. In a small enough society, there’s an existing feud system. For example, in England, the Romanchol, the largest Romani group, follows such a system. In this society, if I believe you’ve wronged me, I might threaten to beat you up unless you make it right. Both of us know that the community is small enough that people will be able to tell whether you’ve wronged me or not.

However, in a larger society, you need something more organized. A relevant example is Somalia, which had a system similar to the Icelandic one, but this system was only terminated about 50 years ago when the modern state of Somalia was created by England and Italy. Before that, Somalia was largely a stateless society, and the people had mechanisms for creating courts that would be recognized for any dispute. Once a court made a ruling, the verdict was generally accepted by society.

There are various ways in which this problem can be solved. The next issue is commitment mechanisms. How do we ensure that my threat is truly believable, that I won’t just back down when you say, "If you try to get me, I’ll get you back"?

This concept is hardwired into us. People sometimes argue that property is a modern invention, but in fact, property predates our species. In other species, this behavior is known as territorial behavior. There are a variety of species, mostly birds and fish, that exhibit a similar pattern: an individual marks a territory that it claims as its own. When another member of its species and gender enters this territory, the defender will fight. The intensity of the fight increases the further the trespasser enters the territory. Though a fight to the death usually results in a loss for both sides, once it’s clear that the defender is committed to protecting the territory, the trespasser generally backs down — unless they are much stronger.

This is a form of property, albeit a very primitive one. There's no way to buy or sell it, but the property rights are enforced through a commitment strategy, not by a state. This kind of behavior predates our species.

The human version of this commitment mechanism can be observed in myself. If I bump my head, my first reaction is rage. My initial thought is that someone has attacked me, and I feel the urge to retaliate. It’s a hardwired response in human beings — something many of us have observed in ourselves. In that case, however, it makes no sense, but the pattern is there.

The only person who’s injured me is myself, if I bump my head against something. Yet, it’s our natural reaction to feel a strong urge to retaliate when someone hurts us. Human beings are, in a sense, hardwired so that when someone injures us, we instinctively feel a desire to get back at them. But there are other ways to enforce the commitment strategy.

If I threaten to harm you unless you compensate me, and then I back down, I’ve essentially marked myself as a vulnerable target — someone who can be stolen from, trespassed upon, or wronged without consequence. What I want, instead, is the reputation of someone who is not a safe target; someone who will take action if you violate my rights. Status plays a crucial role here. Human beings care deeply about status, and no one wants to be seen as weak or a pushover.

One of the challenges in this system is that we need a commitment strategy that survives beyond death. Without this, the obvious counter-move for the person I’m threatening is to say, “If you’re going to harm me, I’ll kill you first.” The Icelandic solution to this problem was that if you kill me, my heirs inherit my claim against you. Not only do my kin inherit my original claim, but they also inherit the right to seek justice for my death. This gives my relatives an incentive to carry out my threat even if I’m no longer around to do so.

The next challenge is how to protect the weak. My favorite solution to this problem is the Icelandic solution, which is why I argue that the American legal system is about a thousand years behind the cutting edge of legal technology.

In Icelandic law, tort claims were marketable and transferable.

I am an elderly man with only one son, and someone takes his life.

Now, I have a claim for several hundred ounces of silver as compensation for the killing of my son. All right? In this system, there is no criminal law as we understand it, because there is no state to enforce it. Everything operates as tort law.

However, I know that if I try to go to the court and enforce my claim, I’ll likely get beaten up along the way, because I have no one to fight for me. My neighbor, on the other hand, has four strong sons who spent their youth as Vikings, along with plenty of friends, relatives, and allies.

So, I transfer my claim to him.

He collects the claim, and if I’m lucky, he pays me back half of the silver he’s collected. But even if he doesn’t pay me anything, the critical point is that someone who kills my son will still have to pay a Wehrgeld — a fine of several hundred ounces of silver. This means that my rights, and those of my son, are protected by deterrence, regardless of whether I receive the compensation. Whether or not I get compensated likely depends on how difficult it is for my neighbor to collect the payment.

Now, Somalia had a somewhat different system. They had what was sometimes called the DIA-paying group — a coalition of people, usually relatives but not always, who had an agreement or contract to support one another. If any member of the group was injured, the others would help him recover the damage payment. Similarly, if a member had to pay damages, the others would contribute their share. This arrangement provided a preexisting coalition of support, ensuring that group members had people willing to fight for them.

The final problem is terminating a feud. Suppose I believe you wronged me, and you believe you didn’t. You demand compensation, I refuse. You harm me, and now I demand compensation. You refuse. How do we stop this endless cycle of retaliation?

One solution, used in both Iceland and Somalia — despite being separated by about 1,000 years — was to have a court. Both parties would agree to take the matter to a court respected by their neighbors. If the court ruled in my favor, you could accept the decision without losing face, since it was based on an impartial ruling. Conversely, if the court ruled in your favor, I could similarly accept the outcome without appearing weak.

Another solution found in the Icelandic sagas is the use of an arbitrator. This involves selecting an individual who is both powerful and respected, and having them rule on your dispute. Both sides agree to this arrangement because each side believes they are in the right. If the arbitrator rules in your favor, two things happen:

1. I now have a valid excuse for backing down because a neutral party has ruled against me.

2. If I choose not to back down, the arbitrator will have joined your alliance, making it even harder for me to win since they are a powerful and influential individual.

These are some of the ways in which real societies have successfully enforced law privately. This isn’t to say that these systems are universally better than modern government systems, but they do demonstrate that it is possible for private institutions to take over the most central function of government: law enforcement.

Now, let’s look at a modern example. In Shasta County, California — a couple of hours from where I live — there exists a form of private law. Robert Ellickson, a Yale professor, became interested in this phenomenon for reasons I won’t delve into now (that would be a separate talk). He concluded that the community operates on a system of privately enforced norms, which, in certain contexts, override California state law.

These norms are primarily centered around neighborly behavior. For example, if your cattle stray onto my field, trampling and eating my vegetables, the norm dictates that a "good neighbor" would recognize their mistake and voluntarily help me replant the damage. If you fail to do so, I could spread the word about your behavior. The social consequences might include your wife no longer being invited to bridge parties or your kids struggling to find playmates.

Of course, if you’re especially tough, perhaps without a wife or kids, and indifferent to what others think of you, these social pressures might not work.

Eventually, if your cattle strayed onto my field a third time, I would open the gate, drive your cattle a few miles away from your farm, and leave them there for you to find and recover. What’s interesting about this system of norms is that it allows me to make it difficult for you to locate your cattle but does not allow me to convert one of your cows into hamburger.

This is significant because, in a rural area, I presumably have the skills to butcher animals, and turning a cow into beef would seem like a much more attractive punishment from my perspective — I would gain the value of the cow. However, the system forbids this because if I profit by enforcing my rights, I cannot be trusted to enforce them only when they are genuinely violated.

This issue highlights one of the problems in our modern legal system: if I can profit from suing you, it creates an incentive for me to pursue lawsuits even when you haven’t actually violated my rights, provided I have a reasonable chance of persuading the court otherwise. While this may not be a solvable problem, it’s a challenge inherent to systems that allow monetary compensation for rights violations.

This is an example of a private legal system — though we don’t call it "law," we call it "norms." It functions as a legal system because it includes rules, consequences for breaking those rules, and mechanisms for enforcement. Robert Ellickson documented several cases where the legal solution to a problem existed under California law but wasn’t used.

Why? Because one of the norms of neighborly behavior in the community is that neighbors don’t sue neighbors. The social and relational costs of using the court system outweighed the potential benefits for the people involved.

Beyond this, there are other innovative ideas for private legal systems. One example, which does not yet exist but could in the near future, is the concept of seasteading. My son, Patry, has been working on this project, which involves developing technology for floating housing — essentially large rafts.

What can you do with these rafts? You tow a group of them together to form a village. If this village is located outside the territorial waters of any country, it can create its own laws. If it’s within territorial waters, the village could negotiate with nearby countries to compete for the right to host it, allowing the village to make its own laws in exchange for economic benefits.

In that case, the village might have to pay something. But regardless, you end up with a situation of competitive governance.

In my first book, written long before the concept of seasteading was conceived, I sketched a world where people were perfectly mobile. I imagined a scenario where the newspapers announce a war between France and England, and the next day the sun rises on an empty landscape. Everyone has left for safer places, leaving behind only a few war reporters and generals.

Seasteading, in essence, argues that this kind of mobility could become a reality if people were sufficiently mobile and could, metaphorically, take their houses with them. If your village passes laws you dislike, you could call up a tugboat company, have them tow your floating home out of that village, and join another community with laws more aligned with your preferences. It’s a very intriguing idea.

The underlying principle of seasteading is that we should focus less on debating what the law should be and more on creating mechanisms that generate good laws. The proposed technology of floating housing enables exactly that by allowing for dynamic movement and self-selection of communities.

A less extreme but related concept that is already happening is the idea of charter cities. In this model, entrepreneurs persuade the government of a relatively poor country to grant them control over a piece of underutilized or low-value territory, allowing them to set their own civil laws within that area. This creates, in effect, a pocket of governance based on systems like American or British common law within a country such as Venezuela.

If successful, these charter cities can attract people who want to live there, start businesses, and build thriving communities.

Interestingly, the precedent for this approach was inadvertently set by communist China. One of the pivotal steps in China’s transition from being fully socialist to its current model — pretending to be socialist — was the creation of special economic zones. These zones allowed capitalist practices within designated areas, facilitating China’s economic transformation over the last 20 to 30 years.

The original theory, as far as I can tell, was that the Chinese leadership realized that the United States must know something they didn't. After Mao's death, the communist leaders were able to travel abroad, and what did they discover? They discovered that their country, which they had believed had the best economic system in the world, was actually dirt poor.

In fact, a deputy vice chairman of China visited England and made an eye-opening discovery: a trash collector in England was earning twice his own income. This led him to report that England would be the perfect communist economy—if only it had a communist party running it.

So, what did they do? One of the strategies they implemented was to figure out what the capitalists knew by creating isolated capitalist enclaves within China. In these enclaves, foreign companies could make deals, engage in trade, and carry out all the "evil capitalist" activities. These enclaves were placed in areas that were considered unimportant, where the experiment would have minimal impact.

One of these areas was a village that now has a population of six million people. Over time, the exception became the rule. It became clear that these capitalist enclaves were working. In the 20 years following Mao's death, China’s per capita income increased about 20-fold. This is a very striking case of economic transformation.

Unfortunately, the key figure responsible for this economic breakthrough is no longer alive, and his successors don’t seem to have as clear an understanding of how to continue improving China.

Currently, there are examples of common law zones in places like the United Arab Emirates, Kazakhstan, and Honduras. These are attempts to create mini versions of Hong Kong—small areas with systems that are closer to free-market economies because they tend to work better. However, the challenge with these efforts is how to prevent governments from eventually expropriating the wealth and resources these zones create. This is currently a point of contention in Honduras, with ongoing litigation over the Prospera project.

There's another aspect of private law in the modern system, which comes into play with the competition among states for corporate law. For example, many corporations are chartered in Delaware, not by accident. This choice means their legal disputes will be settled under Delaware's laws. Delaware benefits from this setup by collecting fees from corporations, which makes it an example of a competing legal system where states vie to attract businesses by offering favorable legal frameworks for contracts and disputes.

This idea of legal competition isn't new. In medieval Islam, there were four distinct Sunni schools of law. If a person signed a contract in a court governed by one of those schools—say, a Maliki court—the contract would be interpreted under Maliki law. So, within one society, you had multiple legal systems coexisting. This tradition largely ended with the rise of the Ottoman Empire.

If you think about all of this, a compelling idea emerges: if migration becomes sufficiently easy, governments might become little more than landlords. They would no longer have the power to impose laws universally; instead, they’d be forced to create rules that people want to live under. Governments would still control land, which is valuable in itself, and they could collect some revenue from that, but not as much as they would from the ability to dictate laws.

You could imagine a gradual shift in the world—a transition from states to anarchy, with people not even noticing when the change happens.

For those of you familiar with science fiction, Snow Crash offers a fictional portrayal of a society that functions in a state of anarchy, yet still contains individuals who believe they are part of the government, even if they aren't actively doing anything.

Let me now move on to what I consider my favorite example of modern anarchy that is gradually unfolding: anarchy in cyberspace. Many of you may be aware of public key cryptography, which has been around for some time. It’s the technology that allows individuals to send messages to one another in a way that no third party can read. Though we’re not quite perfect at it yet, it is already practical to make payments and perform transactions that third parties cannot observe.

Additionally, there are mechanisms for enforcing contracts through reputation systems. Here’s how it works: I can sign a contract with you online, we agree on an arbitrator, and both of us digitally sign the contract. Our identities are defined by a public key and a private key. I only have the private key, while everyone else in the world has the public key. You can use my public key to encrypt messages that only I can read, and you can also use it to verify my digital signature, confirming that I wrote a message.

I won’t go into the full details of the technology here, but the core point is that it is technologically feasible for online transactions to be entirely private.

There are also mechanisms, some of which are already in use, to enforce contracts in this system. One of the most widely recognized examples is eBay. When you make a transaction through eBay, both parties can report to eBay and others whether the other party actually followed through on their promises. Buyers and sellers are then able to check each other’s reputations; if someone has a low rating, you might choose not to deal with them. This is a simple but powerful form of reputational enforcement. The technology behind this can be used in various ways to support contract enforcement, but I’ll leave that for another discussion.

However, there are some disadvantages to this system. Specifically, once you have a fully private online space with public key encryption, it's possible for criminal organizations to operate with a brand-name reputation. In my book Future Imperfect, I outline a business plan for a fictional "Murder Incorporated," where criminals could use these technologies to establish a reputation for services like contract killings, all while ensuring that customers can reach them without the FBI intercepting their communications. Payments could be arranged securely, and the criminals could build a solid reputation in a manner that avoids typical law enforcement risks.

This presents a double-edged sword. While it allows for decentralized enforcement and privacy, it also means that such systems can be abused. Moreover, it creates environments where online transactions are uncontrolled, and, importantly, untaxable—because you can’t tax what you can’t observe.

I would argue that this is a system that is gradually developing, though not yet in the fully realized form that I’ve imagined. Let me now return to my original idea for how a modern society could function with entirely private law and law enforcement. In this system, each individual is a customer of a rights enforcement agency, and they have the freedom to choose which agency to engage with. Additionally, they can switch agencies if they wish. These rights enforcement agencies would sell two core services: protecting your rights and settling disputes.

An obvious issue arises, however—one that becomes clear to most people within about 30 seconds of hearing the idea: What happens when customers of two different rights enforcement agencies have a conflict? Let’s consider a scenario: I come home to find that my television is missing. The video camera, which my rights enforcement agency kindly installed in my living room, shows you walking out the door with my television set.

My rights enforcement agency then contacts you and asks, "Please return Mr. Friedman's television set, and would you mind paying us $20 for the time and trouble involved in retrieving it?" But you, of course, respond, "I don’t know Mr. Friedman. I never took his television."

"I don't know his television set. I’ve got a nice one—a friend gave it to me, and it's none of your business who the friend is. I have my own privacy."

You, of course, don’t back down. My rights enforcement agency then responds, “We’re sorry you feel that way. If you're not willing to submit this to a court, four tough guys will show up at your door tomorrow to retrieve the television set.”

Now, you retaliate: “Well, if that happens, I’ll contact my rights enforcement agency. They’ll send six tough guys to stop your four tough guys from taking my television.” This escalates into a war between our agencies. This is Ayn Rand’s classic response, where individuals and agencies resort to force to resolve disputes.

But this approach doesn’t make a lot of sense. After all, wars are costly, and profit-driven businesses aren’t in the business of fighting wars over property. Instead, a more sensible solution would be for the two rights enforcement agencies to recognize that their customers may occasionally clash and agree, in advance, on a private court system whose verdicts they will both respect.

Once such a court system is established, they could resolve the dispute by agreeing that, if the court rules against one of their customers, they won’t protect them. After all, there’s no reason to defend a stolen television. Additionally, the losing party would be required to pay a small damage fee for the trouble they caused by falsely accusing the other of theft.

Now, the question you should be asking is: What enforces this contract? We have a contract between two agencies agreeing to abide by a court decision, but in this world, there's no government. So, there's no higher authority to enforce the contract.

What there is, however, is the discipline of constant dealings — the fact that these agencies are repeat players. Each enforcement agency knows that if it refuses to honor the court’s decision when its customer loses, the other agency will reciprocate. This would lead to a cycle of refusals, escalating into conflict, and eventually, war. And as we've established, war is costly. Most customers don't want their front lawns turned into free-fire zones.

If an agency refuses to follow the court's decision, its customers will flock to a competing agency that values arbitration over war. So, the mechanism that enforces these contracts is competition. Agencies know that a failure to abide by the court’s ruling means losing customers to more reliable competitors. In essence, it’s a system of peaceful law enforcement without government intervention.

The next question I’ve brushed over is: Where do the laws come from? What determines what laws exist in this system? The answer is that the arbitration agency is essentially selling its services to the rights enforcement agency. In turn, the rights enforcement agency is selling its customers a package, which includes the legal rules and arbitration services it uses.

So, the rights enforcement agency will consider which arbitration agency to use based on which legal rules will generate the most value for its customers. The arbitration agency, in turn, will be motivated to determine which rules it can offer to attract more business.

To illustrate this, imagine a scenario where the customers of one arbitration agency — let's say they're from a pacifist community — all disapprove of capital punishment.

In this scenario, the customers of one arbitration agency might come from a pacifist community that opposes capital punishment, while another agency's customers — perhaps from a different region, like Tucson — are people who want to ensure that anyone who kills them is hanged. These agencies may serve similar communities, but they might cater to different preferences or even different legal rules depending on regional values.

Now, let's say the Tucson-based agency does a little market research. They find that if they can guarantee that their customers will never face capital punishment in disputes with people from other areas, they can make an extra million dollars a year because their customers greatly value this rule. Meanwhile, another agency discovers that they can only earn half a million dollars from offering capital punishment protections.

To resolve this, the Tucson agency might bargain with the other agency, offering them something they want — perhaps a financial incentive or agreements on how to handle other disputes. The Tucson agency, for example, might care deeply about rules protecting their annual gem show, one of the largest in the world. Whatever the exact terms of the agreement, both agencies engage in bargaining to create a set of rules that maximizes the welfare of their customers, based on how much customers are willing to pay for the benefits those rules bring.

This system of bargaining and negotiation essentially creates a market for law. Each agency is motivated to optimize its legal rules based on customer demand, ensuring that laws reflect what people actually want.

From my standpoint, this is the core argument for the superiority of the system I’m recommending. I see that I’m running low on time—about five minutes left, right? So, instead of going into other topics I had planned to cover, which include some of the flaws of this system (discussed in several chapters of the third edition of my book The Machinery of Freedom), I’d rather leave time for questions.

In that book, I explore how the system might break down, under what circumstances it could fail, and how the legal rules it generates won’t be perfect. Markets don’t function perfectly, but they tend to be better than the alternatives. However, I’d prefer to focus on your questions now rather than delving into theoretical issues.

About David Friedman

David D. Friedman is an academic economist with a doctorate in physics, retired from 23 years of teaching in a law school. His first book, The Machinery of Freedom: Guide to a Radical Capitalism, was published in 1973 and includes a description of how a society with property rights and without government might function. There, as elsewhere, he offers a consequentialist defense of libertarianism.

His most recent non-fiction book is Legal Systems Very Different from Ours, covering systems from Periclean Athens through modern Amish and Romany. He is also the author of three novels, one commercially published and two self-published, and, with his wife, a self-published medieval and renaissance cookbook and a larger self-published book related to their hobby of historical recreation. Most of his writing, including full text of most of his nonfiction books, can be found on his web page: www.daviddfriedman.com. His current work is available at

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