This article was published in the Autumn 1994 issue of Formulations
formerly a publication of the Free Nation Foundation,
now published by the Libertarian Nation Foundation

Comments upon Security, National and Domestic

by Richard Hammer

 
(to table of contents of archives)

Outline
1.Introduction
1.1 The subject of national security is both important and unpleasant
1.2 Can a formulation for domestic security stretch to cover national security as well?

2. Ideas about security in general
2.1 Free people cannot be conquered in one fell swoop
2.2 Free people may be heavily armed
2.3 Free trade provides incentives for peace
2.4 Potential aggressors can be discouraged from even trying
2.5 People naturally want to avoid war
2.6 Security companies would attend to the needs of their customers
2.7 A national defense can be mounted in the traditional way

3. Ideas about security companies
3.1 Private security companies would allocate police in response to market incentives
3.1.1 Where we would expect less policing
3.1.2 Where we would expect more policing
3.1.3 Where we would expect changes in policing, but cannot predict whether more or less
3.2 Security company protections in larger zones
3.2.1 Optimistic argument
3.2.2 Pessimistic arguments

4. Conclusion

Bibliography
 

(back to top)

1. Introduction

I have never had a clear concept of how we libertarians would defend the borders of the realm in which we would like to live. My desire to learn more of this subject led me to suggest that in our next forum we address a related question: "How, and to what extent, could the inhabitants of a free country rely upon private institutions, insurance and defense agencies, to satisfy their needs for security, both domestic and national?" In this article I will use the term "security companies" to name these hypothetical institutions which combine insurance and defense.

During the past few months I have asked several people where I might find information on this question. I have followed many leads. But I have not found solid fare; all available material seems to be speculation. It is good speculation to be sure, but I had hoped to find a developed theory. In this article I will present some of what I have found, and contribute some of my own speculation.
 

(back to top)

1.1 The subject of national security is both important and unpleasant

Incidentally, this is I believe the most critical subject faced by the free nation movement. On the one hand, I expect that few sensible people would be willing to invest their lives or property in a free realm unless they felt secure from international invasion. And on the other hand, if somehow there were created a free realm in which somehow all felt secure from invasion, I believe libertarians and many others would flock into this realm without pausing to worry about any of the other services which they may be accustomed to expect from government. In the recipe for a free nation, national security is probably the critical ingredient which can make everything else jell.

But I find national security to be an unpleasant subject for two reasons. First, it is about war and violence. And second, it is not easy, when talking about fighter bombers and armies, to escape realizing how impossible it seems that our small and disorganized movement could ever wield a respectable defense.

Naturally we experience the impulse to put this onerous subject aside. In this regard our instincts may serve us well. It makes sense for us to do today what we can, and to hope that the tasks which we put off today, because they look impossible, will come within reach tomorrow. But we can do more than hope. Looking toward the seemingly impossible goal, let us ask what we might achieve today so that, come tomorrow, that goal might begin to look possible.
 

(back to top)

1.2 Can a formulation for domestic security stretch to cover national security as well?

Discussion in this article emphasizes national security, and treats domestic security as a side issue. Let me explain. Recall that the question which drives this discussion, as written in the first paragraph above, includes both domestic and national security. Regardless of the scale of a threat, whether from an individual or from a state, we can think in general terms of the means we might use to defend ourselves. These means include, for instance: amity, diplomacy, counterattack, and preemptive strikes. For the sake of simplicity, it would be good if we could produce one general formulation for a set of institutions which could span all our needs for security, both domestic and national.

But a theory has limits, and can comfortably span only certain instances. For my part at least, my research thus far has left me believing that security on a domestic scale can be achieved through private means. See for instance Chapter 2 in The Enterprise of Law by Bruce Benson. Therefore my desire to stretch my understanding leads me to ask questions about national security.
 

(back to top)

2. Ideas about security in general

While searching for material on the question of whether security companies could provide national defense, I found little that addressed my question directly. But I came upon many ideas which addressed the broader subject of security. In this section I will tell some of these ideas. Then, in section 3, I will tell things which relate more directly to my question.

The reader may notice that some of these ideas beckon us to think of security in new ways. If we ask, "how are we going to finance an air force and induct an army?" we may be asking the wrong question.
 

(back to top)

2.1 Free people cannot be conquered in one fell swoop

It is hard to conquer a free people, because there is no government or single power which has the authority to surrender on behalf of other people. An invasion may overwhelm one region, and the people in that region may surrender, but their surrender does not bind anyone else in the remainder of the nation. An invader wanting to control the whole nation may well have to conquer each and every house.

The history of Ireland provides an example. As Murray Rothbard tells, for a thousand years until the seventeenth century, Ireland had no state or anything like it. The conquest of Ireland by England was bloody and difficult, and seems not to be over yet.
 

(back to top)

2.2 Free people may be heavily armed

We could expect many of the inhabitants of a free nation to be heavily armed. This would make conquering the country much more difficult. We have a present day example in Switzerland where, as I understand it, many householders have automatic weapons in their closets. This is understood to be a principal ingredient of their national defense. I have heard that Hitler planned to invade Switzerland, but decided against it when advised by his generals that the populace was heavily armed.
 

(back to top)

2.3 Free trade provides incentives for peace

If goods are being traded between the free nation and the potential aggressor, then because of this trade, some people in the potential aggressor will stand to lose should war start. If this point seems unclear, recall that free trade by its very nature benefits both parties to each ongoing relationship of exchange; since participation is voluntary each trading partner must perceive himself as winning, otherwise he would cease entering such bargains. If many goods are being traded across the border then the traders within the potential aggressor might put considerable pressure on their government to avoid war.
 

(back to top)

2.4 Potential aggressors can be discouraged from even trying

Kevin Cullinane draws a distinction between protection and defense that is worth repeating. Protection, as he describes it, is what you do to discourage an aggressor from even trying. Examples are: locks, fences, camouflage, credit checks, mine fields. Defense, on the other hand, is what you do to respond to an aggressor who is attacking. Examples of defense are: fighting with an aggressor, and counterattacking into the aggressor's territory. Cullinane says that if your protection is good enough then you do not need defense. Defense involves violence and you want to avoid it if possible. So he advocates focusing on protection.
 

(back to top)

2.5 People naturally want to avoid war

As I have frequently heard Philip Jacobson argue, there are great incentives to avoid violent conflict. War is costly. If it starts each party tries to destroy the valuables of the other. War is a negative sum game. Whereas peace with free trade is a positive sum game. We can normally expect potential antagonists to be willing to invest heavily in avoiding war.
 

(back to top)

2.6 Security companies would attend to the needs of their customers

Writing primarily about defense agencies on a local scale, Murray Rothbard shows how private agencies satisfy the needs of their customers better than government agencies. For instance a private security company will emphasize restoring stolen loot to its owner, the customer. Whereas a government agency on learning of a theft emphasizes catching and prosecuting the criminal, and sees the loot only as evidence to be guarded and not as property to be returned. And as Bruce Benson recounts, government agencies are so intent on doing their thing, prosecution, that they treat the victims of crime not as customers to be served, not as people who need help, but as evidence to be presented at the right time in court.

These failings of government policing on a domestic scale make me think it likely that government policing on the national scale also falls short of what could be achieved by a market system. In many ways that we should be able to imagine large-scale security companies should serve us better than government agencies.
 

(back to top)

2.7 A national defense can be mounted in the traditional way

If we libertarians compromise, and admit limited government, then we may assume taxes and a strong national defense of the traditional sort. But as evidenced by this article, I do not want to make this compromise unless I am convinced it is necessary.
 

(back to top)

3. Ideas about security companies

On a domestic scale, in a free market, it is natural to expect the formation of security companies, that is to expect merger of functions we may now, by habit, consider separate: insurance and defense. Both involve security. A customer might sign a contract with a security company to purchase security in certain defined categories. As we are accustomed, the insurance aspect of this contract would pay unrecovered losses, probably with a certain deductible. But as we are not accustomed, the security company would not only pay losses, but to prevent losses from occurring in the first place it would also police and provide protections (of the sort suggested by Cullinane).

I expect the most successful companies would minimize their expenses, and thus reduce the charges to their customers, by intelligently balancing their mix of expenditures on policing, protections and payments.
 


(back to top)

3.1 Private security companies would allocate police in response to market incentives

This private industry in security would differ in some notable ways from the state-sullied mess we experience now in the United States. In some cases we can predict: we would see either less policing or more policing. In other cases we can expect changes in the nature of the policing, but it is difficult to predict the nature of those changes.
 

(back to top)

3.1.1 Where we would expect less policing

Customers would be willing to pay for their own security, and to pay for prudent policing toward that end. But few customers would be willing to pay more to have police beat up unpopular minorities such as Rodney King, David Koresh, prostitutes and drug dealers.

In addition to frugality the financiers of the police forces that is the customers would experience the usual motives of civility. These are:
 


(back to top)

3.1.2 Where we would expect more policing

It is easy to think of places where a sensible private security company would invest more, by comparison with government, in protections and policing. Generally speaking, just think of any situation which regularly scares you. Probably you would be willing to pay to feel more safe from this predictable threat. If you ask why there is no company prepared to profit by selling you such protection, you will probably find some action of the state which bars or discourages this protection from being marketed.

Think, for example, of a frightening street in an inner city. If the street were private, the customers of the street, that is the residents, would have an economic relationship with the owner of the street through which the customers could express their desires and expect to be heard. Consider the parallel of private shopping malls. Owners of malls police their corridors because they need revenue from their customers, the operators of the shops, who can stay in business only if you drop by. And you will drop by only if you feel safe. The magic of free markets satisfies your demand for safety.
 

(back to top)

3.1.3 Where we would expect changes in policing, but cannot predict whether more or less

There is also a category in which it is not clear to me whether security company agents would be more or less evident in our day-to-day affairs. Consider motor vehicle laws regarding drunken driving, seat belts, and speed limits. Do these laws save life and property sufficient to justify the cost of policing of their enforcement? A free market in security would answer this question more honestly than any legislature.

Private companies would calculate, using some statistics I expect, ways to minimize their total costs, for both payments and protections. I expect their contracts would offer options. A customer might save money by signing a contract which stated that he would buckle his seat belt. But should he be tempted not to bother with his seat belt, he would be wise to know what the contract stipulates in this regard. We can certainly expect the security companies to protect their interests; they may demand the right to snoop, or police if you will.
 

(back to top)

3.2 Security company protections in larger zones

I have outlined a few of the reasons why I trust that security on a local, domestic scale can be handled by private enterprise. Here I present arguments, pro and con, on the question of whether private enterprise could likewise provide national security.

There is a fundamental similarity between large-scale and small-scale security companies. Both have a base of customers that they charge rates sufficient to cover expected costs. Both employ both protections and policing. Both need arms sufficient to their risks. Both need to be prepared to pay should their protection and defense fail. Both rely on good relations with their customers, and thus both are constrained to provide a real and valued service. Both are in the same sort of business, just on a different scale.
 

(back to top)

3.2.1 Optimistic argument

I know that insurance companies share their risks in a business called reinsurance. And I recall hearing boasts from this industry:
 

This last example should show us that a small country, no bigger than the swath across Florida, should be able to trust private security. Of course this assumes an international business in reinsurance, that the residents of a ravished small country could expect payments from a pool beyond their borders.
 

(back to top)

3.2.2 Pessimistic arguments

Leading libertarian light David Friedman regards national defense as a daunting problem, and offers little hope for private provision.

Also my novice's scan of Limits of Insurability of Risks by Baruch Berliner, has shown me that:
 

This book, by showing the science of deciding what risks are too big, implies, in not too subtle a way, that some risks are too big. I am disappointed, but I should not have been surprised.

It is possible, I would like to believe, that either I misunderstand this book, or that this book misunderstands reality. For my taste Berliner kowtows too readily to the state and "public policy" when his analysis displays limits. Some economists, I know, see the work of the invisible hand, while others see only a need for state action. Possibly a specialist in insurance who favors free enterprise would write quite a different book.
 

(back to top)

4. Conclusion

Our quest to formulate security is just beginning. We welcome input from any readers who have it to offer. Δ

 
(back to top)

Bibliography

Bruce Benson. The Enterprise of Law: Justice Without the State. Pacific Research Institute, 1990.

Baruch Berliner. Limits of Insurability of Risks. Prentice-Hall, 1982.

Kevin Cullinane. "Militarism to Libertarianism," a talk in Bethesda, MD, at Summit '86 of the Advocates for Self Government. Tape available from Advocates for Self Government, Atlanta, GA.

David Friedman. The Machinery of Freedom. Second edition, Open Court, 1989.

John Hospers. Libertarianism. Nash Publishing, 1971.

Philip E. Jacobson. A libertarian friend who lives in Cary, NC.

Albert Loan. "Institutional Bases of the Spontaneous Order: Surety and Assurance." Institute for Humane Studies. Humane Studies Review, Vol. 7, No. 1, 1991/92.

Gustave de Molinari. The Production of Security. Originally published in French in the late nineteenth century. Excerpts published, thanks to Carl Watner, in The Voluntaryist, December 1988.

Murray N. Rothbard. For a New Liberty. Collier Books, 1978.

Morris and Linda Tannehill. The Market for Liberty. 1970. Reprinted in Society without Government, Arno Press, 1972.

 

Richard O. Hammer, of Hillsborough, NC, to advance the work of the Free Nation Foundation, is giving himself sabbatical leave from his small business of building houses one stick at a time. He is active in local politics in Orange County, North Carolina, writing columns in the local paper and, at present, running for County Commissioner.

(back to top)

(to table of contents of archives)