A common problem in the Austrian school of economic thought is the way in which the prerequisites for the existence of a free market, namely the availability of a police force, courts and an army, are to be ensured. The typical solutions range from utilizing tax-supported services as in minarchism to market-based solutions as in Rothbard’s anarcho-capitalism. The aim of the present article is to offer an alternative to the above approaches, which is still fully market-based while at the same time eschewing the problems associated with both of the aforementioned systems.

1. Ethical considerations

What both minarchism and anarcho-capitalism have in common is that the owners of the property pay for its protection. In minarchism private property protection is paid through taxes levied on the population and in anarcho-capitalism individual private property owners pay for it themselves, either by hiring a private protection company or through private property insurance. However, paying for the protection of one’s private property engenders several ethical concerns all by itself.

Firstly, people do not pay for the police, courts and army because they are eager to use their services, but because unless they do it, their quality of life would deteriorate. Basically, one is forced to pay for these services because the alternative is to suffer losses in the form of stolen property, physical damage (mugging, killing), etc. Unless one takes preemptive action, it is guaranteed that physical aggression would be used on him. The threat of physical aggression is what makes people pay for protection services. However, this presents a problem. According to Ayn Rand, freedom is the absence of initiated physical force, and both schools subscribe to the view that being forced through physical violence (threat inclusive) to do something is morally wrong. Based on this, the systems of organization proposed by both schools could be deemed as not ethically clean because they do not conform to the ethical principle both schools espouse. Both systems assume that those who do not initiate violence would bear the cost of its occurrence by paying for police services, for instance. What happens, in effect, is that one person pays for the wrongdoings of another. This is morally reprehensible.

Secondly, both schools of thought accept the supremacy of private property. So, according to this view, if one buys/obtains something by free market means (that is, without the initiation of physical force), then this item is his and his only. However, this leads to another problem. In both minarchism and anarcho-capitalism, people pay in order to ensure the continued possession of their property. This raises the legitimate question: Is any item really yours if you need to pay in order to ensure that it remains in your possession? The latter suggests that the simple act of buying something does not guarantee full possession, which it turn leads to the conclusion that private property rights are not absolute but contingent upon constantly and incessantly paying for what you possess; thus over the length of one’s life-span possibly paying many times more than the original price of the item/property. In short, if one stops paying for one’s possessions, one’s rights over them disappear. The latter suggests that private property rights in both systems deviate significantly from the absolute ones.

Thirdly, when freedom is obtained through the purchase of a service, as in anarcho-capitalism, the following problem occurs: one gets only as much freedom as one is able or willing to pay for. This is an inevitable consequence of the way the free market works. In a free market, one obtains from a service/goods just as much as one has paid for. Since freedom would be the result of a market transaction, then one would get exactly as much as one has given. The aftermath is that there would be no common standard for freedom, i.e. there would be “equal” and “more equal” people. In particular, those with more money would be “more equal” than others. This lack of a common standard contradicts the fundamental anarcho-capitalist belief that all people must be equal with respect to their basic rights. In contrast, in minarchism, where police/courts services are public and are provided to all, all would be equal before the law. Here the problem is that much of the money allocated for this purpose would be wasted/inefficiently used since the service would be run by the state and not by the market. In effect, one would get less than one has paid for (when compared to the free market alternative).

The only way to avoid the above ethical issues is to offer a system in which one does not pay for private property protection. In this way, we avoid the aforementioned problems, i.e. i) no person pays for the wrongdoings of another; ii) once a person buys something it becomes his own without any other conditions, that is, private property ownership becomes as close to the absolute as possible; and iii) the amount of freedom one gets is independent of one’s financial status or personal preferences/abilities.

However, if we release private property owners from the obligation to pay for the protection of their own property, who then would pay for the police, courts and army? The answer to this question is quite clear from an ethical point of view: the one who has caused the problem, the one who has initiated physical force, i.e. the criminals themselves.
So, an ethically clean solution would be that the criminals themselves pay for the operation of the police and courts. In effect, we would have the police be funded from and by the very act of fighting crime. Thus, when a crime is committed, the police would have the right to catch the criminal and let him pay for its services, for the effort expended in the criminal’s apprehension. Similarly, the criminal should pay for his appearance before court, i.e. for the law-suit, and for his stay in prison if he is convicted. This would guarantee that private property owners would not pay for property protection.

However, this last suggestion raises some legitimate questions, such as:
Since the free market is based on non-aggression, then is the interaction between police and criminals a free market transaction? After all, criminals do not choose to be arrested willingly. The latter seems to contradict the way in which free market services operate, namely by allowing everyone to freely choose or not choose a particular service or goods. In order to answer the above question from an ethical standpoint, it is instructive to review the definition of freedom. Once again, freedom is the absence of initiated force, so if no force is initiated, then one’s actions are considered free. In view of the above, the interaction between police and criminals as outlined is a free market interaction since both sides act freely. Neither the police nor the criminals are subjected to initiated force. Force is applied to criminals while they are apprehended, kept in jail, etc., but this force is retaliatory. And since in such a law-enforcement market there is no initiated violence, this would be a free market. It would be a strange kind of market, in which one of the sides (the criminals) does not get to choose who will provide the service but it would be consistent with the free-market principles. No contradiction occurs and the existence of such a market is not proscribed. The proposed market uses the only way in which physical force can rightfully be applied.
An interesting consequence of the suggested system is that one gets his freedom “for free”, so to say. In minarchism and anarcho-capitalism, one obtains freedom through paying for a service, but in the suggested system the ones who use police and court services are the criminals themselves, not the private property owners. In effect, freedom is a byproduct of “servicing” the criminals. One gets it even without asking for it, which is exactly what the definition of a basic human right is, a right which is yours just by virtue of your existence.

2. Economic considerations

Paying for the protection of one’s private property in any way has negative economic implications. It amounts to a waste of resources, which could have been better utilized otherwise.
By committing a crime against private property, the criminals force the productive part of the population to spend money not how it would prefer, but just for keeping/securing what it has. In effect, the money for burglar alarms, fences around the house, etc., could have been used to further improve one’s life, either in the form of investments in new goods/technologies/services or for personal satisfaction, such as buying products for one’s home or better health services. Just as an example: Buying a lock for your house does not make your life better; it prevents it from getting worse. You could have bought an item of aesthetic value instead, which in itself would have made your life richer/more enjoyable, or you could have saved/invested the money in order to obtain a future benefit.
From an economic standpoint, the suggested system would amount to a transfer of economic resources from counter-productive hands into productive ones. The system would punish the people who subvert society without burdening the productive part of the population by forcing it to pay for prisons, for instance.

3. Organization of the proposed system

Once the ethical and economic grounds for the existence of the suggested system have been made clear, it is time to show the specific way in which it could function. I will concentrate on the operation of the police, courts and prisons, leaving aside for the time being the problem of whether an army should exist at all and how. While describing the system’s functionality, I will contrast it with its anarcho-capitalist and miniarchist counterparts and explain why it is superior to both of them.

3.1 Prerequisites

A necessary and sufficient condition for the suggested system to function is the existence of a pre-established, monopolistic body of law governing a certain land area, whose sole intent is to ensure the protection of private property.

3.2. Police organization

3.2.1. Size, quality of service, market competition and self-regulation

In the proposed system, the police would finance itself from and by the very act of fighting crime. In particular, when the police captures a suspected criminal, it would send him to court to be sued. If the court finds the defendant guilty, then it would make him pay for the expenses incurred by the police. In this way, we guarantee a direct correlation between the level of criminal activity and the quality/quantity of the police. The latter would ensure that the size and organization of the police forces would correspond to the actual crime protection needs of the society. In societies with high criminal rates, the police force would be large and well-organized but where crime is almost non-existent, the police forces would be barely noticeable. Basically, the volume and severity of crime would determine, with the help of the market forces, a police system of just the right size and organization necessary to successfully counter such crime.

The proposed system allows for the existence of many competing police forces, as in anarcho-capitalism. However, since in our case the police would have different clients (the criminals themselves), some differences in the way the police forces operate would emerge. The most notable one would be the lack of conflict between private police organizations, which is inherent in anarcho-capitalism. In anarcho-capitalism, two police forces could have opposing interests if the client of one of them commits a crime against the client of the other, and this could potentially lead to an aggressive confrontation between the two police forces, i.e. the well-known problem of the competing police agencies. Moreover, the police under anarcho-capitalism would very frequently find itself locked in a situation of an irreconcilable conflict of interest. This would happen when one of its clients perpetrates a crime against another of its clients. The problem is that the police would have to arrest a person from whom it obtains money for protection. Under the suggested system, such problems among the competing police forces would not exist because all police forces would serve the same client pool at the same time and their interests would be aligned. Police interests would simply not cross in this way, even when they target the same criminal. If conflicts between the separate police agencies arise, for example with regard to who has caught a particular criminal first, they would have to be solved in court, because only the court would have the right to force the criminal to pay to a given police force. An interesting consequence of the suggested police structure is that the police system would police itself, i.e. if an act of aggression occurs between two police agencies, all the competing companies have a vested interest in suing them for breaking the particular laws under which the police is allowed to operate. In such a way, the police system would be self-regulating and would need no external control, i.e. the problem of “Who controls the controllers?” would not exist.

3.2.2 Motivation

It would be guaranteed that the motivation of the police would be exactly the same as with any other free market sector. In comparison: In minarchism, as well as in the current social system, the police is not motivated to do its job well because there are no standard market-driven incentives. The income of the police is independent of the value of its services; furthermore, it does not bear full responsibility for its actions. Such a situation allows the police not to do its job well and yet not to suffer the full weight of the consequences. Again in comparison: In anarcho-capitalism, the police is motivated to do its job well, but its motivation is determined not by the level of criminal activity but by the subjective perceptions of its clients about it. So, the police would be more concerned with ensuring that the subjective needs of its clients are satisfied than with objectively persecuting criminals. It would be more important how its actions are perceived by the society than how much work it has actually done. Let us illustrate this with an example. Since how much money the police would get would be dependent on the number of private property owners who subscribe to its services and on their willingness to pay more or less, the police would make sure to persecute more vigorously those criminals/cases that have achieved a wider social response in the media. The case of the capture of a notorious criminal, for instance, would bring much more money to their coffers than that of an unknown gangster who has committed similar crimes. Objectively, however, the two cases are identical and should be treated in the same way, which would not happen, unfortunately. In short: in anarcho-capitalism, the motivation of the police forces would be extremely subjective, which would mean: not as effective as we would wish.
Let us now try to evaluate the motivation of the police in the suggested system. The motivation of the police would derive directly from the crime itself, without any intermediary. No preference would be given to conspicuous/important cases unless the general population is willing to pay for them additionally. The only parameter which would be of importance would be the type of crime, big or small, because this would have a direct impact on the money to be obtained from it. The police would try to be as efficient as possible and would not let the rest of the population dictate how it does its job, just as any free-market company would do. As an example: If there is a public gathering, the police in the suggested system would do its best to assess the number of policemen necessary to guarantee the safety of the crowd and deploy just the number needed. In anarcho-capitalism, the number of policemen sent to safeguard the same gathering would likely be much higher than necessary since it would be of an extreme importance that the police presence be noticed by the public and appreciated. In effect, the suggested police organization would adjust objectively to the actual crime protection needs of the society, not to its perceived crime protection needs, as in anarcho-capitalism. This would guarantee efficiency, which is what every market-based company strives to achieve.

3.1.3 Functioning of the police

When a crime is committed, the police would do its best to find the criminal since this would bring it income directly. In order to get money from a potential criminal, the particular criminal case would have to stand trial, which in turn means that the evidence the police has collected would need to be good enough to result in a conviction. Since the police would incur significant expenses for capturing the particular defendant/criminal, for keeping him in custody and for hiring the services of an attorney to sue the defendant in court, it would have to be convinced that the case it has would stand in court. Because if the latter does not materialize, i.e. if the defendant is acquitted, then the police would not be able to recover its expenses. This would guarantee a responsible action by the police. It would not be tempted to arrest people on false or insufficient charges because such charges would not be accepted in court. What would actually happen is that the police would take responsibility for its wrong decisions just as every other private company in the economy, by paying for them. Such a situation could never arise under minarchism, for instance, as the police would not lose money when making a wrong decision, for instance when arresting an innocent man.
However, if the defendant is found guilty, the police would be compensated for its work by collecting a certain price for its services from the convicted criminal. This price would be determined by the market forces and would correspond to the severity of the crime committed. The mechanism would be explained below, in the discussion on the way the court system functions. However, since the price for the particular crime would correspond to the severity of the crime itself, the police would have indicators as to what is more or less important to the market. In short, police work would be driven by the market system itself. Crimes such as murder would have a high price tag; therefore, they would be high on the priority list on the police. On the other hand, crimes such a petty shoplifting would be quite “cheap”, although they may be much more numerous, and consequently they would be of a lower priority for the police. In effect, the market would guide the police in its actions.

The money to compensate the police would have to be obtained, as already suggested, from the convicted criminal himself. This money could come from the criminal’s savings, from sale of personal property, bank loans, private interest/charity organizations, relatives, etc. and last but not least, from the criminal’s future work in jail. The convicts would be allowed (but not forced) to work while in jail and to repay any debt they have been incurred. In case that the criminal cannot pay the police immediately, the police would have the right to collect its money from the criminal’s income in the future. If the convicted criminal has no property and very little earning power, he may be forced to pay for a long time, possibly until the end of his life.

To be able to sue the defendant/criminal successfully, the police would have to hire the services of an attorney. Since different types of criminal cases would have different market prices, it is reasonable to expect that the police would try to maximize its net income from each case by hiring the cheapest lawyer possible who is sufficiently qualified to handle and win the particular case. The latter would also apply to the defendant, i.e. he would have to hire (typically) the services of a lawyer to represent him in court and he would try to find the cheapest but still sufficiently qualified lawyer to represent him. Interestingly, if the defendant is very poor and can afford only a very low-quality attorney, the police would have a vested interest in matching the quality of this attorney on their side. After all, they would like to maximize their profit from the particular case, so why hire a lawyer who vastly outmatches the one of the defendant, i.e. an expensive one? This would minimize their profit from the particular case, since the income from it is fixed by the market price.

Due to the desire of the police to minimize its expenses, it would never keep a suspect in custody longer than it is necessary to organize the trial in court. After all, it costs money to support a suspect while he is arrested. Still, if deemed necessary, the maximum length of detention could be codified in the legislation governing the police.

3.3. Court system

3.3.1. Motivation for the suggested structure

The court system would be a free-market one. This means that its size, structure and the organization according to which it would function would be determined by the market. In order for this to happen, the funding for the court system needs to come from the market itself. This is easy to fathom in the case of civil law, i.e. when private individuals sue each other. In this situation, both parties would choose the judge and the one who loses the case would pay all the expenses related to the work of the court. However, it would be more interesting to discuss the case of criminal law, i.e. when the police sues a suspected criminal. What is worth noting is that the same system can function in such a situation as well.

In the current social system, as well as in minarchism, judges are paid by the state. The idea behind such a structure is that judges need to be independent of the two conflicting parties. Because of their independence, they are able to impartially judge on the particular case. However, what is necessary is that judges be impartial, not independent. Independence of the two conflicting parties is just one way of ensuring impartiality. Another possible way of achieving impartiality is for the judges to be chosen by both parties equally. In this case, the judge would be equally dependent on both parties, which would guarantee impartiality. Let me reiterate, as this is an important concept: Independence is just one way of ensuring impartiality. There are other ways too, for instance when the judge is equally dependent on both parties. The latter is what is suggested here: that the judge be chosen equally by both parties.

It follows from the last requirement that judges cannot allow themselves to be partial or even to appear partial, biased toward any of the conflicting parties. If a judge is known to be biased, he would never be chosen by one of the parties. So, if a judge is known to judge predominantly in favor of the police, then no defendant would choose his services under any circumstances. The opposite is also true, i.e. if a judge rules predominantly in favor of the defendants, then no police force would ever choose his services. In effect, for the judge to be chosen, he would need to be and appear as impartial as possible, since this would be the only way for him to win clients. Since the police and the arrested person/defendant would be free to negotiate with each other as to who is to handle the particular case, they would have to come to a mutual compromise about the choice of a judge.

By using the above idea, we could combine civil and criminal law into one.

3.3.2. Functioning of the court system

Since the suggested courts system is market-based, the number, qualification and specialization of the judges (civil, criminal law or both) would be decided by the free market. This suggests that there would always be a sufficient number of qualified judges to satisfy market demand. If there is a shortage of judges, then the price for their services would rise and this would stimulate new ones to enter the profession. When there is an excess of judges, the prices for their services would go down and some of them would leave the profession in search of more lucrative opportunities. At the same time, the manner in which they would operate and the overall structure of the court system would be as efficient as possible, since it would be dictated by the market forces. People would look for judges whose fees are low and whose services are of high quality (a quick, well-justified ruling, for instance). So there would be market pressure for the judges to provide high-quality services at prices as low as possible.

The judge to serve a particular criminal case would have to be chosen by both sides. So, the suspected criminal and the police would have to jointly choose who the judge would be. If for some reason the latter does not materialize, i.e. if both parties cannot agree upon a judge or if the defendant flatly refuses to choose one, then the laws governing the particular land/jurisdiction would have to offer a solution. There may be multiple solutions to the this problem and any one of them may be chosen, as long as the case reaches the court, so that justice can be served. For instance, the judge to hear this case may be chosen at random from a list of prospective judges. The qualifications, number, etc. of these judges may be regulated by the laws or left open. Or a single, well-known judge may be chosen. The number of possible correct solutions is unlimited.

The task of any judge would be to come to a decision about several distinct problems:
a. / If the defendant is guilty, the judge would have to decide how he is to be punished, for example the length of his prison term, based on the particular criminal code. Such a punishment is necessary in order to stop/disincentivize future criminals. It would have to be completely unrelated and independent of any other payments the criminal would have to cover.
b./ The judge would also have to rule on how the criminal is to compensate (pay to) the private property owner who has been affected by the particular criminal activity. The latter is very important, because only thus could private property be regarded as really private. In effect, what would happen is that the damaged private property would be restored from the criminal’s property/funds/future work. In this way, private property would move from counter-productive hands into productive ones. So, aside from being punished (with a jail sentence, for instance) for his crime, the criminal would be made liable for any losses he has caused.
It may be the case that the criminal has caused bigger losses than he can reasonably repay. Such losses would never be compensated in full and should be accepted in the same way as natural disasters such as hurricanes, earthquakes, etc. The latter cannot be avoided in any social system, because they are a force of nature. Still, the owner of the particular property must be compensated in the best way possible. This may or may not include for the criminal to pay for his wrongdoings not only while in jail but possibly for the rest of his life.
c./ The judge would have to decide on the monetary compensation to the police for the capture, detention and suing of the criminal. This would entail the formation of market prices for the different types of offences, as explained below.

3.3.3. Lawyers

The judiciary system would need lawyers to represent both conflicting parties in court. In the case of civil law, these would be the two litigants and in the case of criminal law, these would be the police on one hand and the defendant on the other. The number and specialization of lawyers would be determined by the free market and by the lawyers’ interactions with their clients. The same would apply for the prices they charge.
If the defendant cannot afford to hire the services of a lawyer directly, he will have to resort to other ways, such as: bank loans, charity, deferred payment (through the work of the defendant in/outside jail, by the plaintiff who has lost the case), etc.

3.3.4 Formation of market prices for different types of offences

Judges would be responsible for ruling on the remuneration of the police for its services if the defendant is convicted. For this reason, the judges would have to balance between the interest of the police and those of the convicted. If a judge does not pay the police enough to compensate for its expenses and generate some profit, he would never be chosen by the police. At the same time, if the judge makes the criminal pay too much, he would never be chosen by the particular criminal. This, along with the specific criminal code stipulated by the laws of the jurisdiction, would lead to the formation of market prices for the different types of offences. In effect, the judges would be an active party to the price formation process. They would have a vested interest (a monetary one) that all type of offences defined in the criminal code be prosecuted and therefore, they would strive to raise the specific prices of the offences so that the police is motivated to catch and sue the perpetrators against the particular rule of law. At the same time, however, they would not be able to raise the prices as high as they wish because they would be bound by the competition for clients, in particular for the criminals, who are an active party in choosing the judge for the case. The defendant would surely choose a judge who typically rules low police compensations. Since the profession of judges would be open to new competition, this would by itself limit any attempts to raise prices too high.
It is very likely that the market prices to emerge from this interaction between the police, judges and defendants would correspond to the severity of the cases as defined by the criminal code to be used. In effect, the market price for a petty theft would be much lower than the market price for a murder. This would guarantee that the police treat the murder case as the one deserving more attention because of its importance for private property protection. In effect, market prices would prioritize the offences with respect to their severity.

3.4. Prison system

3.4.1. Motivation for the suggested structure

Let us first contrast the typical solutions offered by minarchism and anarcho-capitalism. In minarchism, prisons are supported through state-levied taxes while in anarcho-capitalism, prisons are typically supported by the clients of the various defense associations. In both cases, however, the prisoners are not only a burden to society since they have to be supported, but the possibility of their being productive citizens like the rest of the population is either non-existent or limited. This happens because prisoners have little or no opportunity to work in jail. In addition, since prisoners are not able to support themselves, support is provided, which effectively puts them in the position of dependent persons. And since prisoners are in fact treated as dependents, they are frequently mistreated. This takes the form of prison guard brutality and inter-prisoner violence. Prison institutions have no vested interest in resolving the above problem by themselves. There are no monetary, market incentives for that to happen.

From another point of view, the primary purpose of imprisonment is to punish the criminal for his wrongdoings by limiting his access to/separating him from society. Punishing the criminal by subjecting him to bad living conditions has never been the original intent of the law, but this is what happens in reality because the prison system has no motivation to offer adequate and acceptable living conditions. Again, there are no market-induced incentives for this. Even in anarcho-capitalism this problem would exist, because it is not those interested in good living conditions who pay for the prison stay, but the defense associations. Such defense associations, however, would be interested mainly in minimizing their expenses, not in improving prison conditions.

The suggested system solves the above-mentioned problems by changing the very clients of the prisons. Instead of society paying for them, prisoners would be allowed to cover their expenses on their own. This would be possible if prisoners pay for their stay in jail with personal funds and/or work while in jail. This option would significantly change the relationship between prisons and inmates. In effect, the prisoners would become cherished clients to be taken good care of, because they would be the ones to pay for their stay. Prison brutality would be virtually non-existent since prisons would be highly motivated not to allow them. In addition, since the system would be market-based, the quality and quantity of its services would be defined by the market, which by itself guarantees constant improvement and updating of the living conditions and, in general, continuous development.
An additional benefit of the suggested system is that prisoners would be able to contribute to the society with their work even while in jail. Thus, rather than a burden on society, they would be productive citizens.

3.4.2. Functioning of the prison system

Convicted criminals would be allowed to choose the prison they would like to go to. However, their choice would be limited to just where to serve their sentences, not if. There is no problem if the criminal code defines different classes of prisons with a range of limitations on the prisoner’s access to society. The prisoner would just have to choose a prison in the respective class, as given in the judge’s ruling.

Since prisons would be dependent on the number and wishes/financial situation of their clients, the number and quality of prisons would be directly determined by the needs of society. If there are more would-be prisoners, more prisons would appear, if less, their number would decrease. The quality of the services in jail would be determined by the criminal code in the first place and secondly, by the prisoners themselves. However, there would be a general tendency for the prisons to develop and offer modern, cheaper and better services as any other private company in the market economy would do. Competition would drive them. If, however, a particular prison is tempted to offer more amenities/freedoms than stipulated in criminal’s sentence, then this prison could be sued by the police for breaking the law. The monetary reward from suing the particular prison would guarantee that the police would closely monitor the inner workings of the jails.

While in jail, prisoner would have all the rights normal people have, except the ones postulated in the particular laws/sentences. The prisons themselves would be motivated to offer everything not forbidden by the ruling of the judge/criminal code.

Working while in jail would be common and ordinary. Still, if a criminal has the funds to support himself in jail by paying for his stay there without working, then this would be allowed. The prisoner would enjoy as much luxury/goods/services as he is able or willing to buy, as long as these are not forbidden under the conditions of his sentence. Working in jail would usually be necessary for the prisoners to support themselves but unlike the situation under anarcho-capitalism, this would not be compulsory. The market itself would offer incentives to the prisoners in the form of better living conditions, so that most of them would willingly choose to work. Work may even be necessary just to repay the debts one has, in particular when one has to pay the police for its services and the compensation for the committed private property violation.

Prisoners would be able to choose prisons matching their financial situation or earning power. Still, it is very likely that some of the prisoners would refuse to work despite being unable/unwilling to support themselves while in jail. Those would most likely be transferred to minimum-amenities jails. Hopefully, when they see the big difference between the lifestyle the working inmates would be able to afford and their personal situation, they would be incentivized to start working. Such minimum-amenities jails would have to be supported by either the prison system itself or by charity organizations, private companies, etc., i.e. without burdening society. It would be in the prison system’s best interest to support minimum- amenities jails for which prisoners do not pay and consequently receive the bare minimum of services necessary for their survival. Experiencing the difference between what one gets without working and the privileges extended to the productive inmates would be a very good, market-based incentive to start working and be transferred to a better-quality jail.

4. Consequences for crime

The implementation of the suggested system would make crime a very risky and expensive proposition. This is due to many reasons. For one, the police would be very highly motivated to do its job right, because only so will it be able to exist. Secondly, criminals would be forced to pay for all the services provided free of charge until now, namely: police detention, courts services, prison stay and in addition repaying the full value of the damages caused. Third, the general population would be very motivated to help the police directly, because only so would it be able to recoup its losses caused by criminal activity. It is also very likely that the police would be allowed to offer prizes for information leading to the capture of a particular criminal. In general, the life of a criminal would be very hard when the whole of society is strongly motivated to capture him.

5. Conclusions

An alternative way of social organization has been offered. Its advantages over the competing minarchist and anarcho-capitalist proposals have been illustrated. The particular way it would function has been discussed.
In particular, the proposed system allows for the existence of a society which does not pay for crime protection and thus ensures the freedom of its citizens for free. Freedom in this case corresponds exactly to the definition of a basic human right, namely a right which is yours just by virtue of your existence.

In the proposed system, the people who pay for crime protection are the ones who have caused the problem in the first place, i.e. the criminals themselves. Therefore, society would be able to achieve better economic development, since the productive part of the population would not be burdened with expenses for the police, courts and prisons and the convicted criminals themselves would be converted from counterproductive to productive citizens by being allowed to work in jail and thus helping the development of society.

New, market-based structures of the police, court and prison have been offered. The common link between all of them is that the existing intermediaries between the service providers and the service recipients have been eliminated.

The police has been allowed to finance itself directly through the criminals, i.e. the intermediary clients existing in minarchism and anarcho-capitalism have been eliminated. In minarchism, the intermediary client is the state and in anarcho-capitalism – the defense organizations.

The courts would be able to finance themselves directly through the police and the defendants, thus avoiding the necessity of state or private property owner support. In contrast to minarchism, judges would be able to rule on cases with impartiality not because of their independence from the two parties but because they would be equally dependent on both.

The prisons would be funded and chosen by their customers, i.e. the prisoners themselves. No state structures or private defense organizations would be necessary, i.e. again, there would be no intermediaries. This would ensure that the prisons function in full compliance with the principles of the free market.