Anarchy, State, and Utopia on Individualist Anarchism vs. the Minimal State

In the tradition of John Locke, both Rothbard and Nozick adopt a natural rights approach to political philosophy. One should begin political theorizing by asking what moral rights (if any) individuals would have in the absence of any government, i.e., in a state of nature. One must begin by identifying the basic moral norms with which people may be required to comply. Only then can one determine what coercive institutions—in particular, what form of a state, if any—can be justified. The core Lockean contention about our basic enforceable moral claims against one another is that, since we are each

Each individual has moral rights against others taking or destroying his or her life, liberty, or rightful possessions. Moreover, individuals may use force to defend themselves against violations of their rights and to extract compensation from—and to impose punishment on—violators of their rights. Individuals may also authorize others to exercise these rights of defense, compensation, and punishment on their behalf.

According to Locke, there is a twofold problem in the state of nature. One problem is that some people will engage in violations of the rights of others. Thus, to some significant degree, everyone’s rights are insecure. The other problem is that each person’s enforcement of his or her own rights will lead to further conflict. Locke holds

For this reason, Locke adds, “I easily grant, that civil government is the proper remedy for the inconveniences of the state of nature …”⁵ In addition, Locke holds that civil government is legitimized by the consent of the governed. However, Locke quickly adds that this consent cannot be to the rule of an absolute Monarch because people would be better off remaining in a state of nature with all its inconveniences than living under a ruler who “has the liberty to be judge in his own case, and may do to all his subjects whatever he pleases.”⁶

In contrast, both Rothbard and Nozick think that Locke moves much too quickly to the notion that overcoming the inconveniences that will exist within the state of nature requires the institution of a government. As Nozick says,

Thus, both Rothbard and Nozick focus on what sort of measures might be adopted in the absence of government to overcome the twofold inconveniences of the state of nature—measures that themselves abide by the basic moral norms that bind people in the state of nature. The ultimate difference between Rothbard and Nozick is that Nozick thinks that those measures culminate in what he calls the “minimal state”⁸ whereas Rothbard maintains that any establishment of (even) a minimal state will violate those basic moral principles—and also will be deeply inconvenient.

Rothbard begins by envisioning a state of nature in which individuals are endowed with rights to life, liberty, and property but are worried that their rights may be violated by freelance thugs or roaming bands of predators. In response to such danger, those individuals might at first engage in self-​protection or in cooperative defensive (and rectification and punitive) measures with their friends or neighbors. Still, the benefits of the division of labor will likely lead to specialized businesses arising in response to economic demand for more reliable protection (and rectification and retaliation) against rights-​violations. These private agencies will compete with one another to offer increasingly fine-​tuned and effective protection of rights at attractive prices. Rothbard emphasizes that, as with all other products or services, the best bet for getting high quality at low cost is a free and competitive market.

Rothbard and Nozick both recognize that most prospective clients of protective agencies will seek the peaceful and generally just resolution of disputes that they have with others. To this end, prospective clients will only sign up with agencies that have entered into agreements with their competitors to create reliable dispute resolution mechanisms—e.g., arbitration and judicial institutions that operate in accordance with common accepted norms. Both Rothbard and Nozick recognize that outlaw or rogueagencies may arise to sell protection to aspiring criminals. Both affirm that upright, non-​outlaw agencies may coercively suppress such outlaw agencies. For Rothbard this structure of essentially self-​regulating and competing non-​outlaw protective businesses is both morally legitimate and stable. In such a situation, no state exists—not even a minimal state—because (as Rothbard and Nozick agree) for an institution to count as a state, it must possess a monopoly on the use of force over a large number of people (usually nearly everyone within a given territory).

For Rothbard, a problem arises for this stateless order only if a protective agency or a coalition of them seeks to establish itself as the monopoly supplier of protective services and, therefore, as a state. For, to establish itself as a monopoly user of force, that agency or coalition must suppress or otherwise exercise control over competing non-​outlaw agencies (and non-​outlaw self-​protectors). Yet, such interference with non-​outlaw competitors violates the rights of those competitors who, after all, are merely supplying their clients with the legitimate service of rights protection. Even the minimal state is unacceptable because it can only establish and maintain its monopoly on the use of force through the violation of the rights of those non-​outlaw agencies which have been or aspire to becoming competitors to it.

Rothbard offers a further argument against the legitimacy of any state. According to this argument, any state must derive its revenues through taxation. However, taxation is the coercive (not consented to) seizure of someone else’s rightful possessions. That is, taxation is theft. Since theft violates rights, we have another reason to conclude that every state must be morally illegitimate. I’ll return to this supplementary argument by Rothbard after describing Nozick’s complex response to Rothbard’s primary case against even the minimal state.⁹

The task that Nozick set for himself was to show how a minimal state could arise and function without employing impermissible coercion. Nozick sets the stage for his core move by arguing that in the state of nature there will be strong pressure for consolidation among competing protective agencies. Potential clients of protective agencies will strongly favor agencies which are members of a network of agencies that have agreed with one another about how disputes between clients of different agencies will be settled. No one—or almost no one—wants to be a client of an agency that has refused to be part of a network involving mediation and arbitration and judicial processes for peacefully and justly settling disputes. In addition, the more clients that an agency or a confederation of agencies have, the more prospective clients will be attracted to it. For at least in general disputes between individuals will be more likely to be settled peacefully and at low cost if those individuals are clients of the same agency (or confederation of agencies). And, as more prospective clients join a given agency (or confederation), the incentive for yet more individuals to sign up with or transfer their patronage to that rising agency (or confederation) increases. For this reason, Nozick predicts that without in any way engaging in coercion a given agency or confederation of protective agencies will scale up to being what he calls the dominant protection association (in short, the DPA).¹⁰

However, this DPA will still not have a monopoly on the use of force. For some competing non-​outlaw agencies will still exist. For the DPA to become a state it must coercively suppress these non-​outlaw competing agencies or at least exercise significant control over them. How, though, can the DPA’s suppression or exercise of control over these still independent and non-​outlaw agencies possibly be permissible?

Nozick’s basic answer involves introducing the topic of risk into state of nature theorizing. According to Nozick, there are not two categories of agencies: agencies which respect rights and outlaw agencies. Rather, there are three categories, the first two of which count as non-​outlaw agencies:

1. Those agencies whose actions pose so little risk of violating the rights of clients of the DPA that these agencies must not be coercively interfered with.
2. Those agencies whose actions pose a middle level of risk of violating the rights of the DPA’s customers. These agencies impose more risk on those customers than they should have to tolerate. Nevertheless, since they do not intend to violate rights and their actions might very well not result in violations of the rights of those customers, these actions do not justify the DPA’s straightforward prohibition of the activities of these agencies.
3. Those agencies whose actions pose so much risk of violating the rights of the clients of the DPA that they may straightforwardly be suppressed by the DPA.

Fortunately, according to Nozick, there is an intermediary mode of response to agencies posing that middle range of risk. They may be interfered with, but only if they are duly compensated for being subject to this interference. This mode of response splits the difference between the DPA simply suppressing the activities of the agencies imposing middle range risks and the DPA simply allowing the impositions of those risks. According to Nozick, this is the appropriate intermediary response to those non-​outlaw agencies which are on course to engage in intermediary risky action.

If you find this stance problematic, consider this analogous case. There is a huge dead tree standing on your neighbor’s property. If a storm comes through there is an uncomfortably high chance—say 10%—that the tree with fall on your house and cause significant damage to your house or body. This may not be high enough a risk to justify forcing the neighbor to bear all the costs of removing the tree; and yet the risk might be high enough that you should not have to tolerate it. Is there an intermediate course of action? Yes, there is. You (or your protective agency) may require your neighbor to have the tree taken down as long as you bear some or all of the cost. For instance, you may have to cover the arborist’s bill.

Nozick refers to the rule that says that one may shut down the conduct of an agency or individual that poses a middle level risk of violating rights as long as one pays that individual or agency due compensation as the Principle of Compensation. According to Nozick, at least a significant percentage of the non-​outlaw agencies that would remain independent of the DPA would fall into the middle risk imposing category. Hence, the Principle of Compensation would apply to those agencies. On behalf of its clients the DPA may require that these would-​be independent agencies cease their middle-​level risky procedures—as long as the DPA pays compensation to those agencies or their clients for the disadvantages created by that prohibition.

Still, Nozick cannot assume that all the protective agencies that (to begin with) remain in competition with the DPA will be imposing middle level risks on the clients of the DPA and, hence, will be subject to prohibition under the Principle of Compensation. What about a remaining competitor which pledges to carefully mimic whatever procedures the DPA follows in protecting the rights of its clients? It seems entirely possible for an independent protective agency’s procedures objectively to pose as little risk of violating the rights of the DPA’s clients as the DPA’s procedures objectively pose of violating the rights of that independent agency’s clients. Also, it seems entirely possible for an independent agency’s procedures objectively to be merely a little bit riskier than those of the DPA without those procedures being risky enough to be subject to prohibition under the Principle of Compensation. For Nozick says that the DPA can demand no more than that the riskiness of the independent’s procedures be in the same neighborhood as its own procedures.¹¹ Thus, Nozick needs to explain how the DPA may permissibly prohibit or exercise control over non-​outlaw agencies the procedures of which are not markedly riskier than those of the DPA.

To do this, Nozick focuses on whether the DPA has a right to assure itself (and, hence, assure its clients) that the procedures of each remaining non-​outlaw competitor are within the risk neighborhood of its own procedures. According to Nozick, the DPA has a right to demand that each such remaining independent agency provide satisfactory evidence that its procedures are at least no more than marginally riskier than those of the DPA. It has a right to require the independent regularly to submit its procedures to the DPA’s inspection and be prepared to forego those procedures that the DPA deems to be too risky. The DPA has a right to deem the independent’s procedures too unreliable if the independent does not submit to the DPA’s monitoring of them and stand ready to abide by the DPS’s judgments—even if objectively the independent’s procedures may be no riskier than those of the DPA. It has the right to exercise this level of control over these other agencies as long as it duly compensates those agencies (or their clients).

Although Nozick does not explicitly say so, he seems to believe that when the DPA enforces its right to monitor the procedures of another agency and to enforce its judgments about whether the agency’s procedures are significantly more risky than its own, the DPA essentially converts that agency into a dependent affiliate of the DPA.¹² In this way, the DPA legitimately eliminates the independence of non-​outlaw competing agencies which are not already shut down because the riskiness of their procedures are objectively significantly greater than those of the DPA.

Hence, according to Nozick, through coercive—but entirely permissible –actions, the DPA either shuts down or converts into dependent affiliates all of the non-​outlaw agencies (other than itself). Thus, the DPA can acquire a monopoly on the use of force and, thereby, rise to statehood, without violating any independent agency’s rights. Contrary to Rothbard, minimal states can legitimately arise and maintain themselves as states. Notice again that Nozick is not denying that the DPA uses coercion to achieve its monopoly on force and, hence, its statehood. Rather, his argument that the coercion that the DPA uses against unreliable independent agencies is justified coercion. However, we have gotten ahead of ourselves a little bit. For Nozick recognizes a complication within his defense of the DPA’s right to monitor and judge the procedures of agencies whose procedures may be objectively no more risky than those of the DPA. The complication is that each of these agencies has the same right to demand that the DPA submit to its monitoring and judging the DPA.¹³ It equally has that right because it too reasonably takes its procedures to be sufficiently reliable and reasonably takes itself to have a right that other agencies (including the DPA) reassure it about their reliability. Doesn’t this derail Nozick’s attempt to vindicate the DPA’s use of coercion against competing agencies whose procedures are about as risky as those of the DPA?¹⁴

Nozick’s answer acknowledges that the DPA has no unique right to become the minimal state. It has no distinct moral status that calls upon all other agencies to defer to it. It is not more deserving or more entitled than the other agencies to become the state. For this reason, the monopoly that the DPA establishes when it exercises control over other non-​outlaw agencies is not a “de jure monopoly.” The difference between the DPA and these other agencies is merely that the DPA has sufficient power to exercise its right to supervise the other agencies and enforce its judgments while none of the other agencies have this power.

As the most powerful applier of principles which [the DPA] grants everyone the right to apply correctly, [the DPA] enforces its will, which, from the inside, it thinks is correct. From its strength stems its actual position as the ultimate enforcer and the ultimate judge with regard to its own clients. Claiming only the universal right to act correctly, it acts correctly by its own lights. It alone is in a position to act solely by its own lights.¹⁵

In exercising its power, the DPA attains a “de facto monopoly: a monopoly that is not de jure because it is not the result of some unique grant of exclusive right.”¹⁶ According to Nozick, there is nothing illicit about it doing so. The situation is like two individuals who each notice that there is an abandoned $20.00 bill on the sidewalk between them. Each is equally morally at liberty to reach down and grab it. It’s merely that the quicker individual gets to it first. The slower party has no basis for claiming that any of his or her rights have been violated. Similarly, no less powerful agency has a basis for claiming that its rights have been violated because the DPA has been the agency that exercised its right to become the monopoly provider of protective services.¹⁷

Some Insufficiently Recognized Features of Nozick’s Minimal State

I mentioned above that Rothbard has a supplementary argument for the illegitimacy of all states, viz., that all states finance themselves through taxation and taxation is theft. But this argument does not apply to Nozick’s minimal state. For Nozick’s minimal state does not engage in taxation. Rather, it funds its services by selling the provision of them to its clients. It must fund itself in this way because Nozick agrees with Rothbard that taxation violates the rights of those subjected to it. More specifically, Nozick argues that any state’s expropriation of part of the fruits of people’s productive activities would wrongly treat those people as though they are in part owned by the expropriators. Why is it wrong for the expropriators to treat people in this way? Nozick appeals here to Locke’s claim that individuals have rights over their own productive capacities because they are morally speaking self-​owners.¹⁸ Nozick also argues that taxation on earnings is morally on a par with forced labor.¹⁹ Why is it wrong to imposed force labor on people? The Lockean answer is that as self-​owners people have rights over their own labor; and that means the rights to decide when, how, and for what purpose their labor will be employed.

That Nozick’s minimal state finances itself through the sale of its services reflects the fact that it is itself a business operation—presumably a profit-​making operation—and not anything like any political institution we have ever seen.²⁰ The Nozickian minimal state has customers, not subjects or citizens. It has managers and executives, not state bureaucrats or elected officials. It has a board of directors, not a legislature. It has a CEO, not a president. It has stockholders, not voters in elections of political candidates. It has various organizational rules, not a governing constitution or judicial invocations of constitutional restrictions or any structural division of powers. If you were to ask Nozick whether this takes the romance out of statehood and contravenes the idea that the state possesses a special and even holy authority, he would surely answer, “You bet it does.”

On the other hand and especially in light of the absence of any constitutional restrictions or any embedded separation of powers, one has to inquire about what will constrain the conduct of the Nozickian minimal state? Would there be any independent body of law—one would hope for rules that give detailed content to people’s rights to life, liberty, and property—to which the activities of this minimal state would be subject? If so, what would be the source of such law and how much resilience would it have against the judgments and the demands of this minimal state?

Normally business enterprises are severely constrained by competition. But that is because normally a business enterprise may not use force to shut down its competitors or to enforce its judgment about whether its competitors’ activities are sufficiently reliable. Nozick considers this issue briefly when, after describing the minimal state’s de facto monopoly, he writes,

Other protective agencies, to be sure, can enter the market and attempt to wean customers away from the dominant protective agency. They can attempt to replace it as the dominant one. But being already the dominant agency gives an agency a significant market advantage in the competition for clients.²¹

It is important to recall that there are two distinct advantages that the Nozickian minimal state enjoys. The first is that in its journey toward statehood almost all prospective clients will prefer to sign up with an agency with whom most other people have signed up. For this increases the likelihood that their disputes with others will be subject to resolution by familiar and common rules. The second is the advantage enjoyed by Nozick’s minimal state after it arrives at statehood of being the party who determines whether the services any aspiring competitor plans to offer will be reliable enough to be allowed into the marketplace. This advantage seems out of place for a purely economic enterprise because it seems to be a political power which the Nozickian minimal state will likely exercise to its economic advantage. In this way Nozick may ascribe a right to his minimal state that expands its power beyond what Nozick envisioned.