Market Protection of Property Rights

“An American Experiment in Anarcho-​Capitalism: The Not So Wild, West.” The Journal of Libertarian Studies 2, no. 4(1978):9–29.

The absence of formal government did not result in the western frontier of the United States being as wild as legend has it. The free market and non-​governmental incentives provided protection and arbitration agencies that functioned well and either completely replaced or largely supplemented federal government. The disorders that did result generally support the contention that agreement on initial rights is very important for the effectiveness of the non-​governmental, market society known as “anarcho-​capitalism.”

In the West, private contractual agencies frequently created an orderly society, protected property and resolved conflicts. Not having a legal monopoly on “keeping order,” these agencies do not qualify as governments. Since warfare and violence were economically expensive ways of resolving disputes, the free market evolved less expensive and more social methods of conflict-​settlement through private arbitration and courts.

Four examples of institutions that approximated free-​market, non-​governmental agencies in the old West were land clubs, cattlemen’s associations, mining camps, and wagon trains. These examples support the belief that the free market can enforce private rights without chaos. In relation to natural resources ownership and management, the voluntary land clubs and mining camps were instructive.

“Land clubs” or claims associations arose in the Middle-​West as a market and “extra-​legal” response by pioneer settlers to deal with the problem of protecting and enforcing property rights in the absence of an effective government. Each law club adopted its own constitutions and by-​laws, elected officers, established rules for adjudicating disputes, and set procedures for registering and protecting land claims. The Claim Association of Johnson County, Iowa functioned effectively in such manner and charged its members fee payments to defray arbitration expenses. Sanctions against those who did not abide by the land club’s rules allowed for force but also for social and economic boycott or ostracism.

The mining camps with their free market law system that arose in the West following the discovery of gold in California in 1848 illustrate again the voluntary, non-​governmental approval to social order and the protection of mineral rights. Since the miners anticipated that they would be without a formal state structure to define and enforce their rights and claims to minerals, many groups devised mining camp rules before leaving their homes. These voluntary contracts resembled company charters and stipulated the rules governing relationships between individuals. These miners did not “recognize any higher court than the law of the majority of the company.” The miners’ free-​market law functioned effectively and often better than the subsequent government law. Competition among the miners courts and their desire to repeat “business” made each court more cautious and responsible for mistakes.

In these two selected cases of land clubs and mining camp rules, we see that rights to natural resources in land and minerals can be protected by non-​governmental agencies.