Laws without government: Law & order from INCENTIVE rather than THREAT

• Can laws exist without government?

Yes. Without the force of an arbitrary perceived “authority”, law equivalents can exist that can be better than laws as we know them today: superior in application and in morality.

Non-government law equivalents can exist, and can be more effective than threat-driven laws of modern “civilized” society. This is because such free laws are driven by incentive, not force. Incentive-driven “laws” represent WHAT people truly want, and HOW MUCH they want it. Each “want” is backed by responsibility. People only get what they are willing to assume the consequence of, so each law becomes truly organic.

Give me a moment to explain this norm-breaking paradigm…

• Can such stateless “laws” be enforceable without government?

Not exactly “enforceable”, but instead, incentivized, unlike the barbaric way our violence-driven societies function today. If you have ever worked in sales, you’d know that people value what they “want” more than what they “need”, so an incentive for greater value is a greater behavioral driver than forced compliance to a mere requirement.

Incentive-driven “laws” mean that a society provides the incentive for people to not harm you. If they do, society incentivizes them to make it up to you. And society does this, not by threatening to take away from the “criminals” what they already have (freedom or money); it incentivizes them to make it up to you by depriving them off the over-and-above benefit and opportunity of being protected by such “laws”.

• This is confusing! So how can there be “law and order” without the threat of government violence? Threat of violence is the only way a “civilized society” can function. How can laws emerge without altruistic leaders who supposedly represent the will of the people over the will of corporate lobbyists, the latter of which pay with money, not votes? How can you make someone fall in line without threatening to harm them if they don’t?

Incentive is more potent than fear.

First we need to understand that, despite numerous laws and barbaric state punishments, crime still exists, and there tends to be more crime the more numerous and the more barbaric laws become. And by “crime” I mean the basics: harming people, stealing from people, and depriving people’s individual sovereignty. Something that is victimless is not a true crime.

Second, we need to understand that a vote does not give a politician money. However, a big corporatist lobbyist does. So, because a politician is fully unaccountable to the people, he has zero incentive to cater to his voters. Yes, politicians pretend to “cater to the people” through gaslighting, blame shifting, and other manipulation tactics, but politicians ultimately work for their sponsors.

Politicians have every incentive to cater to those who blatantly bribe them with donations, stock market insider info, and who knows what else. If you accept this reality, and how human behavior is predictably driven by incentives, then you logically concede that democracy is just theatre: a swindle to make people think they have power over politicians with their votes, when in fact, only lobbyists get to truly vote with their money. And why is that? Because lobbyists put their money where their mouth it. Voters don’t. Voters think that they can simply drop a vote and get to choose a public policy without having any skin in the game. If you truly want something, you should be willing to put your money where your mouth is, because only money talks. Unfortunately, democracy is the slyest form of totalitarianism, since it is the delusion of freedom. This is because a vote without a stake in it has no value. Voting is simply pretending to support a public policy without having to be held accountable for it, and those without accountability should have no right to an opinion in a specific matter…

“If there is nothing to lose, then there is nothing to gain.”

• OK smartass, so HOW can laws exist without a government?

Easy answer? …Gambling, also known as insurance. Let me explain through an exploration of human psychology…

What would you do if you lived in a society without government? It is possible, you know… State institutions can collapse when people finally get fed up with government corruption, or if there’s a nuclear apocalypse that breaks down government infrastructure (and faith in it), or when we finally migrate to another hospitable planet, and colonize it without a government.

Civilized people understand that, in order to survive and thrive, they need to trade with each other, each offering their unique value in exchange for other people’s reciprocal value. For both parties transacting, the value given is less than the value acquired, this way creating more value for society as a whole. We know this because, if the value acquired wasn’t more than the value given, for both parties, then the transaction would not have taken place (assuming it is a free transaction). This is how a free-market society is driven by incentives.

Free trade is the basis for all economies, and all civilizations. And this valuing of each other is what government tends to distort with its forced entitlements, unfair wealth redistribution, and false sense of safety from benefits. When people feel entitled and safe by a vague benevolent “deity”, the state, they forget that they need each other to keep each other safe. When we feel that the government takes care of us no matter what, we forget we need to be kind to others to incentivize them to be kind to us in return. No wonder people are so mean and indifferent to each other.

In history, it is the most cooperative people who tend to survive and produce offspring, not the most aggressive. Regardless, there are always those who work against their own self-interests: the criminals, the abusers, the sadists, the manipulators, the psychopaths. Such self-destructive people tend to want to harm others, steal from others, and abuse others, ultimately at their own expense. Maybe they value short-term pleasure more than long-term benefit. But just like a heroin addict, they end up harming themselves more in the end. Regardless, people like this exist, so a civilized society tends to put systems in place to safeguard its logical incentive-driven people from the criminal-minded.

Without outsourcing their free will to a government, logical people would have an incentive to insure their well-being from the violence of others. With no state monopoly on “security”, insurance takes this role as yet another service provided to society to all those interested. Besides, this is what the government does with your safety: you pay a premium (taxes) in exchange for insurance for your security. Government compensates you or punishes the culprit if it fails, and it enforces behavioral clauses (laws) to minimize its costs in compensations/punishments. The difference with insurance is that you get a choice among competing providers; with the government, you don’t. Also, the difference with insurance is that insurance will not threaten to punish a criminal; instead, it will warn him that it will take away the privilege of its services, if the culprit refuses to make amends. This is the fundamental difference between threat and incentive.

Anyone who’s studied insurance history knows that insurance works without the state, and in fact, works better without state intervention. Insurance even emerged and flourished outside of state jurisdictions (see the history of shipping insurance).

Insurance, as we know it today, occurred through gambling: sailors of the early 17th century embarked on dangerous voyages to support their families back home. They didn’t have any welfare support from any state while voyaging. Had they died during a journey, nobody would provide benefits to their families. So they literally gambled their lives. They bet against their life with their local bookie: if they died during a journey, the bookie would then have to pay X amount to their families, depending on the premium paid, the amount of people making similar bets, and the risk factor involved. The more the people gambling their lives, the lesser the insurance premium. If they didn’t die, then they would lose the bet, but at least they would keep the sense of “assurance” that this bet granted them. This is value created out of nothing. Bookies had every incentive to honor this bet, otherwise they’d lose their clientele from irreparable reputation damage. Even illegal bookies and loan sharks of today honor their bets. As the premium was determined by the risk factor of someone losing their life during a journey, insurance companies became unmatched in risk assessment. And through this gambling/insurance, people could potentially insure anything, from shipping consignments to their daughters’ virginity (true story).

Insurance worked then and it works now. When you insure your car, you make a bet with your bookie (insurance company) that you will damage your car in a given timeframe. If you do damage your car, you (unfortunately) win the bet, and the bookie gets to pay up. Do it enough times and the bookie will need you to bet more to accept the next bet, due to your risk propensity. If you don’t damage your car, you lose the bet, but you get to enjoy the side-effect value of feeling secure during that timeframe. The same happens when you insure your health, and even your life. I know musicians, for example, who insure the proper function of their hands.

Furthermore, here is the real magic of insurance: if the insurance company is to compensate you, you need to abide by certain clauses. This is to make sure that you, for example, don’t recklessly damage your car, and you don’t damage other people’s cars either. Insurance companies don’t want you to increase their costs just because you feel safer with their service. And they don’t want to ask you to accept anything unreasonable either, otherwise they’d damage their business. This is how insurance companies incentivize good behavior: if you want life insurance, you shouldn’t smoke, and you should also not do things that harm its other clients’ health.

And insurance companies are good at figuring out who breaks their commitments, because they have every incentive to be (unlike government). If insurance companies are too lax with the “enforcement” of their contracts, then they would lose their clientele. If they are too strict with their “enforcement”, they would also lose their clientele. So free market feedback would determine their behavior too.

Without a state monopoly on legislature, people would seek insurance contracts to incentivize good peaceful behavior in others. How about an insurance package insuring your life and bodily integrity against violence and rape? If enough people want it enough to pay for it (they predictably would), and if they had surplus income from not having to pay wasteful taxes, then competing insurance companies would find the lowest possible insurance premium for this type of insurance (unlike inefficient government, which lacks competitive incentive to be efficient).

Insurance companies would predictably add a clause in their contracts, because they have the incentive to: “if you want to be insured against murder, rape and bodily harm, then you agree to not conduct murder, rape or bodily harm onto others. If you commit these violations, you lose your right to insurance coverage because you increased our company’s costs; unless you are willing to cover that cost. If you don’t cover our cost, there is no prison system or violent against you as punishment, but something far worse. You face social ostracism, and the threat of living without insurance in a society where your insured victims want to exact on you, while you’re uninsured.”

To sum up:

Without government and its arbitrary laws that only benefit lobbyists at the expense of society as whole, people would seek social rules that reflect what society truly wants, and how much it wants it. Without the threat of violence by an “authority”, you would seek to insure your well-being, and in doing so, you would incentivize others to safeguard your well-being too. Insurance companies would have the incentive to include clauses in their reputation-enforced contracts: “it’s cool that you want to insure your life with us, but if you take someone else’s life, we would be liable to our clients. So if you want to keep your insurance coverage with us, you must commit not to kill anyone. If you do, your insurance becomes void, and you are left at the mercy of reciprocal violence against you by an aggrieved someone who faces no consequences if they decide to respond to your violence. Unless you agree to pay for damages…”

And this is how laws without government are formed and incentivized. An organic social collective gets to decide what is “legal” and what is not, by what people are willing to pay for. Those who want to “illegalize” something have to put their money where their mouth is, and without crippling taxation and money-counterfeit inflation, they’d have abundant available wealth to do so. Those not wishing to be insured reserve the right to take their own risks. They, however, have an incentive to not commit violations for which others are insured, because then, they face reciprocity for the exact thing they are not insured.

• You talk about money. But who enforced money without government?

We don’t need government to enforce money either; quite the contrary. Societies have been using wealth-transfer media, from gold to salt, to make transactions and store wealth since ancient times. Fiat currency (fake state-enforced money substitute) is a recent invention. And decentralized unenforced cryptocurrency proves that money can be anything that society organically places value to it.

If enough people want something enough to put their money where their mouth is, then you can insure anything. And each insurance contract is a vote in real time; voting with your wallet each time you decide to spend or not spend. This is better than just voting for an unaccountable dictator every few years, and hoping for the best. In voting, people select only what they want, not how much they want it, and how much skin they’re willing to stake in the game. They choose something without having something to lose, and without accountability. This means that they think they have the right to enforce behaviors on others without having to put their money where their mouth is. Free law formation through insurance is like weighted voting, where you communicate what you want as well as how much. This is much more organic and fair to society than a few corporate lobbyists buying lawmakers in parliament, which is the norm in all forms of governance (democracy, monarchy, socialism, theocracy, technocracy, aristocracy, etc). And this is why big corporations benefit from big government. Big corporations would be at the mercy of private individuals in a free society without government.

Through insurance “laws”, you can insure anything. You can insure your property. You can insure your wallet. You can ensure your safe passage through someone’s road system. You can insure children’s rights. You can insure human liberties and worker rights. And you can pay for all this with less money than you pay in taxes. This is because government monopoly on these “insurances” is inefficient due to the lack of competition, not to mention inefficient due to embezzling, corruption, lobbying and war.

You can also insure the environment. If enough environmentalists put their money where their mouth is, they can incentivize others to use more environmental practices, otherwise they lose their insurance coverage, or have to pay more for other types of insurance. Anything can be a clause in an insurance contract, as long as insurance companies have enough market demand input from their clientele to put it in there. If not enough environmentalists value the environment enough, then they are hypocritical, and society does not deserve a healthy environment.

Insurance companies are also effective at figuring out whether you are scamming them with false claims, and they are good at investigating whether you abide by their clauses or not.

In such an incentive-driven “legislature”, insurance companies compensate the insured victims, because it is their business model. Those who choose the risk of not being insured do so understanding the risk, and it is their right. Regardless of a culprit’s insurance status, insurance companies will have to find those who violate said clauses, and ask them to pay the compensation amount to the beneficiaries. They can even incentivize them to pay compensation by offering them a discounted insurance premium. If the criminal wants to keep his right to an insurance, or acquire insurance when he is faced with reciprocal violence by his victim, he will have every incentive to pay that amount. Making amends is a more powerful and rehabilitating “punishment” than the brutal barbaric vengeful prison system of today.

The criminal might have all his access to insurance suspended by all insurance companies until he pays up. All insurance companies will have an incentive to work together on sharing information about criminals, just like they work together today by communicating risk ratings. If a criminal refuses to pay, then his “punishment” is simply the removal of his access to privileges, like access to insurance.

Private individuals and businesses can also reserve the right to marginalize and ostracize such people, organically depriving them of their trade until they pay penance. Society will have every incentive to do this, because no logical person wants to work with people who don’t honor contracts (unlike the state-enforced limited liability status). Plus, ostracising unrepentant criminals is a way to protect yourself.

And if a criminal still refuses to pay up, and chooses to live without insurance, then someone with life insurance can exact revenge on the criminal without the risk of losing their own life insurance. This is because the criminal is not insured, but the avenger is; so no insurance will have to pay for the harm of the uninsured criminal. Therefore, the criminal has every incentive to pay up. And if he doesn’t, then ostracism and the fear of reciprocal violence is what he earns.

This is how law and order works better than what any government could enforce.

• So why doesn’t society work this way?

Because every time a government-less society emerged, a neighbouring government invaded or took over by force. From the colonial settlers of the New World and the pirate era to the tribes of Siberia and Africa, it was always some form of central “authority” that elbowed its way to seize control by force. And that’s when genocide and atrocities occurred.

• If free societies are so good, why does government always overpower them?

Because the only thing government does better than the free market is violence. No free market can compete with the centralized violence of a national military. And it is precisely this consolidation of violent potential that maximizes the probability of committing mass military violence. No free market can enforce systemic democide, genocide, rounding up in concentration camps, development and use of weapons of mass destruction, and the greatest manifestation of insanity: war. It is organized government that systemically exterminates populations. It is always some form of governance that conquers and enslaves a tribe. It is some form of governance that systemically allows and encourages slavery. And it was the “evil rebellious pirates” who willingly died freeing slaves. With each argument against a free world one must bring arguments for governance, and for its “necessary evils”.

The rules system of today’s society is based on threats of violence. This makes people forced to comply rather than want to abide by those rules. An incentive-driven rules system could work more effectively, more organically, and more morally.

We see examples of it working even today… Corporations freely agree to abide by certain private standards. Competing shipping companies agree to share supply chain input so that they can all work more efficiently. Competing cybersecurity providers agree to share emerging cyber threat and vulnerability data, so they can all be more effective. Even government corruption, with its under-the-table brides, works smoothly without any enforceable contracts. The irony or government corruption is that it works freely without government. They work because of incentive, and incentive only. Each party understands that it is in their best interest to abide by their agreement to provide value to others. If they don’t, then they damage their reputation and lose opportunities for future dealings. Reputation loss is not a punishment, but it is simply the loss of potential opportunity.

People are more likely to honor commitments they freely choose, rather than commitments they are forced to comply with.

Rampant chaos is a crossroads without traffic rules. Inherently corrupt governance is a crossroads with traffic lights and exclusive lanes for VIPs only. Incentive-driven voluntarism is a crossroads with an efficient safe roundabout that needs no enforcement to function…