Galtland Index

The Machinery of Freedom

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The Machinery of Freedom

The Machinery of Freedom: Guide to a Radical Capitalism is David Friedman’s case for abolishing the state, argued from consequences rather than from rights. Most of it was written between 1967 and 1973; the second edition adds a long postscript. It is the consequentialist counterpart to the rights-based anarcho-capitalism of Rothbard and the Tannehills, and the place where the tradition states its own hardest problem most plainly.

The method

Friedman does not begin from an axiom about aggression. He begins from institutions and asks what they produce, and his conclusion is stated as a judgement rather than a deduction: “I hold that there are no proper functions of government. In that sense I am an anarchist.” The things governments do, he adds, divide into “those we could do away with today and those we hope to be able to do away with tomorrow”, and most fall in the first category.

The book’s structure follows that division. Part I defends private property; Part II proposes reforms achievable inside present institutions; Part III describes a fully stateless order; Part IV is the second edition’s expanded postscript, which adds the economic analysis of law and the historical material.

Police, courts and laws on the market

Part III contains the passage the book is best known for. A theft leads two protection agencies — Tannahelp and Dawn Defense — toward a confrontation that neither wants, because “wars are very expensive, and Tannahelp and Dawn Defense are both profit-making corporations, more interested in saving money than face.” They arbitrate instead. Friedman is explicit that this improvised settlement is not the institution: in a developed order, agencies “would anticipate such difficulties and arrange contracts in advance, before specific conflicts occurred, specifying the arbitrator who would settle them.”

From that follows his account of law as a produced good. Courts sell adjudication to protection agencies, agencies sell a package including a legal system to their clients, and the law under which a case is decided is fixed by prior agreement between the two agencies involved rather than by territory. Different agencies may patronise different courts, and convergence — where it happens — comes from customers preferring the same rules, not from a legislature.

The stability problem

Friedman treats the objection that such a system collapses into a state as the serious one, and answers it with several considerations rather than one. In the last resort, he says, nothing prevents a power grab “save a populace possessing arms and willing, if necessary, to use them”; short of that, he compares who is selected for the job under each system, and then adds number as “another relevant factor”. Agencies are not sovereigns: “An agency which settles its disputes on the battlefield has already lost, however many battles it wins.” Exit is cheap in a way it is not between countries — “We can change protectors without changing countries.” And number is what makes exit bite: “If there are only two or three agencies in the entire area now covered by the United States, a conspiracy among them may be practical. If there are 10,000, then when any group of them start acting like a government, their customers will hire someone else to protect them against their protectors.” His guess is that the efficient number is nearer ten thousand than three, and his verdict on the whole question is “one of guarded optimism”.

The other structural claim is about rights rather than incentives. Private agencies, unlike governments, have “no rights which individuals do not have”, so their mistakes are torts. His contrast is concrete: “In order to sue a policeman for false arrest I must prove not merely that I was innocent but that the policeman had no reason to suspect me.”

National defence: the hard problem

The chapter that gives the book its intellectual honesty concedes what most of the tradition disputes. An anarchist society still faces states — “there will still be nations to defend against, unless we postpone the abolition of our government until anarchy is universal” — and defence against them cannot be retailed only to those who pay for it. The concession is explicitly conditional on the weapons of the day: “Defense against nations, in the present state of military technology, is a public good.” On that condition it follows that:

“So national defense—defense against nations—must defend areas of national size, whether or not they contain nations. It is thus a public good, and one with a very large public.”

— David Friedman, The Machinery of Freedom

Friedman then dismantles two proposals from his own side. The Tannehills’ scheme of funding defence through an insurer collapses to free riding, because such a company “would have to charge rates substantially higher than the real risk justified, given the existence of its defense system”, and would lose its customers to insurers carrying no defence burden. Ayn Rand’s scheme of funding a minimal state through court fees fails the same way unless the state forbids competing courts, at which point it is coercive again. He canvasses endowed local defence organisations and other partial answers, and does not claim any of them works; his own summary of whether the good can be financed without coercion is “It is not obvious how.”

Medieval Iceland

The postscript supplies the book’s historical case: “the medieval Icelandic legal system comes closer than any other well-recorded historical society that I know of to being a real-world example of the sort of anarcho-capitalist system described in Part III.” Its distinguishing feature is that enforcement was entirely private — “In medieval Iceland all law was civil. The victim was responsible for enforcing his claim, individually or with the assistance of others” — and its elegant solution to the problem that a weak claimant cannot enforce against a strong offender was to make the claim itself property: it could be sold or given to someone stronger, who then had reason to press it “in order both to collect the damages and to establish his own reputation for use in future conflicts”.

Friedman gives the ending as well as the run. “The Icelandic system finally collapsed in the thirteenth century, more than three hundred years after it was established”, and on the cause he does not overclaim: “It is not clear what the reason for the breakdown was. One possibility is that increasing concentration of wealth and power made the system less stable.”

Place in this wiki

The book is the consequentialist pillar beside the corpus’s natural-rights anarcho-capitalism, and its arguments carry most of the mechanism in Private Security and Insurance — the inter-agency arbitration answer, the checks on a protector, and the national-defence concession that marks the limit of the case. Its account of competing legal systems belongs with Market Anarchism and Private Law, and the objections it takes seriously are catalogued in Criticisms of Anarcho-Capitalism.

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Galtland Index. “The Machinery of Freedom.” https://index.galtland.org/references/the-machinery-of-freedom

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