For the time being, at least, the United States of America is still considered a “capitalist” country. But what does this mean? What would it take to make the U.S. not a “capitalist” nation, but a “socialist” one?

Generally, a country is considered to be more “capitalist” to the extent that it’s societal functions are handled by the private sector (the free market) rather than the public (government) sector. Since the Great Depression and New Deal, the Democratic Party has generally favored more government (i.e., less capitalism) while the Republican Party has, at least in its rhetoric, opposed expansion of the public sphere. But under the Bush administration, the federal government has grown much faster than it did under the Democratic administrations of Clinton and Carter. Americans who performed their “civic duty” and cast their votes on November 4 were thus left with a choice between Bigger Government and Even Bigger Government—with no clear indication of which party represented which.

Taking Capitalism to the Extreme

But under a regime of purely free-market capitalism, we wouldn’t need to have elections at all. That’s because under total laissez-faire, there would be no societal functions handled by the public sector—indeed there would be no public sector at all! Thus, there would be nothing to vote on—at least not politically. Consumers would vote with their dollars, and when 51 percent favored Selection A, the remaining 49 percent of society (which might favor an assortment of Selections B, C and D) would not be consigned to the will of the majority.

We don’t choose a national brand of athletic footwear by popular vote, with everyone having to wear Nikes if the majority (or plurality) prefers Nike to Adidas, so why should we choose our governments this way? This is the radical notion of anarcho-capitalism: the idea that “monopoly government” is not only immoral but also unnecessary and ineffective. So with the 2008 election now behind us, let’s stop and consider whether we need to have elections—or “the government”—at all.

There are lots of areas in which the government interferes now that it didn’t 100 or 200 years ago: education, healthcare, labor relations, marriage, charity (welfare), banking, retirement, etc.—the list could go on and on. When we participate in an election, we are choosing the officials who will manage this growing public sphere. On rare occasions, politicians take actions to cut back government, but even the most libertarian-minded of elected officials would never touch the unholy trinity of government monopolies: the military, the police and the court system. If an argument can be made that even these entities could and should be privatized, than the case for “the state” (territorial-monopoly government) would be without merit. So let’s give it a go!

Imagine an “Anarchist” America

Imagine an America with no federal government or any of its agencies or programs. Your “state” (i.e., Michigan or California, etc.) would refer to a geographic region, but not a state government, for there would be none. And your local government would lack the authority to tax or regulate you in any way without your consent. Indeed, there would be multiple, competing “governments” vying for your business.

When you shop at a department store, they may or may not have great customer service. To the extent that they don’t, they risk losing you as a customer. But even the most unfriendly greeter at Wal-Mart has never tased you or shot you or locked you in a cage for a “crime” you didn’t commit. If Wal-Mart did that, they’d not only lose business, they’d be the subject of massive lawsuits. But police departments can and do do these things precisely because there’s no threat of you shifting your business elsewhere—you are a “customer” of the police via your taxes, whether you like it or not. And if you sue the police department, what do they care? You and your neighbors end up paying the cost via a higher tax rate.

But wouldn’t the streets be running with violent criminals if we didn’t have police to “protect and serve” our communities? Perhaps. But just because we wouldn’t have a coercively financed monopoly police department doesn’t mean we wouldn’t have police! In fact, the streets would be much safer and crime would be much lower if we had multiple police agencies competing for customers in the same geographical area.

How would this work? One model rests on insurance. In fact, it could be said that insurance companies would be the “governments” of an anarchist America.

Instead of paying taxes, you would take out an “anti-aggression” policy with the insurance company of your choice. If you were the victim of a crime, you would receive immediate compensation from your insurance company, which would then have a financial incentive to apprehend the criminals who violated your rights—for it is they, the criminals, who would be made to pay restitution to the insurance company. If the criminals lacked the money to pay the restitution outright, or if they posed a serious threat to society, they could be made to work off their debt in a privately run prison.

How Courts and Defense Would Work without Government

But who would determine whether the criminals were guilty? A private court system. Everyone who had an anti-aggression insurance policy would also agree to have their disputes settled in one of several competing courts. The criminals, in this case, might have insurance policies that stipulate any charges brought against them would be handled in Court A, while you (the victim) might have an agreement through your insurer with Court B. No problem: both of your contracts would state that in such a situation, Court C would be used. The jurors who served on Court C would be vetted just as they are in today’s trials, however, they would not be forced to comply with jury duty. For “volunteering” to be called up, they would receive a discount on their insurance premiums.

The insurance companies would hire police agencies to prevent crime. The expense for this service would be covered by the premiums paid by the insurer’s subscribers. Unlike today’s police, these free-market police would not be allowed to violate the life, liberty, and property of individuals—they would face charges in a private court if they did. In fact, the insurance companies themselves might be held accountable, thus encouraging more responsible policing.

National defense would also be paid for by the insurers. Today, the United States spends over a trillion dollars a year on so-called “defense.” The country with the next highest military expenditure is China, which spends only 10 percent as much—with a population four times the size of ours. We could have the same level of per-capita defense spending for just 2.5% of the cost—and that’s compared to a Chinese military that is expanding. In truth, a purely defensive America—where most households would be armed—could be had for no more than $10 billion a year, or about $33 for every man, woman, and child.

The “What Ifs”

What if the private defense and police agencies went rogue? What if the judges of the private courts were easily bribed? For almost every “what if,” the answer is: we already have those exact problems, along with countless others, with monopoly government—why not give the alternative a try?

There are entire books written on the subject of how justice could function in a stateless society, and limited space prevents me from articulating a more thorough argument here. However, now that the election of ’08 is in the rearview mirror, perhaps you should consider a different “what if”: What if instead of choosing between Big Government and Bigger Government, or even Big Government and Small Government, what if the choice was no choice at all? And what if that choice actually represented true choice, as in choice of government? What could be more democratic than that?