Cowan strawmans security insurance, but at least it gives me an excuse to rant about real anarchist philosophy.
"but I do mind patronizing a protection agency whose decisions are ignored by other agencies."
The market is smarter than you. I can think of a solution, which means the market will utterly dominate this problem.
This is an incorrect model of property. The agencies will be able to act unilaterally, the decisions against offenders will be presented to other agencies as fait accompli, which they would have to put to arms to contest, which will be too expensive to be worthwhile.
For example, agency ShopWall captures a shoplifter and jails them. For the shoplifter's agency, SlumLord, to contest the jailing, they will have to invade ShopWall's territory. Once ShopWall publicly shares the security cam footage, SlumLord will be caught between game theory and justice. Or consider flogging; you can't un-flog someone.
It's not at all a matter of 'respecting' another agency's decisions, but whether you're willing to pay the cost of not working with them, which is simply unwise, and Gnon will punish such agencies and their patrons.
Worst case scenario, a burglar burgles and tries to claim sanctuary. HouseWall's request for extradition is not 'respected' by SlumLord. Okay, but now all of SlumLord's patrons are effectively outlaws within HouseWall's territory, and they can be shot on sight. The burglar cannot enter any home or business which patronizes HouseWall without risking citizen's arrest. Why would SlumLord pay these costs when there's solid, objective evidence the burglar is guilty? Not only does SlumLord destroy its relationship with HouseWall, other agencies know that dealing with SlumLord patrons is an unwise risk for their patrons, meaning SlumLord has damaged its reputation globally.
But, just as the market is smarter than you, it's smarter than me. These are not actually hard problems, but we can argue about this from our armchairs eternally. Communism was tried small-scale before it was implemented nationally, and the phase-3 results were precisely predicted by the preliminary trials. Similarly, the thing to do with anarcho-capitalism is try it on a small scale and see what happens.
However, since I don't have any handy tent cities
to rehabilitate, I'm going to continue pontificating from my armchair.
"Protection firms with differing law codes must offer a form of quality collusion that provides a common product (a final decision) to their respective customers when interests clash."
The crime and punishment is determined by the local laws; in an anarcho-capitalism 'local' means whatever the particular property owner happens to want. In most cases it will be some standard provided and administered by a commercial firm. To accept that interests can
validly clash is to violate the principle of property, which is to beg the question against anarcho-capitalism.
Moreover, law is likely a commodity good. All the legal systems are going to converge on a simple set of rules and consequences; it's unlikely they will offer meaningfully different codes any more than cellphone companies innovate on what shape phone numbers are.
"A cooperating network of protection service agencies could use aggressive force to enforce its market domination (Friedman does concede this point, although he doubts its likelihood)."
A cooperating network of states could use aggressive force to enforce slavery. A cooperating network of states could use force to, oh, I don't know, displace millions of Arabs so they have somewhere to put the Jews, or to then later displace millions of Jews because they've changed their mind.
This is not a criticism of anarcho-capitalism.
"The adjudication network is stable only if it can use force to put down outlaw agencies that do not accept its higher-order arbitration decisions. Such a network also could use force to put down firms that do not adhere to the collusive agreement."
Insert sarcasm here. This is really bad. As above, 'accepting' arbitration is simply not how this works.
How it works is violence is expensive, and nobody sane engages in it unless they can externalize the costs. Arbitration agencies hardly need to have enforcement arms at all. Rather, if your options are accept arbitration or challenge the defendant to a gun battle, you accept arbitration because it's not worth your life. The enforcement arms are purely for the insane and the deluded.
If an deviant agency refuses to cooperate, well, guess what, Arab states don't extradite to America, and neither does China. This is simply not a serious problem. If going to Arabia means you might get shot and your family will see neither justice nor restitution, then don't go to Arabia? Just a suggestion, don't take your life into your own hands unless you're willing to risk your life.
"The adjudication network could divide the market in to exclusive territories and institute taxation."
Bare assertions are on the table? Okay, I can do that.
If a firm decides to institute taxation it will instantly see a a subscription revolt. Modern states cannot withstand tax revolts of greater than 10% of the population or so, because enforcement is simply too expensive. A firm that tried this will strangle itself within the week and invite voluntary rescuers to come fortify its former territory against it. Further, social norms within an anarcho-capitalism would make it as difficult to order its employees to do so as it would be to order American soldiers to prevent citizen from voting.
"Under this agreement the forces that usually break down cartels - new entrants and renegade colluders - cannot obtain market share."
Yes they can, because of tax revolts and mass emigration.
"Each firm belonging to the network would agree not to deal with upstart firms, or with firms that violated the common agreement to monopolize."
You can't tax day 1 and go to war day 2, you have to build up a war chest. Instead, 'upstart' firms will already exist and know they themselves need a war chest, due to the drumbeats from the wannabe states, making it far too expensive for the states to deal with them. Not to mention consolidation costs. Moreover, given the existential threat such firms pose, it will incentivize all surrounding firms to attempt a levy, which, due to the existential threat and faux pas committed, will help unite the non-state firms and sell the levy to their customers.
Also think about how hard it is to seal a border by surprise. Given that taxing day 1 doesn't lead to war day 2, they will bleed customers, especially rich customers, extremely fast.
Because firms are not idiots, they will also realize this, and sane ones won't try in the first place. Insane ones are incompetent by definition and are guaranteed less of a problem than Cowan describes.
"But competitive forces could conceivably favor such firms. How would competitive market forces alone prevent an outlaw firm from increasing its business by promising never to turn over its guilty customers for imprisonment or trial?"
As above, without difficulty. Cowan's premise is self-defeating. The problem is not how does OutLaw gain market share, the problem is how do OutLaw patrons live long enough to ask for sanctuary. OutLaw will have to commit violence against other agencies to prevent its patrons being lost to Thanatos, and violence hasn't become cheap in the last couple minutes.
Imagine you run a retail store. Someone walks in, and you know they might patronize OutLaw. So you ask for the relevant ID. If they admit to OutLaw or refuse to show it, are you going to give them the chance to become guilty of something, or are you going to pull your shotgun and indicate they should vacate the premises?
Amusingly, this even works if your firm frowns on vigilantism. The outlaw isn't their patrons, they're not going to bother trying to defend them. Further, given that OutLaw won't extradite to them, why would they bother extraditing to OutLaw?
When security firms break down, they don't automatically become states. Rather, it returns to the Hobbesian law of personal self-defence. Especially with modern technology, it's perfectly possible to defend anything at any scale from the sane. Simply have enough weapons to cause more damage than you have wealth, which is easy since destruction is at least ten times cheaper than creation. (This is the basic reason states are so fond of disarming their citizens. States hate it when the cattle fights back; they can't afford it. Similarly, nobody farms tigers for fur.)
"I think this kind of outlaw firm will fail, but not because customers will automatically stop patronizing it."
Yes, customers are too stupid to realize that patronizing OutLaw is likely to get them shot. The only way they will figure it out is once a bunch of them get shot.
States have to infantilize the population because their interventions are insulting to adults. It is not at all a coincidence that schools try to indefinitely extent childhood.
"The threat of violence from the network."
Collectivists often seem to have issues imagining individuals as real elements in the system.
Which leads to this:
"The disciplinary actions of the network that put down these outlaws are precisely the actions that could enforce collusion as well."
The point of anarcho-capitalism is that Gnon's discpline is sufficient. Firms that deprecate OutLaw don't need to actively do anything, let alone active discipline. They simply need to fail to prop it up. Individual reactions to individual patrons of OutLaw would be more than enough.
The breakdown of security firms still doesn't automatically lead to a state.
"Businessmen and government officials differ little with respect to temperament."
Please tell me this is diplomatic propaganda. I still think lying is profane, but if isn't a lie...
"Electing businessmen to political office, even average ones (as opposed to those who deliberately seek election), would not change the tyranny of government much."
Should I hope this is the rumoured Straussianism?
Right, entrepreneurs are totally the same as professional liars. That said, it's entirely true that electing non-liars won't change the government much, because elected officials have, to first order approximation, no power at all. I indeed hope this epic equivocation is Straussian.
"In addition, businessmen, if in a position to engineer a coup through the network, might prove more efficient and cost-effective than their public-sector counterparts. A privately owned network holds out the possibility of residual claimancy and profits, which makes the likelihood of a coup through the network greater."
And now entrepreneurs are different from bureaucrats. Maybe I'm just bad at the Staussian transformation? Inconsistency just looks like a mistake to me.
Coups are of course a big problem for voluntary organizations. Oh wait, no, the opposite is true, since the supposed beneficiaries are those in charge of the cash inflow. Wannabe coup conspiracies give them a pass, since they would still have to provide the service to their customers if they want their seized organization to survive.
"It is not the number of police forces that matters, it is the number of sources for final-order arbitration."
Here we see the errors combine into a perfect storm.
Indeed that's true. Luckily, self-defence at any scale is highly feasible. Except that Pax Americana means any insufficiently demotist country gets invaded, which means there's approximately one current source of final arbitration; China and Russia fit within the error bounds on that measurement, even combined.
"But if collusion, one public good among agencies, cannot be provided, neither can the punishment of renegades be provided, another public good among agencies. We cannot have it both ways."
Public goods don't real, so it's not a case of having both ways. As above, punishment is not 'provided,' it simply occurs as long as nobody, stops it from occurring. E.g. America can externalize its costs of preventing it, and it wants to prevent it, so it does.
I find this level of reasoning typical of Cowan, which is why I don't normally read his stuff.
As always, the real problems with anarcho-capitalism are about military level defence.
It seems as if nuclear proliferation has lead to peace because the generals who decide to declare war now actually risk their own lives when they do so. However, generals are not guaranteed sane. Proliferation to the city-state may produce peace, or it may produce nuclear skirmishes with madmen, each one an erroneous instrument reading away from cascading. While madmen are usually incapable of sustaining nuclear infrastructure, 'usually' isn't 'always.' It might still be good enough, but...
Perhaps the same effect could be produced with assassins. Have a few cells of sleeper assassins and let the general know what their orders are.
Setting these aside, even populations are not guaranteed sane. Moreover, making the entire world anarcho-capitalist at once has a few issues with it. Thus anarchist city-states will be faced with state armies they need to repel. While the rational thing to do is cooperate to repel the army, sane does not imply rational, since there are too many inferential steps involved.
A mad state may attack an anarchy even though the anarchy will destroy far more than the state can possibly gain by seizing them. This being the case, it becomes locally rational for the anarchy to surrender, empowering the state, if other anarchies won't help.
Imagine Australia and New Zealand convert to anarchy and get some nukes. America decides this is far too embarrassing, and invades NZ. Even if New Zealand nukes America's forces and nukes America's home soil, it's entirely possible they'll run out of nukes before America runs out of money. After this, it's a short step for the NYT to say, "Crazy nuke-happy New Zealand must be destroyed before they nuke us again!" It's simple for Authority to cast defence as aggression and thus aggression as defence. The only question is whether NZ gets glassified or they can make an excuse for an infantry seizure.
Australia could have prevented all this by intimidating America along with New Zealand. But of course they don't want trade sanctions or to have to deal with bombing themselves, so they play the neutrality card. But, having done so, they make it incredibly easy for the NYT to call them nuke-happy too, once the war-chest is refilled in the aftermath of NZ. They're anarchist. They have nukes. It's only a matter of time... At which point it becomes rational for Australia to surrender.