Constitutional Law Under Anarchy

One of the biggest challenges to the complete decoupling of the provision of law from the state, with a free market of security and adjudication, is the possibility that these entities would collude against their customers.

Economically, it is noted that consumers would lose some money while the collusion in the supply of goods and services is in effect, since the amount of supplied goods should drop and their price should consequently rise under a cartel. Perhaps that is not a problem, given that in a free market such arrangements would be unstable. Moreover, companies should not have the power over the rights of the parties, but only over the prices and services supplied.

However, that is not true for the non-state supply of law. The collusion among agencies of law could lead to a change in the very structure of individual rights, its effects being more permanent, even after the dissolution of the cartel. The manipulation of the judicial system can generate severe losses for specific victims.

Some argue that a constitutional state could be a solution for that, acting as an anti-trust supervisor. That is the conclusion reached by Robin Hanson (who supports the complete “privatization” of the provision of law) and Gillian K. Hadfield (who supports the “privatization” of commercial law only).

Even though these authors do not go into great detail on how this anti-trust supervision would work, it seems that — beyond the conventional prohibition of anti-competitive practices and the nullification (or outright ban) of cartelization contracts — there would have to exist some sort of constitutional mandate that would specify the limits of what agencies should be able to supply (for instance, it could ban preventive detentions without due process) and forbidding secret arrangements that could lead to the harmful modification of the rights structure of the clients. Thus, constitutional restrictions would protect people’s rights against manipulations of colluding agencies.

That would be a minarchist conclusion. But what about anarchism? How could market anarchism overcome that obstacle?

First, we need to understand what a constitutional restriction means. Under constitutional democracies, these norms intend to prevent that legislative, judicial, or even executive acts have certain contents or that they should be put in effect without the fulfillment of certain procedures. For example, in Brazil, a law that establishes death penalty would be unconstitutional and thus invalid. So constitutional restrictions establish something that would not be accepted as a rule even if it were approved by the instances make the legislation.

In private law, what would be analogous to political constitutions? Associations statutes would. Just like constitutions create the legal order under the state, association statutes govern associations. Just like constitutions set up restrictions over state decisions, statutes restrict what boards of directors and assemblies can do. In the specific case of condominiums in Brazil, the law establishes that owners have to elaborate a condominium convention (a statute) and approve an internal regimen for the building or the building complex.

Market anarchism allows for organizations like these. Even though the better known polycentric legal models are those detailed by Murray Rothbard and David Friedman, where the provision of law is negotiated directly by individuals, Michael Huemer’s model in The Problem of Political Authority predicts that the collective acquisition of legal services through associations or condominiums would be the norm. These associations would contract with security agencies and would be able to stipulate a legal code that arbitrators would apply in the transactions made under their jurisdiction.

This collective purchase by means of associations or condominiums opens up the possibility that in each association’s convention or statute there could minimal rules to be followed when acquiring those services. In other words, it could specify that the association would not hire agencies that did not follow certain standards (for example, the aforementioned ban on preventive detentions without due process) and that had the authorization to make arrangements with other agencies.

This dynamic is interesting because it incites agencies to codify rules that limit or ban secret arrangements. The tendency of the explicit adoption of constitutions in associations would probably influence the adoption of constitutions by law agencies themselves.

It should be noted that legal security is higher when we contract an agency by means of a local association or a condominium: the person would be able to invoke the voidness of an arbitration decision or a procedure in the case it did not match the statute or convention in their association, since contractual clauses between the association and the agency would be invalid and “unconstitutional.”

Obviously, it would not be role of local associations to supervise the general competitiveness of the system, but their distributed statutes would collectively prevent abuses and collusions from happening through a bottom-up rather than top-down system.

Thus, the market anarchist order might not lead to a world without constitutions, but with a great diversity of constitutions — the advantage that the “constitutional choice environment,” as Patri Friedman puts it, would be competitive, decentralized, and open one. In this scenario, the choice for an association guarantees individual freedom and the collective contracting of one or more agencies makes the transactions within the market for law safer.

Translated into English by Erick Vasconcelos.

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory