Front Page Titles (by Subject) Free Market Justice - Literature of Liberty, January/March 1979, vol. 2, No. 1
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Free Market Justice - Leonard P. Liggio, Literature of Liberty, January/March 1979, vol. 2, No. 1 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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Free Market Justice
“Justice Entrepreneurship in a Free Market.” Paper presented at the Libertarian Scholars Conference, Princeton University, October 1978.
Some critics of the idea of free market justice have argued that it is incompatible with the rule of law. Without government to impose a uniform system of procedures and standards, such critics envisage a chaotic patchwork of competing agencies, or perhaps even various criminal bands imposing their wills in the name of justice. But free market justice does not oppose the rule of law. Principles of justice are derived from natural law, and therefore fall within the province of human knowledge. Neither the specific content of the law (which can be deduced from a theory of property rights) nor the formal aspects of the law depend upon the existence of government.
“Where, then, is the weak link that opens the door for a monopolistic government?” One link is the concept of “procedural rights” upon which Robert Nozick, for example, in Anarchy, State, and Utopia bases his notion of the “ultraminimal state.” Smith agrees with the idea of restitution as developed in Randy Barnett's “Whither Anarchy? Has Robert Nozick Justified the State?” But in contrast to Nozick, Smith suggests “The important social relation that generates the whole question of reliable procedures is not that between the Victim and the Invader, but the relationship between the Victim and impartial Third Parties.” The crucial idea is that “It is for his own safety, to prevent violent Third Party intervention in his quest for restitution, that the Victim must concern himself with matters of legal procedure.” The problem is explored, not around the “phantom” notion of “procedural rights,” but rather around the concept of “justice entrepreneurship with its two essential ingredients: restitutive risk and the presumption of invasion.”
Much of a Justice Agency's service is entrepreneurial in the sense that the Agency assumes the burden of risk that accompanies the use or threat of physical force in a free society. Thus, “A client contracts with a Justice Agency not only because the Agency is more efficient in obtaining restitution, but also because the Agency is more likely to overcome public suspicion that the force used to obtain restitution is of invasive rather than of restitutive nature. The degree to which an Agency can minimize this risk is a measure of its reliability and, ultimately, the source of its profit.”
Analysis can unravel this problem in terms of Crusoe, Friday, and the introduction of a Third Party. Fundamentally, there is a lack of coordination (knowledge) between the Victim and Third Parties, and thus, the problem, “How can the Victim regain what is rightfully his, by force if necessary, and avoid being branded in the public eye as a common Invader?” The transfer of this risk is the major function of a free market Justice Agency, and that which gives it its entrepreneurial quality. This alertness to opportunity is at the heart of entrepreneurship. This, in turn, leads to the conclusion that the Agency must offer a public verification of its work; the trial must be public with public access.
A number of procedures necessary for such proceedings are available. The major point is not procedural, however, but to bring the whole concept of justice into the “realm of deductive natural law,” Smith concludes that “there are no serious gaps in the libertarian paradigm of natural law and noncoercion, such that a monopolistic government must step forward to fill these gaps.” Any Agency, even Nozick's dominant one, ought to be “gauged by the entrepreneurial standard of public verification.” Any Agency unwilling to do this should not be regarded as legitimate.