Without government courts, how would consumers find redress against businesses that rip them off? That’s the question I answer, in part, in my article, “Free-Market Justice is in the Cards,” published in the April 2005 issue of The Freeman.
Free-market justice is merely business as usual for the credit card companies who settle disputes every day between buyers and sellers. Moreover, this is justice without borders, because it is provided equally for everyone around the world as well as in the United States. Most importantly, this privately provided justice is also significantly more effective, efficient, and consumer-friendly, and far less expensive (meaning no filing fees, court costs or lawyers), than what the state serves up.This article is an outgrowth of my research as a 2003-2004 John M. Olin Student Fellow in Law and Economics at the University of Chicago Law School. I presented some of these details as a scheduled speaker at the 2004 Austrian Scholars Conference.
In any event, this Freeman article should provide some food for thought and, I hope, provoke a bit of scholarly feedback as well.
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Is the article online?
In effect, credit card payments are escrow. Because, if a customer is unsatified with the product or service (compared to the claim of the provider) then credit company will consider forgoing the disputed amount from the customer. It will recover the amount from the provider.
How miserably the state fails at the only function it was ever designed for! When it comes to justice, I only want three things:
1. Protection from wrongdoers.
2. Restitution or redress from the wrongdoer when (1) fails.
3. Provision for my family if (1) fails and I die.
How does the state fare in monopolizing justice?
1. The state fails here, which is why the free market picks up the slack (security and alarm companies). Even more notably, the state offers no protection against its own wrongdoing.
2. The state fails here, preferring to house and feed the wrongdoer at my expense. These jail sentences are also arbitrary punishments and never fit the actual crime. The free market is barred from competing in this function.
3. The state doesn’t even try here, which is why the free market’s insurance business has picked up the slack. In most countries, the state will actually rob me and my family if I die.
The state can go to hell (if it isn’t there already).
To answer the question, FEE keeps select articles off its website when new Freeman issues come out, to encourage people to subscribe. As soon it’s available online, I’ll make it known on my website.
Paypal is supposedly another system that does this, but in practice it merely creates horror stories about frozen accounts, unauthorized transfers, and people who can’t recover anything after being ripped off. (see paypalwarning.com).
In another post, a claim is made that “the state” fails. Is that because it is monopolizing justice, or that people don’t want justice although in many places judges are appointed by elected people or even directly elected, as are those who wield the executive power. Most people won’t act to prepurchase protection by voting, so I doubt they would do it in a “free market”. You get ripped off. It would cost $5000 to investigate the break to find the burglar v.s. $500 to fix and replace things. Do you pay the additional $4500 to get “justice”?
And if justice can be bought, cannot injustice, and more cheaply? It is easier to destroy than to construct. You must secure every entry, the thief only needs to find one weakness.
I’ve made the point before that a lot depends on whether you think law and justice is the Natural Law, or merely some personal whim. If a calculator returns 5 for 2+2, it is broken, wrong, in error. If you assume Natural Law would establish a system of laws (and how to enforce them properly), the question then BECOMES whether or not a benevolant dictatorship, an elected legislature, an oligarchy, the result of a plebecite, or a free market will provide it.
Does a cash register that overcharges customers result from a different idea of justice, cheating, or stealing, or merely a different idea about arithmetic?
In case of PayPal there’s a limiting factor to their misbehavior: customers are free to walk away. A lot of merchants stopped accepting PayPal. If PayPal will keep mistreating vendors, eventually they’ll become a mere credit card processor for eBay.
The comparable limiting factor for government misdeeds involves lots of spilled blood. That’s the difference between “private” and “public” justice.
UPDATE: The piece is now online.
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