The Case For Privatizing National Defence (and fully de-funding the military)

DEFENCE & GEO-POLITICS / Monday, December 30th, 2019

Extract from Chapter 11 of “The Myth of National Defense”


Voluntary military organizations do respect private property rights in all aspects of their activities. Their soldiers are either volunteers or hired, and their funds stem either from donations or from defense contracts with private individuals or organizations. By contrast, compulsory military organizations do, at least in some respect, rely on violations of private property rights. In particular, they might rely on conscription and/or compulsory finance through taxation.

Let us first consider the issue of ultimate control. Who makes the ultimate military decisions in private and in statist warfare? In private warfare, ultimate control rests with each private-property owner who is somehow involved in the production of defense. Since each soldier, donor, and customer controls his property, he can keep it invested in, or withdraw it from, the production process at any time. Most individuals do not have big stakes in the production of defense (or in any other process), yet the fact is that they do have some control over the process, and that this control is clearly circumscribed by their property. If they withdraw their patronage, if they refuse to work for the army or to finance it, they do curtail its production process in favor of nonmilitary ventures.

They may have various motives for withdrawing their support. A person might stop working as a soldier to earn a better living in a steel mill, or a capitalist might withdraw his credit to invest it in a more profitable shoe plant. But a soldier might also give notice, and a capitalist or donor might withdraw his funds because he does not trust the management of this military unit, or he might see no more task for the unit (for example, because there are presently no known enemies) and thus look for other productive challenges. The military might even disgust them now, etc. Yet whatever their motives are, in a private order, individuals can make their value judgments felt. Deciding how to use their time and property, they do have an impact on the whole structure of production.

In a private order, the consumption and investment decisions of all citizens rigidly connect and steadily equilibrate the production of defense with all other productions. And since investment decisions ultimately seek to satisfy consumption needs, it is the citizens as consumers who determine which defense services are produced by which technique and by which type of organization.

If consumers feel a more urgent need for military services,for example, because they apprehend the attack of a foreign enemy, they will increase spending on military goods and services. Some will buy guns and cannons for themselves. Others will also join local or national militias, and still others will simply subscribe to the services of professional defense agencies. (For example, the standard contract of an airborne unit could provide that the unit combat enemy forces within a radius of x miles from the property of the patron.) As a consequence, the production of these defense goods and services becomes more profitable and will thus attract human and material resources that otherwise would have been invested in the production of apples, roofs, etc.

On the other hand, consumers reducing their demand of military services because they sense no immediate threat will reduce their spending on such services and thus make their production less profitable. The defense market will be adjusted accordingly: Its overall size will shrink (in favor of other markets), and its structure will adjust, too. Different forms of organizations will offer different types of goods and services that fit the reduced willingness of the consumers to spend on defense. For example, it is possible that the goods and services used by defense professionals(not only fighter jets, heavy armament, uniforms, but also staff positions of military planners and military theorists, etc.) will be more affected by a shrinking market than those used by amateur militias (small guns, small field cannons, mobile radar equipment, etc.).

In short, in a free society, the production of defense is always as perfectly adjusted to the needs of the citizens as is humanly possible. With consumers directing and balancing all productions through their spending decisions, the producers of defense services are in permanent competition with one another and with the producers of all other types of goods and services. This forces them to use their resources as diligently and as efficiently as possible. They simply cannot afford waste, since it would curtail their income and also the spending on their product.

Moreover, since in a free society, there would be various defense organizations competing for the same human and material resources, these organizations would be embedded in a system of market prices. Hence, they could use the precious yardstick of economic calculation to select the most efficient technology and the most efficient form of military organization for any defense problem at hand.

By contrast, in statist warfare, ultimate military decisions are typically taken by the owners of the production facilities,that is, those who control the tanks, air fighters, ships, guns,bases, etc. This does not mean that statist military leaders are always to be found in the ranks of the generals. In most Western countries, for example, this is surely not the case, at least in peacetime. In these countries, the militarily relevant decisions are taken by high-ranking civil executives, such as the defense minister, the president of the republic, the prime minister, or the chancellor. Yet, in any case, statist production of defense means that those who run the state can impose their value judgments to the detriment of all other members of society. The state conscripts soldiers and confiscates property to finance its war. Whether the soldier wishes to work in the army is no longer a concern; he must serve. Whether the capitalist wishes to invest does not count; his money is confiscated.

From an economic point of view, the overall result of this is a misallocation of resources. The state produces cannons and warships that take away the resources for the production of shoes, yogurt, books, and cello lessons—goods and services that the citizens would prefer to enjoy if they could use their property as they pleased.

This misallocation is bound to intensify in the course of time. Since statist producers of defense can increase their income by increasing military expenditures, the military now has a built-in tendency to expand its activities without regard for any other considerations. More human and material resources are invested in military undertakings than would bethe case in a free society. The state-sponsored military organization will become artificially large, engaging in horizontal and vertical mergers. This means that the extent of defense markets and of the price system will shrink, so that economic calculation becomes increasingly impossible. As a consequence, it becomes ever more difficult to rationally select appropriate defense technologies and forms of organization.

Even within the military industry itself, the natural balance between the various goods and services is disrupted. The possibility to ignore the needs of the consumers gives the producers the opportunity to produce goods that only they consider important. Since they are typically the chief executives of professional military organizations, they tend to favor the production of heavy armament and highly specialized manpower (for military staff and academies) over all other types of military products. They discourage competing nonprofessional defense organizations and often even seek to prohibit or reduce private gun ownership, etc.

Freed from the need to serve consumers as efficiently as possible, the producers of defense services now have a bigger margin for wasteful behavior. The institution of conscription has particularly negative effects since it encourages military leaders to expose their troops to unnecessary danger.

Not surprisingly, compulsory schemes for the production of defense are the same economic debacle that they are in all other fields. Let us therefore turn now to the question of whether, at least in purely military terms, regular government troops are superior to spontaneously formed, private war organizations.


In our examination of the comparative military effectiveness of voluntary versus compulsory organizations we can safely neglect all problems of military technique, that is, everything that relates to tactics, strategy, military aspects of organization, etc. We are here exclusively concerned about the impact of any military unit’s political organization on its military performance.

Let us first consider which type of persons will occupy executive positions in the two political regimes. Again, we can neglect common points and focus on the differences stemming from their different political nature. A typical common point is, for example, that in both regimes, the military will attract a disproportionately large number of patriotic persons. By contrast, as we shall see, the crucial difference is that compulsory military agencies, like all compulsory organizations, are subject to the pernicious influence of bureaucratization.

In purely voluntary regimes, military leaders are selected exclusively for their military expertise and efficiency. The case is clearest in militias, which commonly elect their leaders.Peacetime militias might, like many other clubs, elect particularly sociable leaders. Yet in times of war, there will surely be a dramatic change, since the election now becomes a matter of life and death. Each single militia member then has an interest to make sure that the most able person is in the lead. It is even certain that members would quit a militia if they sensed that the leadership was incapable.

Things are basically the same in professional defense agencies operating on a voluntary basis. The owner of these enterprises has a personal interest in hiring only the most able persons for executive positions. If he fails to identify these persons, he runs the risk that other companies will hire them and outcompete him on the market. And he is also threatened by the prospect that the other soldiers that he hired will give notice, since they too are unwilling to risk their lives under incompetent military leadership.

These mechanisms are, at least partially, destroyed, by the impact of compulsion. Conscription by its very nature prevents soldiers from quitting when executive ranks are filled within competent personnel. Conscripts are also notoriously unmotivated, being temporary slaves. In confrontation with highly motivated private troops, be they ever so few, this represents a huge competitive disadvantage.

The effects of compulsory funding are similarly devastating. It reduces the necessity for the military agencies to satisfy customer needs. As a consequence, as we have seen, the various military executives can start satisfying their own needs,both in respect to the services they produce and in respect to the selection of personnel.

It is important to keep in mind that there is no such thing as “a defense service” or “a defense good.” All goods and services are heterogeneous concrete goods, like “one hour of guarding property X at location Y” or “fortification of hill A against possible assaults by tank divisions of the type B, or by infantry of type C.” In a free society, all consumers involved decide which concrete defense service shall be produced. By contrast, compulsory funding enables the producers to ignore the consumption wishes of their fellows and to place undue emphasis on their own satisfaction. Rather than fortifying hill A, they fortify hill H, because it is not so windy there or because it better protects the ranch of the general’s nephew. Rather than guarding the private property of the civil population, they spend all their time guarding their own bases. Rather than protecting a single house, they close all surrounding streets and shut down the city, etc.

Moreover, rather than hiring the most capable personnel,they start hiring the fellows who know the best jokes, or the children of their schoolmates, or people who share their political, sexual, religious, and other preferences. Or they might hire particularly ruthless individuals, who despise common morality. Also, rather than organizing the defense units in the most militarily efficient way, they acquiesce to other considerations.For example, the recent admission to the U.S. military of females and homosexual males does not seem to be based on military, but political, expediency.

The only way to prevent such excesses is to issue specific directives to all executives on how to use their resources, and to check compliance with these directives by written reports,inspection teams, etc. In short, one has to subject the military to a bureaucratic apparatus and regulation. Military leaders are told what to do when and where, and hiring decisions are made dependent on general standards, that is, on criteria that do not take account of the individual requirements of particular times and places.

At least as far as the selection of personnel is concerned,however, such reforms will be doomed to failure. There is only one way to test the ability of a person: Let him do the job and see whether he can do it. A person hired by a voluntary defense organization will soon have shown whether he is suited for his position because such an organization constantly has to prove its military effectiveness. Only if it is sufficiently effective, will it continue to be patronized. Yet in compulsory organizations,all the tests take place in an artificial environment. For example, one cannot tell whether a soldier or officer is too ruthless or not ruthless enough, or whether he accomplished his task with a sufficient amount of accuracy. For his ruthlessness and the accuracy of his work cannot be judged without standard. And in compulsory organizations, this very standard is arbitrary to a larger degree than in voluntary agencies.

Thus we see that private defense agencies, while enjoying all virtues of compulsory schemes, do not suffer from certain specific disadvantages of the latter. In particular, they are likely to attract and select more capable personnel, and they will react to the military requirements of any given situation in a far more flexible way.

However, so far we have only dealt with small private units,as they are typical in guerrilla warfare. Our foregoing considerations about economic and military efficiency would thus merely imply that, given equally small units, the private secessionist forces would have a comparative advantage over the government troops. Yet as a matter of fact, government troops are typically much larger in size. Are our small private units able to confront these large and concentrated forces of the government’s army?

Before we pursue this question any further, let us observe that such a confrontation might not be necessary in the first place. The purpose of the secession is to break the compulsory ties between the secessionists and a government which they no longer accept. It concerns only the secessionists. It does not concern those who wish to continue to be ruled and protected by the government. Therefore, it is at least conceivable that, asa result of a successful secession, the government troops remain in the seceding lands, to protect the loyal subjects. The territory would then no longer be politically homogeneous, but sprinkled in the colors of the secession and of the government. There is no reason to assume that such a setting would be inherently unstable and plagued by violence, so that we can go on with our original question.

Thus, suppose that all inhabitants of a given territory wanted to secede, but that the government troops refused to quit the country. Suppose furthermore that the troops could not rightfully claim any piece of land in the territory as their own.They would then clearly be aggressors, and the inhabitants would be entitled to expel them. Yet, how can the secessionists do this? Can they build an army of comparable size to beat the enemy in the open field?

Again, we first should raise the question of whether the secessionists need to build up a big army in the first place. We have already mentioned that our libertarian partisans enjoy the advantage of operating on the basis of the same principle of respect for and defense of private property. This is a powerful organizing principle, which gives a common direction to all their scattered individual actions and which makes sure that they hit the right target in all instances. Thus, to a very large extent, they can do without a common agency. They do not need the unity of command, since they enjoy the unity of principle.

We have pointed out the benefits and limits of this stage of the secessionist struggle. Decentralized organization in small units can be sufficient to make the costs of ruling unbearably high. Yet in most cases, it will not be sufficient to rid the country of the government troops and, thus, of the tax men.

The government troops must be beaten if they do not go on their own. Can they be beaten? This depends essentially on whether the government can concentrate enough forces in the seceding territories to beat any secessionist army. If it can, the formation of larger units will be futile, and the secessionists are best advised to continue their guerrilla struggle until better opportunities arise. If the government cannot mobilize enough forces, then the formation of larger secessionist units is advisable. This can be effectuated under the three forms of concentration known from civil business: (1) growth, (2) merger, and (3) joint venture.

The possibility to form big private armies through growth and merger is amply illustrated by history. In fact, all armies are in a way “private,” since they are controlled by one agency. And during most of history, armies were owned by individual human beings, the warlords, who personally led their forces on the battlefield. Famous owner-warlords of the past include Alexander the Great, Caesar, Attila, Otto the Great, Wallenstein, and Frederick the Great.

Yet even short of merger and growth, history has demonstrated again and again that, in times of dire crisis, private defense organizations have formed joint ventures to meet great threats. At crucial junctures in the history of Western civilization, such independent troops have spontaneously joined forces to confront overwhelming enemies. Examples are the battles against the Huns in 451 A.D., against the Saracens in 732A.D., against the Magyars in 955 A.D., against the Turks in 1683, against Napoleon in 1813, and against Hitler in 1941–45. Even secessionist movements have successfully practiced military joint ventures, for example, in the case of the Netherlands and Switzerland.

To sum up, private defense organizations are ceteris paribus more effective than compulsory organizations. Successful secessionist warfare does not necessarily require the expulsion of the government troops, but it might lead to different, equally satisfying settings. Expulsion of the enemy requires a concentration of troops of similar size, which in turn can be accomplished in ways common to other forms of business.

We would love to hear your thoughts on this