Problems of Reputation and Markets for Protection - Non-Co-operative Games

Abstract

It would be necessary for the state to enforce rules of property only if protection for property could not be provided as a market good or in some other manner. This chapter investigates some aspects of this possibility. Nozick argues, for example, that, in a state of nature without Hobbesian problems, something like a market for protection could emerge and produce a solution to the general problem of security for property.¹ In this case, if the state provided physical security, the market could provide security for private property through a process of selling and buying protection. The state would thus remain an ultra-minimal institution that only protects life. The market could then be seen as a quasi-autonomous mechanism that could operate without external support once physical security is provided. That is, it could be seen as a self-sustaining mechanism that could produce its own inputs as outputs. Nozick avoids the security problem by assuming that individuals have rights in the state of nature and that these rights would be respected by others. It is difficult to see how this assumption might be justified. This problem will be disregarded for the sake of the argument. If a market for protection cannot plausibly arise in the absence of security problems, then it would not be plausible under more rigorous conditions.