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Anarcho-capitalism or free-market anarchism (a form of individualist anarchism) is an anti-state political philosophy that attempts to reconcile anarchism with capitalism. It advocates the elimination of the state; the provision of law enforcement, courts, national defense, and all other security services by voluntarily-funded competitors in a free market rather than through compulsory taxation; the complete deregulation of nonintrusive personal and economic activities; and a self-regulated market. Anarcho-capitalists argue for a society based in voluntary trade of private property (including money, consumer goods, land, and capital goods) and services in order to maximize individual liberty and prosperity, but also recognize charity and communal arrangements as part of the same voluntary ethic. Though anarcho-capitalists are known for asserting a right to private (individualized/non-public) property, non-state common property can also exist in an anarcho-capitalist society. What is important is that it is acquired and transferred without help or hindrance from the compulsory state. Anarcho-capitalism is a utopian vision rooted in capitalism, but to be realized it requires that both human beings and institutions renounce force and compulsion. Beginning from the concept of individual freedom, it assigns the state no role other than to enforce the interests of the individual citizens. On this view, the state is to be nothing more than a collection of private desires, with no compelling public interest.
Anarcho-capitalist libertarians believe that the only just way to acquire property is through voluntary trade, gift, or labor-based original appropriation, rather than through aggression or fraud. Murray Rothbard coined the term anarcho-capitalism to distinguish it from anarchism that opposes private property.
Anarcho-capitalists see free-market capitalism as the basis for a free society. Rothbard defined free-market capitalism as "peaceful voluntary exchange," in contrast to "state capitalism" which he defined as a collusive partnership between business and government that uses coercion to subvert the free market. "Capitalism," as anarcho-capitalists employ the term, is not to be confused with state monopoly capitalism, crony capitalism, corporatism, or contemporary mixed economies, wherein natural market incentives and disincentives are skewed by state intervention. They reject the state, based on the belief that states are aggressive entities which steal property (through taxation and expropriation), initiate aggression, are a compulsory monopoly on the use of defensive and/or punitive force, use their coercive powers to benefit some businesses and individuals at the expense of others, create monopolies, restrict trade, and restrict personal freedoms via drug laws, compulsory education, conscription, laws on food and morality, and the like. The embrace of unfettered capitalism leads to considerable tension between anarcho-capitalists and many social anarchists who tend to distrust the market, and believe that free-market capitalism is inherently authoritarian – hence incompatible with Anarchist ideals.
Various theorists have differing, though similar, philosophies which are considered to fall under "anarcho-capitalism." The first well-known version of anarcho-capitalism was formulated by Austrian School economist and libertarian Murray Rothbard in the mid-twentieth century, synthesizing elements from the Austrian School of economics, classical liberalism, and nineteenth century American individualist anarchists Lysander Spooner and Benjamin Tucker (rejecting their labor theory of value and the normative implications they derived from it). In Rothbard's anarcho-capitalism, there would first be the implementation of a mutually agreed-upon libertarian "legal code which would be generally accepted, and which the courts would pledge themselves to follow." This legal code would recognize sovereignty of the individual and the principle of non-aggression. However, in David D. Friedman's anarcho-capitalism, "the systems of law will be produced for profit on the open market", which he believes would lead to a generally libertarian society if not an absolute one. Rothbard bases his philosophy on absolutist natural law grounds but also gives economic explanations of why he thinks anarcho-capitalism is preferable on pragmatic grounds. Friedman says he is not an absolutist rights theorist but is also "not a utilitarian," but believes that "utilitarian arguments are usually the best way to defend libertarian views". Hans-Hermann Hoppe, meanwhile, uses "argumentation ethics" for his foundation of "private property anarchism", which is closer to Rothbard's natural law approach.
"I define anarchist society as one where there is no legal possibility for coercive aggression against the person or property of any individual. Anarchists oppose the State because it has its very being in such aggression, namely, the expropriation of private property through taxation, the coercive exclusion of other providers of defense service from its territory, and all of the other depredations and coercions that are built upon these twin foci of invasions of individual rights." Murray Rothbard in Society and State.
The term anarcho-capitalism was most likely coined in the mid-1950s by the economist Murray Rothbard. Other terms sometimes used for this philosophy, though not necessarily outside anarcho-capitalist circles, include:
Anarcho-capitalism, as formulated by Rothbard and others, holds strongly to the central libertarian nonaggression axiom:
[…] The basic axiom of libertarian political theory holds that every man is a self owner, having absolute jurisdiction over his own body. In effect, this means that no one else may justly invade, or aggress against, another's person. It follows then that each person justly owns whatever previously unowned resources he appropriates or "mixes his labor with." From these twin axioms—self-ownership and "homesteading"—stem the justification for the entire system of property rights titles in a free-market society. This system establishes the right of every man to his own person, the right of donation, of bequest (and, concomitantly, the right to receive the bequest or inheritance), and the right of contractual exchange of property titles.
Rothbard's defense of the self-ownership principle stems from what he believed to be his falsification of all other alternatives, namely that either a group of people can own another group of people, or the other alternative, that no single person has full ownership over one's self. Rothbard dismisses these two cases on the basis that they cannot result in an universal ethic, i.e., a just natural law that can govern all people, independent of place and time. The only alternative that remains to Rothbard is self-ownership, which he believes is both axiomatic and universal.
In general, the nonaggression axiom can be said to be a prohibition against the initiation of force, or the threat of force, against persons (i.e., direct violence, assault, murder) or property (i.e., fraud, burglary, theft, taxation). The initiation of force is usually referred to as aggression or coercion. The difference between anarcho-capitalists and other libertarians is largely one of the degree to which they take this axiom. Minarchist libertarians, such as most people involved in Libertarian political parties, would retain the state in some smaller and less invasive form, retaining at the very least public police, courts and military; others, however, might give further allowance for other government programs. In contrast, anarcho-capitalists reject any level of state intervention, defining the state as a coercive monopoly and, as the only entity in human society that derives its income from legal aggression, an entity that inherently violates the central axiom of libertarianism.
Some anarcho-capitalists, such as Rothbard, accept the nonaggression axiom on an intrinsic moral or natural law basis. It is in terms of the non-aggression principle that Rothbard defined anarchism; he defined "anarchism as a system which provides no legal sanction for such aggression ['against person and property']" and said that "what anarchism proposes to do, then, is to abolish the State, i.e. to abolish the regularized institution of aggressive coercion." In an interview with New Banner, Rothbard said that "capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism." Alternatively, others, such as Friedman, take a consequentialist or egoist approach; rather than maintaining that aggression is intrinsically immoral, they maintain that a law against aggression can only come about by contract between self-interested parties who agree to refrain from initiating coercion against each other.
Central to anarcho-capitalism are the concepts of self-ownership and original appropriation:
Everyone is the proper owner of his own physical body as well as of all places and nature-given goods that he occupies and puts to use by means of his body, provided only that no one else has already occupied or used the same places and goods before him. This ownership of "originally appropriated" places and goods by a person implies his right to use and transform these places and goods in any way he sees fit, provided only that he does not change thereby uninvitedly the physical integrity of places and goods originally appropriated by another person. In particular, once a place or good has been first appropriated by, in John Locke's phrase, 'mixing one's labor' with it, ownership in such places and goods can be acquired only by means of a voluntary—contractual—transfer of its property title from a previous to a later owner.
Anarcho-capitalism uses the following terms in ways that may differ from common usage or various anarchist movements.
The root of anarcho-capitalism is property rights. In this it differs from collectivist forms of anarchism such as anarcho-communism in which the product of labor is collectivized in a pool of goods and distributed "each according to his need." Anarcho-capitalists advocate individual ownership of the product of labor regardless of what the individual "needs" or does not need. As Rothbard says, "if every man has the right to own his own body and if he must use and transform material natural objects in order to survive, then he has the right to own the product that he has made." After property is created through labor it may then only exchange hands legitimately by trade or gift; forced transfers are considered illegitimate. Original appropriation allows an individual to claim any "unused" property, including land, and by improving or otherwise using it, own it with the same "absolute right" as his own body. According to Rothbard, property can only come about through labor, therefore original appropriation of land is not legitimate by merely claiming it or building a fence around it; it is only by using land—by mixing one's labor with it—that original appropriation is legitimized. "Any attempt to claim a new resource that someone does not use would have to be considered invasive of the property right of whoever the first user will turn out to be." As a practical matter, anarcho-capitalists recognize that there are few (if any) parcels of land left on Earth whose ownership was not at some point in time obtained in violation of the homestead principle, through seizure by the state or put in private hands with the assistance of the state. Rothbard says in Justice and Property Right that "any identifiable owner (the original victim of theft or his heir) must be accorded his property." In the case of slavery, Rothbard says that in many cases "the old plantations and the heirs and descendants of the former slaves can be identified, and the reparations can become highly specific indeed." He believes slaves rightfully own any land they were forced to work on under the "homestead principle." If property is held by the state, Rothbard advocates its confiscation and return to the private sector: "any property in the hands of the State is in the hands of thieves, and should be liberated as quickly as possible." For example, he proposes that State universities be seized by the students and faculty under the homestead principle. Rothbard also supports expropriation of nominally "private property" if it is the result of state-initiated force, such as businesses who receive grants and subsidies. He proposes that businesses who receive at least 50 percent of their funding from the state be confiscated by the workers. He says, "What we libertarians object to, then, is not government per se but crime; what we object to is unjust or criminal property titles; what we are for is not "private" property per se but just, innocent, non-criminal private property." Likewise, Karl Hess says, "libertarianism wants to advance principles of property but that it in no way wishes to defend, willy nilly, all property which now is called private…. Much of that property is stolen. Much is of dubious title. All of it is deeply intertwined with an immoral, coercive state system." By accepting an axiomatic definition of private property and property rights, anarcho-capitalists deny the legitimacy of a state on principle:
"For, apart from ruling out as unjustified all activities such as murder, homicide, rape, trespass, robbery, burglary, theft, and fraud, the ethics of private property is also incompatible with the existence of a state defined as an agency that possesses a compulsory territorial monopoly of ultimate decision-making (jurisdiction) and/or the right to tax."
Though anarcho-capitalists assert a right to private property, some anarcho-capitalists also point out that common property can exist by right in an anarcho-capitalist system. Just as an individual comes to own that which was unowned by mixing his labor with it or using it regularly, many people can come to own a thing in common by mixing their labor with it collectively, meaning that no individual may appropriate it as his own. This may apply to roads, parks, rivers, and portions of oceans. Anarcho-capitalist theorist Roderick Long gives the following example:
"Consider a village near a lake. It is common for the villagers to walk down to the lake to go fishing. In the early days of the community it's hard to get to the lake because of all the bushes and fallen branches in the way. But over time the way is cleared and a path forms - not through any coordinated efforts, but simply as a result of all the individuals walking by that way day after day. The cleared path is the product of labor - not any individual's labor, but all of them together. If one villager decided to take advantage of the now-created path by setting up a gate and charging tolls, he would be violating the collective property right that the villagers together have earned."
Nevertheless, property which is owned collectively tends not to have the same level of accountability found in individual ownership (the so-called problem of the commons, anarcho-capitalists generally distrust and seek to avoid intentional communal arrangements. Air, water, and land pollution, for example, are seen as the result of collectivization of ownership. Central governments generally strike down individual or class action censure of polluters in order to benefit "the many." Legal and economic subsidy of heavy industry is justified by many politicians for job creation, for example.
Anarcho-capitalists tend to concur with free-market environmentalists regarding the environmentally destructive tendencies of the state and other communal arrangements. Privatization, decentralization, and individualization are anarcho-capitalist goals. But in some cases, they not only provide a challenge, but are considered impossible. Established ocean routes provide an example of common property generally seen as difficult for private appropriation.
The society envisioned by anarcho-capitalists has been called the Contractual Society—"…a society based purely on voluntary action, entirely unhampered by violence or threats of violence."—in which anarcho-capitalists claim the system relies on voluntary agreements (contracts) between individuals as the legal framework. It is difficult to predict precisely what the particulars of this society will look like because of the details and complexities of contracts.
One particular ramification is that transfer of property and services must be considered voluntary on the part of both parties. No external entities can force an individual to accept or deny a particular transaction. An employer might offer insurance and death benefits to same-sex couples; another might refuse to recognize any union outside his or her own faith. Individuals are free to enter into or reject contractual agreements as they see fit.
One social structure that is not permissible under anarcho-capitalism is one that attempts to claim greater sovereignty than the individuals that form it. The state is a prime example, but another is the current incarnation of the corporation, which is currently defined as a legal entity that exists under a different legal code than individuals as a means to shelter the individuals who own and run the corporation from possible legal consequences of acts by the corporation. It is worth noting that Rothbard allows a narrower definition of a corporation: "Corporations are not at all monopolistic privileges; they are free associations of individuals pooling their capital. On the purely free market, such men would simply announce to their creditors that their liability is limited to the capital specifically invested in the corporation …." However, this is a very narrow definition that only shelters owners from debt by creditors that specifically agree to the arrangement; it also does not shelter other liability, such as from malfeasance or other wrongdoing.
There are limits to the right to contract under some interpretations of anarcho-capitalism. Rothbard himself asserts that the right to contract is based in inalienable human rights and therefore any contract that implicitly violates those rights can be voided at will, which would, for instance, prevent a person from permanently selling himself or herself into unindentured slavery. Other interpretations conclude that banning such contracts would in itself be an unacceptably invasive interference in the right to contract.
Included in the right of contract is the right to contract oneself out for employment by others. Unlike anarcho-communists, anarcho-capitalists support the liberty of individuals to be self-employed or to contract to be employees of others, whichever they prefer as well as the freedom to pay and receive wages. David Friedman has expressed preference for a society where "almost everyone is self-employed" and "instead of corporations there are large groups of entrepreneurs related by trade, not authority. Each sells not his time, but what his time produces." Rothbard does not express a preference either way, but justifies employment as a natural occurrence in a free market that is not immoral in any way.
Different anarcho-capitalists propose different forms of anarcho-capitalism, and one area of disagreement is in the area of law. Morris and Linda Tannehill in The Market for Liberty, object to any statutory law whatsoever. They assert that all one has to do is ask if one is aggressing against another (see tort and contract law) in order to decide if an act is right or wrong. However, Murray Rothbard, while also supporting a natural prohibition on force and fraud, supports the establishment of a mutually agreed-upon centralized libertarian legal code which private courts would pledge to follow. Such a code for Internet commerce was developed by Andre Goldman, called The Common Economic Protocols.
Unlike both the Tannehills and Rothbard who see an ideological commonality of ethics and morality as a requirement, David Friedman proposes that "the systems of law will be produced for profit on the open market, just as books and bras are produced today. There could be competition among different brands of law, just as there is competition among different brands of cars." Friedman says whether this would lead to a libertarian society "remains to be proven." He says it is a possibility that very unlibertarian laws may result, such as laws against drugs. But, he thinks this would be rare. He reasons that "if the value of a law to its supporters is less than its cost to its victims, that law… will not survive in an anarcho-capitalist society."
Anarcho-capitalists only accept collective defense of individual liberty (i.e., courts, military or police forces) insofar as such groups are formed and paid for on an explicitly voluntary basis. But, their complaint is not just that the state's defensive services are funded by taxation but that the state assumes it is the only legitimate practitioner of physical force. That is, it forcibly prevents the private sector from providing comprehensive security, such as a police, judicial, and prison systems to protect individuals from aggressors. Anarcho-capitalists believe that there is nothing morally superior about the state which would grant it, but not private individuals, a right to use physical force to restrain aggressors. Thus, if competition in security provision were allowed to exist, prices would be lower and services would be better according to anarcho-capitalists. According to Molinari, "Under a regime of liberty, the natural organization of the security industry would not be different from that of other industries." Proponents point out that private systems of justice and defense already exist, (private arbitration, security guards, neighborhood watch groups) naturally forming where the market is allowed to compensate for the failure of the state. These private courts and police are sometimes referred to generically as Private Defense Agencies (PDAs).
The defense of those unable to pay for such protection might be financed by charitable organizations relying on voluntary donation rather than by state institutions relying on coercive taxation, or by cooperative self-help by groups of individuals.
Like classical liberalism, and unlike anarcho-pacifism, anarcho-capitalism permits the use of force, as long as it is in the defense of persons or property. The permissible extent of this defensive use of force is an arguable point among anarcho-capitalists. Retributive justice, meaning retaliatory force, is often a component of the contracts imagined for an anarcho-capitalist society. Some believe prisons or indentured servitude would be justifiable institutions to deal with those who violate anarcho-capitalist property relations, while others believe exile or forced restitution are sufficient.
One difficult application of defensive aggression is the act of revolutionary violence against tyrannical regimes. Many anarcho-capitalists admire the American Revolution as the legitimate act of individuals working together to fight against tyrannical restrictions of their liberties. In fact, according to Murray Rothbard, the American Revolutionary War was the only war involving the United States that could be justified. Anarcho-capitalists, i.e. Samuel Edward Konkin III also feel that violent revolution is counter-productive and prefer voluntary forms of economic secession to the extent possible.
Classical liberalism is the primary influence with the longest history on anarcho-capitalist theory. Classical liberals have had two main themes since John Locke first expounded the philosophy: the liberty of man, and limitations of state power. The liberty of man was expressed in terms of natural rights, while limiting the state was based (for Locke) on a consent theory.
In the nineteenth century, classical liberals led the attack against statism. Notable was Frederic Bastiat, The Law (1849), who wrote, "The state is the great fiction by which everybody seeks to live at the expense of everybody else." Henry David Thoreau wrote, "I heartily accept the motto, 'That government is best which governs least'; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe, 'That government is best which governs not at all'; and when men are prepared for it, that will be the kind of government which they will have."
The early liberals believed that the state should confine its role to protecting individual liberty and property, and opposed all but the most minimal economic regulations. The "normative core" of classical liberalism is the idea that in an environment of laissez-faire, a spontaneous order of cooperation in exchanging goods and services emerges that satisfies human wants. Some individualists came to realize that the liberal state itself takes property forcefully through taxation in order to fund its protection services, and therefore it seemed logically inconsistent to oppose theft while also supporting a tax-funded protector. So, they advocated what may be seen as classical liberalism taken to the extreme by only supporting voluntarily funded defense by competing private providers. One of the first liberals to discuss the possibility of privatizing protection of individual liberty and property was France's Jakob Mauvillon in the eighteenth century. Later, in the 1840s, Julius Faucher and Gustave de Molinari advocated the same. Molinari, in his essay "The Production of Security," argued,
"No government should have the right to prevent another government from going into competition with it, or to require consumers of security to come exclusively to it for this commodity."
Molinari and this new type of anti-state liberal grounded their reasoning on liberal ideals and classical economics. Historian and libertarian Ralph Raico asserts what that these liberal philosophers "had come up with was a form of individualist anarchism, or, as it would be called today, anarcho-capitalism or market anarchism." Unlike the liberalism of Locke, which saw the state as evolving from society, the anti-state liberals saw a fundamental conflict between the voluntary interactions of people—society—and the institutions of force—the State. This society versus state idea was expressed in various ways: natural society vs. artificial society, liberty vs. authority, society of contract vs. society of authority, and industrial society vs. militant society, just to name a few. The anti-state liberal tradition in Europe and the United States continued after Molinari in the early writings of Herbert Spencer, as well as in thinkers such as Paul Émile de Puydt and Auberon Herbert.
Ulrike Heider, in discussing the "anarcho-capitalists family tree," notes Max Stirner as the "founder of individualist anarchism" and "ancestor of laissez-faire liberalism." According to Heider, Stirner wanted to "abolish not only the state but also society as an institution responsible for its members" and "derives his identity solely from property" with the question of property to be resolved by a 'war of all against all'." Stirner argued against the existence of the state in a fundamentally anti-collectivist way, to be replaced by a "Union of Egoists" but was not more explicit than that in his book The Ego and Its Own published in 1844.
Later, in the early twentieth century, the mantle of anti-state liberalism was taken by the "Old Right." These were minarchist, antiwar, anti-imperialist, and (later) anti-New Dealers. Some of the most notable members of the Old Right were Albert Jay Nock, Rose Wilder Lane, Isabel Paterson, Frank Chodorov, Garet Garrett, and H. L. Mencken. In the 1950s, the new "fusion conservatism," also called "cold war conservatism," took hold of the right wing in the U.S., stressing anti-communism. This induced the libertarian Old Right to split off from the right, and seek alliances with the (now left-wing) antiwar movement, and to start specifically libertarian organizations such as the (U.S.) Libertarian Party.
The question of whether or not anarcho-capitalism is a form of individualist anarchism is controversial. * Rothbard said in 1965: "Lysander Spooner and Benjamin T. Tucker were unsurpassed as political philosophers and nothing is more needed today than a revival and development of the largely forgotten legacy they left to political philosophy." However, he thought they had a faulty understanding of economics. The nineteenth century individualists had a labor theory of value, as influenced by the classical economists, but Rothbard was a student of neoclassical economics which does not agree with the labor theory of value. So, Rothbard sought to meld nineteenth century individualists' advocacy of free markets and private defense with the principles of Austrian economics: "There is, in the body of thought known as 'Austrian economics', a scientific explanation of the workings of the free market (and of the consequences of government intervention in that market) which individualist anarchists could easily incorporate into their political and social Weltanschauung".
The Austrian School of economics was founded with the publication of Carl Menger's 1871 book Principles of Economics. Members of this school approach economics as an a priori system like logic or mathematics, rather than as an empirical science like geology. It attempts to discover axioms of human action (called "praxeology" in the Austrian tradition) and make deductions therefrom. Some of these praxeological axioms are:
Even in the early days, Austrian economics was used as a theoretical weapon against socialism and statist socialist policy. Eugen von Böhm-Bawerk (1851-1914), a colleague of Menger, wrote one of the first critiques of socialism ever written in his treatise The Exploitation Theory of Socialism-Communism. Later, Friedrich Hayek wrote The Road to Serfdom, asserting that a command economy destroys the information function of prices, and that authority over the economy leads to totalitarianism. Another very influential Austrian economist was Ludwig von Mises (1881-1973), author of the praxeological work Human Action: A Treatise on Economics. (1949).
Murray Rothbard, a student of Mises, is the man who attempted to meld Austrian economics with classical liberalism and individualist anarchism, and is credited with coining the term "anarcho-capitalism." He wrote his first paper advocating "private property anarchism" in 1949, and later came up with the alternative name "anarcho-capitalism." He was probably the first to use "libertarian" in its current (U.S.) pro-capitalist sense.
Criticisms of anarcho-capitalism fall into several categories: practical criticisms which claim that anarcho-capitalism is unworkable in practice; critiques that claim that capitalism requires a coercive state to exist and that a society can be anarchist or capitalist, but not both; general critiques of the morality of capitalism and liberalism, which also apply to anarcho-capitalism; and a utilitarian critique, which claims that anarcho-capitalism would not maximize utility.
Objectivists and others argue that an anarcho-capitalist society would degenerate into a "war of all against all." For example, Noam Chomsky says:
"Anarcho-capitalism, in my opinion, is a doctrinal system which, if ever implemented, would lead to forms of tyranny and oppression that have few counterparts in human history."
Other critics argue that the free rider problem makes the provision of protection services in an anarcho-capitalist society impractical.
Some anarchists argue that anarcho-capitalism is not a form of anarchism due to their belief that capitalism is inherently authoritarian. In particular they argue that certain capitalist transactions are not voluntary, and that maintaining the capitalist character of a society requires coercion, which is incompatible with an anarchist society. Moreover, capitalistic market activity is essentially dependent on the imposition of private ownership and a particular form of exchange of goods where selling and buying is usually mandatory (due to the division of ownership of the capital, and consequently, value).
Anarcho-capitalists counter that the capitalist system of today is, indeed, not properly anarchistic because it is so often in collusion with the state. According to Rothbard, "what Marx and later writers have done is to lump together two extremely different and even contradictory concepts and actions under the same portmanteau term. These two contradictory concepts are what I would call 'free-market capitalism' on the one hand, and 'state capitalism' on the other."
"The difference between free-market capitalism and state capitalism," writes Rothbard, "is precisely the difference between, on the one hand, peaceful, voluntary exchange, and on the other, violent expropriation." He goes on to point out that he is "very optimistic about the future of free-market capitalism. I’m not optimistic about the future of state capitalism—or rather, I am optimistic, because I think it will eventually come to an end. State capitalism inevitably creates all sorts of problems which become insoluble."
According to this argument, the free market is simply the natural situation that would result from people being free from authority, and entails the establishment of all voluntary associations in society: cooperatives, non-profit organizations (which would, just as today, be funded by individuals for their existence), businesses, etc. A free market does not equal the end of civil society.
The following is a partial list of notable nonfiction works discussing anarcho-capitalism.
All links retrieved October 3, 2012.
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