Most libertarians believe that we should have a small government, which is limited to core activities of law & order, some public goods, and perhaps a dash of welfare. Minarchists remove the public goods & welfare from their list. But a small minority of libertarians go further and want to privatise law & order. These are the anarchists.
Anarchy does not mean chaos. Anarchy is the lack of a government. Chaos is when people run around burning cars (Paris) and throwing rocks (Bangkok).
Non-anarchists object that anarchy is not viable, as only the government can provide sufficient law & order. Anarchists respond with a bunch of theories for how a society could coordinate its security requirements without government. The argument is interesting, but mostly theoretical.
We need to put anarchy to the test.
There are several examples we could use. David Friedman likes to talk about Iceland around 1000AD, which maintained a governmentless and relatively peaceful existence for a few centuries. Others like to mention the recent trails & tribulations of Somaliland (north Somalia), which has seen some advances and some setbacks over their past three decades of weak (or no) government.
But one of the best places to look for evidence on anarchy is the American west. In the mid 19th century American settlers were building communities outside the reach of the American government in what came to be known as the “wild west”. But as Anderson & Hill pointed out back in 1979, the pseudo-anarchist west was not so wild.
Their conclusions are:
1) The West, although often dependent upon market peace keeping agencies, was, for the most part, orderly.
2) Different standards of justice did prevail and various preferences for rules were expressed through the market place.
3) Competition in defending and adjudicating rights does have beneficial effects. Market agencies provided useful ways of measuring the efficiency of government alternatives. The fact that government’s monopoly on coercion was not taken as seriously as at present meant that when that monopoly was poorly used market alternatives arose. Even when these market alternatives did become “governments” in the sense of having a virtual monopoly on coercion, the fact that such firms were usually quite small provided significant checks on their behaviour. Clients could leave or originate protective agencies on their own. Without formal legal sanctions, the private agencies did face a “market test” and the rate of survival of such agencies was much less than under government.