A localized state—emerging from wider anarchy—would need to include a sound basis for property rights, monetary system and collective action during times of emergency (of which there would be many during wide-spread anarchy). 

What follows is a proposal for such a localized state.

Property rights of a scale required for civil society are necessarily contractual.  Consensual laws beyond the commandment “Thou shalt not steal.” are necessary so as to, in all cases, assign entitlement to the substance of that commandment.  Once assigned, group force, entailed by civil law, is meaningfully applied to enforce the commandment. 

So to be clear, what I am proposing is a contract that an individual may freely accept or reject—and that this natural man should be considered to possess at least what an animal in a state of nature possesses:  The means by which to form a family and raise, to viable adulthood, the family’s children.  Note that this assumed possession places that individual in a position to freely reject the proposed contract without loss of vital interests.  Therefore, one must face the fact that if a proposed contract threatens the vital interests of an individual, it is unlikely that individual will agree to it.

Proposed Contract

Establish a monetary system whose backing assets are the property rights recognized by law.  These property rights are secured by a mutual property insurance corporation, whose members can be called upon to perform duties ranging from enforcement of property rights to “barn raisings” in the event of natural disaster. The role of demurrage, in, for example, gold backed monetary systems, is replaced by the insurance premium.

Underwriting assessments take the form of escrowed bids for the insured properties—bids accepted at the current owner’s discretion. The bids are denominated in currency issued by the mutual insurance corporation.The shareholder/members of the mutual insurance corporation hold one voting share each which is issued at the time they join. They may proxy their votes, as in any corporation.

The natural individual, endowed with vital interests sufficient to form a viable family, will demand, in exchange for his commitment to this contract, a voting share in the corporation and guarantee of regular dividends.  Note:  This demand by the natural individual, based on respect for his consent, is often overlooked—or even denounced as “collectivism”—in foundational thinking of libertarians of the Austrian school.  Delivery of social goods, and elimination of attendant problems corresponding to public sector rent-seeking, can be largely handled by this purchasing power, placed in the hands of the share holders from the regular payout of dividends.

Only the high bid in escrow for a given property right is charged no demurrage. This efficiently allocates the monetary base among the local economy’s assets. By this means, the monetary base becomes the liquid value of the local economy’s assets. In the theoretic ideal case, where all transactions are conducted electronically, a purchase consists of a change in the escrowed bids, transferring money from one person’s escrowed bids to another person’s escrowed bids. In this case, the role of the “investment expert” is essentially to act as an insurance underwriter who accepts a person’s money and, on their behalf, places that money in one or more escrowed bid that, by being the highest, is not charged demurrage because it has served the purpose of insurance assessment at the liquidation value of the assets bid.

Failure Modes

First of all, it is irrational—in the literal sense of the word “ratio”—to explore in great detail the consequences of this or any other proposed contract without taking its “ratio” with respect to commensurable proposed contracts.  Since there are no other commensurable proposed contracts, it is therefore irrational to place too great an emphasis on such explorations here.  Just as there are no utopias, there is no rational evaluation in the absence of commensurable comparison.

Having said that, the most obvious problem with adopting this, or any other contractual agreement, is that it is a creature of creatures of finite wisdom and is therefore bound to be imperfectly defined and/or interpreted in its enforcement.  A good example of this kind of imperfection is the way the US Constitution is perversely interpreted.  The remedy for this is to ensure that men may practically escape from the contractual regime—that they are free to leave and that they are guaranteed what they came into the contract with:  Their ability to form viable families.  In the present instance, that would mean that the US Government, were it similarly constrained to respect its own imperfect nature, would allocate land area to those who did not consent to its terms and conditions and/or to its interpretation of those terms and conditions.  Since land, itself, is considered property, the dispute processing entailed by this land allocation is rendered problematic but can be less so if the natural relationship of man to land, in the form of food acquisition, informs the process.  Moreover, this is an area where it is vital to consider alternative contractual proposals.  This proposal reduces the need to depart from it by virtue of the fact that the dividend stream provides a market mechanism by which land may be allocated to those of like mind about what “shall to them seem most likely to effect their safety and happiness.”  That is to say, the dividend stream is a caisson against anarchy.  Other proposals must either provide a specific alternative or must admit to greater hubris.

Now to the specific failure modes:

Corporate governance has many problems that have been shown by long experience to be predictable—particularly as the scale of the corporation increases.  For instance, it is quite common for there to develop a conflict of interest between shareholders and officers, even when the officers are major shareholders.  Dividend payouts are often times a source of such conflict, since retention of earnings within the corporation gives the officers more power while payout gives the shareholders more power.  This conflict is also present within this mutual insurance corporation.

The authority of the corporation to call forth the members for emergency service is obviously a potential failure mode—as exemplified by the present US Government’s tendency toward perpetual war as a justification for centralizing power to itself and depriving the people of their rights.  Obviously, the shareholders of the mutual insurance corporation would be in a position, via their elected board members (who, in turn, appoint officers of the corporation), to control this abuse to some extent.  But beyond this there is the very definition of what, exactly, constitutes a “Declaration of War”. 

Toward that end, a “Declaration of Emergency” is a more general phrase that needs clear definition so that it is less likely to be abused.  One step toward such a definition is an operational definition of what constitutes a “Declaration of Emergency”:

A Declaration of Emergency is a declaration of the State of Affairs that, once attained, ends the State of Emergency.  Moreover, this State of Affairs, to quality as part of a Declaration of Emergency, must be of a sufficiently objective nature that no substantial adjudication is required—it must be instantly recognizable as being achieved or not by all upon whom its authority is exercised.  This is adequate since if such a clearly defined State of Affairs is likely not attainable, the Declaration of Emergency obviously amounts to the imposition of perpetual slavery, and would be unlikely to go into effect.

Another failure mode is the abuse of the actuarial power of setting the risk adjustment on the insurance premium.  Two individuals may possess exactly the same market-assessed liquid value, yet one of these two may be subjected to far greater insurance premiums than is the other, and this difference may represent biases in the actuarial risk assessment.  These biases may be everything from personal antipathy between a property owner and an actuary to institutionalized actuarial rules that are simply incorrect.  Since the market is the basis for the liquidation value assessment—that portion of the assessment is fair.  The victim of biased risk assessment suffers damages that are limited by the fact that he can simply accept the high bid in escrow from the market assessment and leave the community.  In this case the monetary damage is relocation cost.

Another failure mode is the one the US is experiencing as a consequence of Federal malfeasance in enforcing the border:

Unwanted dilution of shareholder value.

Obviously the answer to this is to set a high standard for admittance to membership so that the value of shares is not diluted by invasion.  This entails “the politics of exclusion”—which is considered to be the height of evil in the present moral zeitgeist.