“An ounce of prevention is worth a pound of cure.”—Benjamin Franklin
Political states without exception have established and maintained monopolies of so-called national defense, often to disastrous effect for the subjects and citizens under their rule. But what would happen if a government becomes insolvent and unable to continue functioning? How could a society defend itself from foreign military threats without the protection of the state?
This chapter expands on an alternative method of national defense introduced in previous chapters: the defense of the homeland by private military forces in association with the insurance industry.
It may seem implausible to many readers that large-scale defense against external aggressors could be provided by any entity other than a political state. That skepticism derives from the fact that free enterprise defense has never been tried on a large scale. However, private military forces have operated for a long time on every continent other than Antarctica, albeit with the authorization, and sometimes the financing, of political states. In America’s war for independence from Great Britain, privateers–private persons that engage in maritime warfare under a commission of war–operated as a de facto naval force of the American resistance to British rule.
In a hypothetical future where the US government has gone out of business, there would be ample incentive for insurance companies to expand their business operations and collaborate with private military companies to provide defense from external aggression, both domestically and abroad, if necessary. Currently, the insurance industry has no role in defense; they specifically exclude losses from military conflict in their coverage (with a limited exception for the shipping and aviation industries).
The reason for this exclusion is that insurance underwriters have no means of calculating the risk of loss from armed conflict between political states. Accordingly, insurance carriers are unable to set prices for war risk insurance, an essential requirement for providing insurance coverage.
Many political states, including the United States of America, often wage war not to deter or neutralize foreign aggression, but to impose their political will on other countries. As shown by the experience of both the Soviet Union and the United States in Afghanistan 1 this use of military force often leads to expensive, protracted, and unpredictable armed conflict, for example in regions with long simmering internecine violence. 2
Alternatively, if insurance companies provided war risk insurance in the absence of the state, their primary objective would be to prevent loss of life and property, both by declining to utilize private military companies in needless or avoidable conflict, and by deterring aggression before it posed a serious threat to their customers.
At present, political states organize and deploy military forces to carry out their objectives. But all military equipment – uniforms to aircraft carriers – is provided to the state’s military by private enterprise. The state produces none of it. Moreover, the state has no ability to pay for anything on its own. It can only pay for its requisitions through the funds it collects by taxing private individuals and companies.
In our hypothetical future with the state bankrupt and out of the defense business, war risk insurance could and would be acquired by large companies. They have the incentive and the means. The world’s larger privately owned enterprises individually have annual revenues in the tens or hundreds of billions of dollars, and in the trillions of dollars in aggregate. The world’s large business enterprises have the motivation of protecting their business interests, including the lives of their workers and the workers’ families from foreign aggression.
Everyone in a stateless society would benefit from corporations that acquire war risk insurance; individuals would have no need to purchase their own. Instead, people would contribute indirectly to the common defense through their continual purchases of the products and services they use on a daily basis. War risk insurance purchased by large companies to pay for defense would be sufficient to provide superior national security for everyone.
In the absence of a single, centralized military command, numerous security and defense forces would be available to defend the lives and property of the people and companies in their various territories. However, these assorted private military forces could form alliances in the event a larger force is required to defend against a powerful aggressor.
There are many examples of disparate entities, both state and non-state, cooperating to achieve goals that are beyond the ability of a single player to take on alone. The military forces of several allied nations joined to defeat Nazi Germany and Imperial Japan in World War II. In the energy industry, five petroleum companies – Texaco, Humble Oil (later Exxon), Union Oil, Mobil, and Shell Oil – collaborated to build artificial islands off the coast of Southern California to exploit offshore oil reserves.
Maintaining an effective defense not only requires cooperation, it can be prohibitively expensive. As of the early 21st Century, the US government allocated roughly $700 billion per year to its military.
American companies generate more revenues than the government of the United States. Private industry could afford $700 in annual military spending, although that figure is far higher than is necessary to protect American lives and property. Today, huge military expenditures are generally justified as appropriate to maintain bases and operations around the world to defend the US and its interests from threats posed from anywhere and at any time. This is, however, an unnecessary state of affairs in a post-cold war world.
With ICBMs and other weapons of mass destruction available to hostile actors abroad, the cost of preventing annihilation is the cost of the military capability to neutralize such threats preemptively before they are deployed, thus avoiding a full-scale war for survival.
Preemptive military action has not often been used successfully by democracies despite the fact it would some times be the best form of defense. As Winston Churchill observed, World War II in Europe could have been prevented without the firing of a single shot merely by an appropriate show of force in March 1936, when France and England failed to act against Nazi Germany’s occupation of the industrialized Rhineland. 3
The most notable recent examples of preemptive self-defense were provided by the nation of Israel. On multiple occasions it has used preemptive action to repel or neutralize an enemy.
On June 5th, 1967, with hostile armies from three Arab countries massing on their borders and threatening immediate attack, the Israeli Air Force attacked first and destroyed most of the operational capability of their enemies’ air forces. With the advantage of air supremacy, the Israeli army routed the opposing armies whose stated intention was the destruction of Israel. Hostilities lasted for only 6 days. This successful preemptive action in all likelihood saved the country from annihilation by a far larger combined enemy army.
On June 7th, 1981, in another military operation, the Israeli Air Force deployed eight F16 fighter-bombers in a stunning preemptive strike against Iraq, destroying the Osirak nuclear reactor that many believed may have been developing weapons-grade nuclear material. The reactor, and the intentions of Iraq’s dictator Saddam Hussein, were subjects of intense worry among Israeli leaders, most of whom believed a nuclear-armed Iraq represented an existential threat to the entirety of their tiny country.
These two examples of Israeli preemptive action as a means of defense are in vivid contrast to the military efforts of other countries, notably the US wars in Iraq and Afghanistan, which have been ongoing for more than 15 years as of this writing. The US had little trouble defeating the enemy initially; the weapons and technology developed by private enterprise and deployed by US forces were far superior to that of Iraq or the Afghan Taliban.
However, in the aftermath of its relatively easy initial military victories, the US government tried to impose new political order onto ethnic and religious groups that have been fighting each other almost from time immemorial. The US found itself embroiled in two intractable wars many thousands of miles from home, at enormous expense in both lives and treasure lost.
Benjamin Franklin famously wrote that “an ounce of prevention is worth a pound of cure.” That axiom, originally addressing fire safety, has broad application. Regrettably, it has been under-utilized by political democracies in their own defense.
Other topics in this chapter are airport security, preventing terrorist attacks on the homeland, private property as the best means of defending infrastructure, and neutralizing rogue states such as North Korea and Iran.
- Soviet military intervention in Afghanistan 1970-1979 and U.S. military involvement in Afghanistan 2001-2019 and continuing thereafter ↩
- See Chapter 13 entitled “Wars of the United States” and chapter 26 entitled “National Defense” for detailed analysis of the failure of the US government to prevent war or stay out of unnecessary conflict. ↩
- This is discussed in detail in Chapter 25 on National Defense ↩