Crime victims have little economic incentive to punish the perpetrator; if you burn my house down, jailing you won’t un-burn the house. If you steal my gold, I have some interest in catching you and taking it back, but no more than I do in catching some other poor shmuck and taking his gold. It’s only society as a whole that wants to make sure criminals are reliably punished and the innocent consistently safe. This is the classic situation where economists usually recommend government intervention
Examples of different equilibria:
* The Gypsies and Amish will ostracize members who defy the court – but since everyone lives in fear of ostracization, in real life they’ll just pay the fine or make their public confession or whatever. * The English will hang criminals at the drop of a hat – but since the threat of hanging incentivizes them to bribe prosecutors, in reality few people will need to be hanged. The * Icelandic courts could declare offenders outlaws who can be killed without repercussion – but the threat encourages Icelanders to pay the wergeld, and nobody has to get outlawed. * The Somalis are ready to have murderous family feuds – but the possibility of such a feud keeps people willing to go to arbitration. * Even our own legal system works like this. The police can physically drag you to jail, kicking and screaming. But more likely you’re going to plea bargain, or agree to community service, or at least be cooperative and polite while the police take you away. Plea bargains – which are easier for prosecutors, easier for defendants, and easier for taxpayers – seem like a good example of cultural evolution in action; once someone thought them up, there was no way they weren’t going to take over everything despite their very serious costs.
18th century England had a government, a court system, and some minimal law enforcement – but it really sucked. There were no public prosecutors; anyone who felt like it could bring a criminal to court and start prosecuting him, but if nobody felt like it then the crime remained unpunished. Prosecuting took a lot of time and money and was generally a thankless task. And the government didn’t want to go to the expense of imprisoning people, so they usually just hanged convicted offenders (if the crime seemed really bad) or pardoned them (if it didn’t seem to merit hanging). The exotic anarcho-capitalist part comes in as English civil society creates its own structures to work around these limitations.
Merchants, landowners, and other people with wealth banded together in mutual-protection-insurance-groups. Everyone in the group would pay a fixed amount yearly, and if one of them got robbed the group would use the money to hire a prosecutor to try the criminal. Group members would publish their names in the newspaper to help inform thieves whom it was a bad idea to rob. But this wasn’t about leaving poor people out to dry. The groups would also help indigents who couldn’t afford their own prosecutors, partly out of a desire to crack down on crime before it reached the point where it could inconvenience them.
Once a trial was underway, prosecutors would usually cut a deal: the offender would bribe the prosecutor with a certain amount, and the prosecutor would drop the case. The size of the bribe would vary based on how much the offender could pay, the extent of their crime, and the facts of the case (and therefore the likelihood of the magistrate choosing hanging vs. pardon).
10th through 13th century Iceland … If an Icelander thought a crime had happened, they would go to court and plead the case themselves. If the court pronounced a guilty verdict, it would demand a penalty from the criminal. Usually this was a fine paid to the victim; even murders were punished with wergeld. If the criminal paid the fine voluntarily, all was well. If they refused – or didn’t even come to court – then the court could declare the criminal an outlaw, meaning it was legal to kill him and take his stuff. And:
One obvious objection to a system of private enforcement is that the poor (or weak) would be defenseless. The Icelandic system dealt with this problem by giving the victim a property right – the right to be reimbursed by the criminal – and making that right transferable. The victim could turn over his case to someone else, either gratis or in return for a consideration. A man who did not have sufficient resources to prosecute a case or enforce a verdict could sell it to another who did and who expected to make a profit in both money and reputation by winning the case and collecting the fine. This meant that an attack on even the poorest victim could lead to eventual punishment.A second objection is that the rich (or powerful) could commit crimes with impunity, since nobody would be able to enforce judgment against them. Where power is sufficiently concentrated this might be true; this was one of the problems which led to the eventual breakdown of the Icelandic legal system in the thirteenth century. But so long as power was reasonably dispersed, as it seems to have been for the first two centuries after the system was established, this was a less serious problem. A man who refused to pay his fines was outlawed and would probably not be supported by as many of his friends as the plaintiff seeking to enforce judgment, since in case of violent conflict his defenders would find themselves legally in the wrong. If the lawbreaker defended himself by force, every injury inflicted on the partisans of the other side would result in another suit, and every refusal to pay another fine would pull more people into the coalition against him.There is a scene in Njal’s Saga that provides striking evidence of the stability of this system. Conflict between two groups has become so intense that open fighting threatens to break out in the middle of the court. A leader of one faction asks a benevolent neutral what he will do for them in case of a fight. He replies that if they are losing he will help them, and if they are winning he will break up the fight before they kill more men than they can afford! Even when the system seems so near to breaking down, it is still assumed that every enemy killed must eventually be paid for. The reason is obvious enough; each man killed will have friends and relations who are still neutral–and will remain neutral if and only if the killing is made up for by an appropriate wergeld.