A Private Criminal Justice System

By Mike Tront

There are not too many actions of government that libertarians don’t want privatized.  One function, criminal justice, is mostly assumed to be a legitimate function of government, even by many libertarians.  I’m not on board with that.  Here, I’d like to show how a privatized justice system could look.

Let’s start with one area I think we can all agree on:  restitution should be the focal point of any justice system.  Today, if I am the victim of a violent crime, I’m actually a victim twice over.  First, I suffer whatever loss or injury the criminal imposed on me.  Second, I have to pay taxes to fund police, courts, and prisons to find, apprehend, try, and imprison the criminal.  Not only am I without restitution, but the opposite happens!  I have to continue losing money for as long as my attacker is in the system.  This obviously is not right.

To find a free market solution, let’s look at how insurance works today.  If someone robs my home or business, I can have an insurance policy that covers my losses.  This means, for at least some level of crimes, there already is a market solution that brings restitution to victims.  It isn’t a perfect system, mostly because the insurance company now is a victim of sorts, and it doesn’t address what happens to the criminal, but more on that in a minute.

In a free market, insurance would expand to insure against violent crimes as well.  I’d be able to find policies that pay out if I was a victim of assault, battery, rape, or even murder.  Just like life insurance, I’d have a range of polices to choose from based on how much risk I want to assume and how much I’d want it to pay out.

So far this isn’t groundbreaking stuff.  But the real change to justice happens on the other end.  The “what happens to the criminal” end.

If we’re talking about a totally privatized market, prisons like we have today can’t exist.  After all, who’s going to pay for them?  Plus, we still have a restitution problem.  Yes, the victim has been given restitution by their insurance company, but what about the insurance company?  They’re now out of their money.  Basically, by filing a claim with your insurance company, you’re selling debt.  The criminal is in debt to you or your estate for the crime they’ve committed.  Like any other debt, you can choose to collect it on your own at your own expense, or you can sell that debt to the highest bidder and they can now attempt to collect the debt, for better or worse.

Now the insurance company has an insensitive to find this criminal.  Today, this is the job of the government.  If the criminal is caught, tried, and convicted (all this at the victim’s expense), they are then put in prison to rot (at the victim’s expense yet again.)

This will look very different in a free market.  Let’s say I’m carjacked and I’m physically injured in the altercation.  All in all, the insurance company pays out $100,000 to replace the vehicle and pay for the physical and emotional damages I’ve suffered.  The insurance company now has a right to collect on this debt.  They will use their own funds to find this person and take him to a privately funded court to make sure he’s guilty.

If they find the correct person, and he’s found guilty of this crime, now what?  Chances are he’s broke.  He now owes the insurance company the money it paid to his victim, and the costs associated with his capture and trial.  Today, he’d rot in a cage for years, and his life would most likely be destroyed when he gets out, thus leading to more crime and more victims.

In a free market, he’d have to work off his debt.  Depending on his skills and risk level, this could work out many different ways.  If this was a teenager who got caught up with the wrong crowd one time, but otherwise is tracking to go to college and become a productive person, all sides might just agree to have him pay off his debt as a percentage of his income until he’s even.  No prison, no guards, no futures ruined, no further crime.

If this is a more hardened or violent criminal, it may look very different.  There may in fact be a prison.   Except it would have to be a prison that runs a factory.  Or a construction company.  Or some other economically viable business that could keep these violent criminals away from society, and at the same time generate revenue to pay for itself and the debt their prisoners owe.


Like any untried idea, there will be objections.  There’s one huge one I can imagine and I will touch on it a bit.

The biggest problem I can think of is: what about abuse and corruption?  If money is to be made by convicting and forcing people to work to pay off crime debts, won’t these courts, insurance companies, and prisons be incentivized to railroad innocent people for profit?

This is a very real possibility, since that’s exactly what we see today from police forces, prosecutors, federal bureaucracies, prison guard unions, and other cronies in the system.  They have an incentive to railroad people to justify their jobs and paychecks.  However, today there is little or no punishment for wrongdoing by these people.  If a police officer plants evidence, or a prosecutor withholds evidence that could exonerate an innocent person, they don’t get in trouble.  When a judge or jury sentences an innocent person to prison, and 20 years later he’s finally found innocent, nothing happens to the people that put him away.

In a free market, that’s not how it would go down.  An investigator or prosecutor that plants evidence, or withholds evidence that could free an innocent person, is personally liable for his actions.  20 years later when this is discovered, they are now a criminal.  The innocent person that had to pay that criminal debt is of course free, and the people responsible for putting him away now owe him a tremendous amount of money.  Today, innocent people locked up do get paid millions for their time, but the taxpayers pay that money.  The judges, jurors, prosecutors, and police officers responsible don’t pay a dime and they get to continue doing their job!

Any court that convicts even a few innocent people will quickly be out of business.  Any private juror or judge that gets even a few verdicts wrong will quickly be unemployable as well.  In a free market, all sides involved would have incentive to get it right, or else suffer the financial and personal consequences when they convict an innocent person.

Other Benefits of a Private Justice System

Another huge problem with today’s justice system is recidivism.  When someone goes to jail, they don’t learn new skills, they are housed in a dangerous environment, they loose all sense of self-worth and value for life and property, and they are mostly unemployable when they are released.  This dangerous mixture leads to more crime committed by the former criminals, often times of a more violent nature than what they originally did.

How will this be different with a free market in justice?  First, there would be very few prisons that actually house people 24/7.  These work camp prisons would be expensive, and most likely be only used for murderers and other horribly violent people.  People that probably won’t ever be able to pay off their huge criminal debt to the estates of their victims.  Even then, it would still be in the prison’s best interest to maintain a safe, healthy environment in order to maximize productivity.  This means keeping their prisoners healthy and teaching them new, more valuable skills.

What about lesser crimes?  I imagine many criminals would not want to be in a 24/7 work camp, so I’m sure they’d negotiate a deal to report somewhere 5 days a week for the day to work off their debt.  Of course, the more money they make, the quicker they’re totally free.  This incentivizes the convicts to work, and it would incentivize competing businesses to pay the highest wages possible in order to attract the best convict labor.  This could also allow convicts to learn new skills on the job.  Skills that could be used to become a productive person with no need for crime.

In the end, no system will ever be perfect.  What I think we can agree on is that the current justice system is extremely flawed, will continue to make us less safe, and will cost us more money every year.  Any industry that is largely left up to the market, whether it’s electronics, computing, food, etc will always bring the world tremendous products and services at lower and lower prices.  Any socialized industry, like public schools, will always bring the world worse and worse products and services at higher and higher prices.  It’s time we take the socialism out of the justice system and unleash the free market.


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