Philosophers, from Hobbes to Rand, believe that for all encounters there must exist one authority to create and enforce laws. They are baffled by what would happen if two parties had a conflict without an overarching judicial system. They assume that only the public sector can prevent and resolve disputes, but they have failed to notice the many private arrangements already in existence to deal with such dilemmas.
Government police and courts are inefficient and inhumane. There is no reason that consumers should be forced to deal with a central monopoly when there are other alternatives. The legal realm is no different from any other industry; the market will allow consumers to buy services provided by entrepreneurs that are far superior than anything statists can imagine. Private law already provides many solutions but is ultimately restricted by the leviathan state. If the state stopped intervening, the consumer would finally be sovereign and the market would finally be able to flourish.
How does a system of enforcing rules work if there is no army threatening force as does the state? While most people assume that violence is the only possible way to enforce laws, this is far from the practice used in business. Firms can choose to do business only with other companies who are members of certain commerce organizations, which indicate that they are reputable and will follow appropriate business procedures. For companies that have not established connections with commerce associations, there is yet another option. Before trades take place, both companies can deposit sums of money with a specific arbitrator who has the discretion to bestow the money to a party if the arbitrator finds the other party at fault. There is no world government, and yet firms find ways to resolve disputes. Such arrangements do work, and there is no unsolvable problem due to the lack of an overarching state.