The standard theory of government offers little insight into the necessity of the state. To the extent that government is needed because coercive third-party enforcement is required for cooperation and exchange, we have demonstrated that the need for government is highly questionable. Both theory and the results of experimental economics support the claim that a high degree of cooperation is sustainable without any third-party enforcement. To the extent that third-party enforcement is necessary at all, we have shown that coercive state enforcement is not required. Here both theory and the evidence from history and modern international trade suggest that non-coercive third-party enforcement is often just as effective in ensuring contract enforcement as government enforcement.
Read the article at the Journal of Private Enterprise.