I didn’t say that there is anything inherently wrong with a monopoly.
Felix Watts

If I were living in a Utopia, whatever produced said utopia would prove to be the “right way”, would it not? I didn’t claim free markets “solve everything”, did I? You claimed that absent government, which is not laissez-faire btw, monopolies form and stand in for government, establishing their domination through violence. But history does not show this, instead it shows that monopolies formed as a result of government, not when there wasn’t government. Indeed, the very phrase laissez faire is a reduction from the cry of the French Revolution’s “laissez fair nous” — a call for the government to “leave us alone”.

We can also look to what happened in Somalia after the collapse of government. According to your posited hypothesis, companies formed, got violent with each other, and obtained geographical monopolies, consituting a de facto government. But this is not what happened.

Instead they had private companies and a “clan” system. There was no law making, no central or federal authorities. It was, essentially, a collection of clans that operated in non-geographical distinct areas. Multiple clans operated in the same area and an individual could switch which clan they were a part of. They had customary laws rather than formal ones, and switching clans changed “jurisdiction”. The wars returned when a religious group wanted to establish control of the area in then name of their religion. This is despite the rather high supply of military weaponry left over from the various wars from before the collapse.

There was more violence and war during their periods of formal government establishment than during the “anarchic period”. Of course, you should not misconstrue this to be a promotion of anarchy. However, it is a modern example of how what you posit does not occur. The situation being “tainted” by the ravages of the previous wars does make it more difficult to see from a distance what has transpired. But we have another one we can look at, one that takes place on a larger geographical area and with a lot more resources to “fight over” or control. We can look to the American West.

Despite the portrayal by Hollywood, the “Wild West” was not so wild. It was a largely lawless territory as the U.S. federal government was very weak out there. That could even be reasonably seen as an understatement. In the pre-civil war American West there was the rise of what you could call “companies” such as the various cattleman associations, mining clubs, wagon trains, etc.. Each of these constituted a laissaez-faire economic organization of competing businesses. They were, however, not geographic as you claim they must arise as. Nor did they turn to violence as their means of claim resolution.

There was no rise to centralize or create what you call an “ultimate arbiter”, which most recognize as a central government. There was very little war with the natives, as well. Most settler groups, cattlemen, and mining clubs negotiated deals with local tribes rather than acting violently- despite the settlers believing they had been granted a right to the lands by the United States government.

Indeed the gold rush period puts further trouble to your hypothesis. The mining camps were formally organized by prospective miners prior to embarking out west and they formed “charters” which established how they would handle many things such as property rights, disputes, and what expected behavior was.

Once out west they had to interact with each other, often in the same geographical area, right down to the same valley or hillside. Under your hypothesis this would be a situation ripe for violence. Yet the purported inevitable violence was rare. Indeed, the various companies used negotiation and separation rather than aggregation.

Rather than having formal laws for interaction the miners used jury, no judge, and no lawyers. The jury would self-elect a leader and make their decision. If the losing party wanted to push the matter they could appeal to the entire camp en masse, and then had to accept what was decided or leave. Arbitration was the norm, not violence or jail.

In cases where a group within the larger camp decided they didn’t want to abide by whatever aggrements had been made they would vote internally and serve notice to the larger that they had made their own group. This is in direct contrast to your claim that absent the “ultimate arbiter” the inevitable result is centralization and monopoly. This type of activity went right down to the individual level — the individual was free to dissolve themselves from the group, to take their ball and leave if you will.

Now before you talk about the federal government’s existence, you must understand that the only significant presence it had out west were the scattered army posts. These posts were not there to exercise any authority in local activity or disputes. They were there to handle any violence between the natives and the miners or settlers — arguably the most legitimate laissez-faire act of a central government. Prior to the Civil War, even most of these encounters (Army and tribe) were negotiations rather than violence — despite the military superiority of the Army.

The crime data we have shows that crime of all sorts but most specifically violent crime such as murder were rare prior to the Civil War. Even in the more densely populated areas, and even when a provincial government had been established, vigilance committees would form as a response to a crime increase. These groups of vigilantes would often cause large drops in crime — and were not what we would assume them to be. A prime example of this was the San Francisco Vigilance Commitee of 1858 which had around eight thousand members and reduced murders from over a hundred to two.

And I haven’t even covered the early westward pioneers who were technically operating against the laws of the United States. They, too, did not find the need to resort to violence, but to negotiation and arbitration. They, too, were chartered companies of individuals who had to compete with others. By virtue of being largely farming oriented, they had a natural monopoly to their repsective claimed lands. But here we also see a preference for dissolution rather than centralization and for arbitration rather than violence.

So recall your original assertion:

Pure “laissez-faire” capitalism would inevitably progress to war and State. The process is straightforward. At first companies form and compete. In the absence of market regulation and law companies use violence as a tool to achieve dominance. Eventually several large monopolies dominate geographic regions and control everything within their respective domains. The state is reborn and war rages between states

So even with the “Wild West” with its very explicit “laissez-faire capitalism” approach from the government did not turn into what you claim it had to. The movement was toward dissolution, not aggregation; to arbitration not violence.

It was the Civil War, and more specifically the employment by the federal Government of Sherman to exterminate the natives and enforce its newly found “power” of arms across the land by any means necessary that produced what we see bandied about in Hollywood and tales of the Wild West, not the inexorable march of small company to large to monopolies, all through the use of violence.

So as I originally stated, history does not only not support your position, it counters it. Now we could go back and forth where you restate your claim as fact, and I could delve into more historical evidence that counters your claim. But I think it more reasonable that if you want to persist in your claim you should support it with actual evidence, not supposition and assumption. Otherwise, to echo the spirit of the original American west, we can consider this discussion “dissolved”.

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