There are few today, regardless of political affiliation, that would disagree about the fact that our criminal justice system is broken. Whether on the Left or the Right, politicians and think tanks acknowledge the need for some kind of criminal justice reform.1 There may be disagreements over the causes of, or the solutions to, the current state of the system, but the fact that major problems exist is undeniable. Mass incarceration, civil asset forfeiture, the high rate of recidivism, the sluggishness of the legal process, the expense of defense and prosecution, police brutality, and the inability to control gang violence within the inner cities are some of the most significant issues plaguing the system today. What is worse is that even when the system works as it should, the victim who has suffered harm receives nothing in the form of compensation for the loss. Everyone working for the State throughout the process of apprehension, prosecution, and detention of the criminal receives a piece remuneration regardless of the result of the case. However, for the victim to receive any restitution from the offender, a separate civil trial must be conducted, which rarely produces much in the way of compensation given the fact that the defendant’s resources have been exhausted in defending against the State’s criminal case. The victim is then indirectly victimized again should the defendant be found guilty. For now, the State will tax the victim in part to pay the expense of keeping the criminal offender locked up for the duration of the sentence. Furthermore, not only is the victim not restored, the criminal rarely ever is fully restored to society or allowed to be productive behind bars. For the remainder of the criminal’s life, he or she retains a criminal record.

For all of the problems with our current system, the unquestioned assumption remains that justice could never be the supplied any other way. Law enforcement, security, and the criminal court system are considered to be public goods that are incapable of being provided through private means and can only be administered by the State. The argument of this paper is that justice in society can be achieved without the State through the application of alternative dispute resolution methods to criminal law. We will examine this topic first by applying economic analysis to the criminal law system. Second, we will examine the historical precedent of customary law systems. Third, we will consider the biblical support for this approach to law enforcement in the Judeo-Christian tradition, and finally we will evaluate the benefits of, and objections to, a privatized criminal law system.

The Relevance of Economics

Economics, simply defined, is the study of the allocation of scarce resources. Security and criminal justice are goods, and like all goods, they exist in a limited supply. Police, investigators, district attorneys, judges, clerks, and juries all contribute to the criminal justice system and all cost money and all have limited amounts of time. Therefore, criminal justice may be evaluated just like any other scare good or commodity in order to determine its economic efficiency as well as to evaluate the economic incentives that exist within the system. Just like any other good or service, those working within the criminal justice system are forced to ration their services and make decisions based upon certain priorities. This rationing takes the form of plea bargains and increased wait times for cases to be prosecuted. However, unlike other goods and services provided by private organizations in the market place, the rationing made by those offering public services is not regulated by a price mechanism. Thus, decisions of priority become completely arbitrary.

When the supply of a good or resource becomes scarce within a free market, it is rationed in the form of higher prices. Those who value the service choose to pay a higher price to continue to receive it. It is the price, which communicates information about the subjective value of a good or service and rewards the producer who prioritizes his time to provide the good or service that the consumer most values. Unregulated by a price mechanism, public services become more expensive, less efficient, and arbitrary in how they are distributed because there is no measurement for determining whether or not the system is being productive. The United States’ continuing experiment with national healthcare is a perfect example of this phenomenon. As government has taken over the provision of healthcare, the costs have increased, the quality has decreased, and rationing of care will be the inevitable result. By introducing a third party with no vested interest in the outcome into a transaction between the doctor and the patient, the incentives are perverted and the market is distorted. Likewise, the introduction of a third party between the victim and perpetrator of a crime has produced perverse incentives within the criminal justice system that have contributed to the simultaneous yet contradictory problems of a lack of law and order and mass incarceration. Applying alternative dispute resolution methods to criminal law would serve to refocus the priorities of criminal justice back on the restoration of the real victim instead of the interests of the State.

One might argue that security, law enforcement, and criminal justice are goods that are incapable of being supplied by a free market because these are public goods. Public goods, so the argument goes, can only be provided by the state. On the contrary, the theoretical distinction between public and private goods is a myth.  In reality, there is no inherent distinction between public goods and private goods. “All goods are more or less private or public and can – and constantly do – change with respect to their degree of privateness/publicness as people’s values and evaluations change, and as changes occur in the composition of the population…. Their private or public character depends on who few or how many people consider them to be goods….”2 Private goods can produce public benefits just as public goods can result in private benefits. Again, the healthcare industry provides an appropriate example. The absence of plague and disease within a society is a public good. However, it does not follow that only the state can provide healthcare. The idea that no one would pay for security, be able to resolve disputes, or be able to enforce law in a community without a state monopoly on the use of force should strike the reader as absurd as the argument that no one would pay for healthcare unless the state provided it. There is no reason why a market can provide a shoe or a car or insurance, but cannot provide for security or criminal justice.

History and Private Resolution

The idea of applying alternative dispute resolution procedures to criminal law is not without historical precedent in Western civilization. Indeed, all of those things which we may today consider to be public goods have been supplied by private institutions in the past.3 There is nothing about law enforcement or criminal justice in particular that requires exclusive or even primary control by the State apparatus. On the contrary, the historical record shows us that the development of law and of the State occurred independently. Warfare was the primary concern in the development of the early State, while law enforcement remained a matter of local concern.4 Medieval Iceland is one such example of a society with a developed and sophisticated legal system that functioned without State enforcement.5 The distinction between the criminal and civil law in the Icelandic system was based not on the substance of the crime, but on the level of cooperation provided by the offender. If the offender would not admit guilt or fled prosecution, the violation moved from civil to criminal law, which carried a steeper penalty for the offender because it required that an investigation be made into the veracity of the accusations. The guilty defendant was better off coming forward to admit wrongdoing. Regardless, both civil and criminal branches of the system were enforced by private means.

We might also consider the common law system in Anglo-Saxon England. Rather than laws imposed and enforced from the top down, the legal system developed from the bottom up based on mutual expectations and reciprocity. “A primary reason for recognizing reciprocal duty in these systems was that offenses were treated as torts with economic restitution as the major form of punishment.”6 The protection of property rights was of central importance to the Anglo-Saxon legal system. To that end, society was organized into small groups called “tithings” which in turn formed a unit called the “hundred.” The hundreds functioned as the source of protection for the individual, providing law enforcement, accountability, a judiciary, and social insurance to its members. Judicial committees were formed from representatives of various hundreds to arbitrate disputes between members of differing jurisdictions. A defendant’s failure to comply with the judgments of these committees would result in social ostracism and the removal from the protection of the tithing or the hundred. In this position, the offending individual would live as an outlaw subject to the full retribution of the victim’s hundred. Thus, built into this system was a strong incentive for arbitration committees to make reasonable judgments, lest they lose credibility among the hundreds which they represented, as well as a strong incentive for the accused to comply with the judgment against him, lest he be abandoned outside the camp bearing the proverbial mark of Cain.

In the event that a plaintiff could not get a fair hearing of his case or lacked the power or influence to bring an offender to justice, a king or an ealdorman could be called upon to back the plaintiff, ensure a hearing, or enforce a judgment within the local hundred. Should the services of a king or ealdorman be necessary to enforce justice, the offender would owe a fine (the wite) to the king or ealdorman in addition to the restitution that was owed to the victim (the bot). This created an incentive for the guilty offender to settle with the accuser in order to avoid additional penalties. Unfortunately, this practice also produced an incentive for the king or ealdorman to insert himself into more and more legal disputes as the fees generated from this service could prove to be an important source or royal revenue.7 However, at this point, the king’s role was limited to enforcing the judgments of the hundred arising out of customary tort law. He had no power to impose criminal sanctions on the offending party.

The distinction between criminal and civil law did not arise in the English common law system until the reign of Henry II (1154-1189) and served as a differentiation between offenses which generated revenues for the king and those resulted in restitution to the victim.8 Crimes began to be defined in terms of the breaking of the king’s peace. The peace of the individual who had been harmed became secondary to the peace of the realm that was disturbed by the offense. Furthermore, the list of infractions constituting a crime grew to include actions that did not even require a victim simply for the purpose of extracting a fee to increase the royal revenues. By the early 14th century, during the reign of Edward III, criminal law enforcement became distinct from civil law as justices of the peace were appointed by the king and commissioned with the task of keeping the king’s peace in each English county.9 Justices of the peace served as a proto-police force and had the power to arrest and imprison those deemed to be disturbing the king’s peace.

The imposition of criminal law was not greeted welcomingly by the people. The effect of this development was to raise the cost of administering justice. The plaintiff had to bear the costs of bringing criminal charges against a defendant and recovery for damages could not be accomplished until the state had exacted its penalty on the guilty defendant. This created a strong disincentive for the people to participate in the criminal law system.  So strong was the people’s resistance to the criminal law system that additional laws were needed in order to ensure victim compliance. Thus, victims of crimes would be charged the misdemeanor of “theftbote” for simply accepting restitution from an offender without going through the justice of the peace.10 The lack of voluntary participation in the enforcement of law among the people led to greater inefficiency in the system. Crime rates rose in urban areas necessitating a stronger public police force to enforce the king’s laws.11 Therefore, we see that the rise of criminal law did not come about in order to maintain law and order in society, but rather as means of producing royal revenue. Law and order predated the rise of authoritarian criminal law.

The principle of a restitution based criminal law system is not only a product of Anglo-Saxon common law, but it is also consistent with the Judeo-Christian tradition. The primary aim of the Old Testament judicial system is the restoration of the victim. There was no provision for state penitentiaries in Old Testament Israel. The offender rather is to restore to the victim what he has taken plus compensation for the inconvenience. The Mosaic Law set the maximum penalties for particular crimes to which the victim has recourse.12 These maximum penalties display the seriousness of the crime in God’s view. For example, the theft of another man’s ox could be punished by restoring up to five oxen to the victim while maximum penalty for adultery was death. However, the maximum penalty need not be imposed. Husbands and wives could choose reconcile rather than prosecute each other and victims of theft could negotiate with the offender for lesser penalties based on the offender’s cooperation in admitting guilt and returning the stolen property. The victim was free also free to forgive the offense. As Old Testament scholar Gary North has written, there was no fundamental distinction between criminal and civil law for the ancient Hebrews.

The Bible recognizes that the State is not God. It is not omniscient. The initiation of public sanctions against all criminal acts therefore must not become a monopoly of civil officers. Citizen’s arrest and torts – where one person sues another in order to collect damages – are modern examples of the outworking of this biblical principle of the decentralization of law enforcement. All government begins with self-government. The bottom-up, appeals court structure of covenant society (Ex. 18) is protected by not requiring that agents of the civil government initiate all civil government’s sanctions against criminal behavior. Nevertheless, all disputes into which the State can legitimately intervene and settle by judicial decision must be regarded in a biblical commonwealth as criminal behavior. There is no biblical distinction between criminal law and civil law.13

To the extent that the Old Testament makes reference to criminal law, it is speaking of sanctions which the civil government must enforce, not an independent branch of law which exists independent of civil law. In the New Testament, Paul writes in Romans 13:1 that Christians are to be “subject to the governing authorities” and Peter tells his readers in I Peter 2:13 that they are to “be subject for the Lord’s sake to every human institution.” Neither of these passages require that the state provide a monopoly on the use force. “Governing authorities” and “human institutions” may include the State, but are not limited to the State. Customs and contracts also may also give rise to legal obligations that are binding upon human behavior and enforced without the use of government.

Advantages of Privatization

To this point, we have seen that state run criminal law is not absolutely necessary in order to have justice within a society. But just because the State is not a necessity to a just and lawful society, does it follow that a private law society employing alternative dispute resolution methods would be an improvement upon a state run criminal law system? What might be some of the benefits of legal system based on negotiation, mediation and arbitration? First, private systems of law arising out of contracts between parties are easier to enforce than laws externally imposed by government. Both parties to a contract have a vested interest in ensuring that the contract is not breached. Thus, customary laws tend to be voluntarily policed by the members of the communities in which they arise, cutting the costs of enforcement.

A second advantage of a private law society is that laws are more stable and more resistant to arbitrary change. Authoritarian law can change simply on the whim of a royal decree or the vote of a legislature or parliament. Customs, on the other hand, are established over time and can only be relied upon if two parties expect the law to be the same tomorrow as it is on the date in which they entered into contract. They cannot worry, for example, that a government body will artificially set price controls upon goods and services or declare the trade of certain commodities to be an illegal based upon the nationality of the other party to the transaction. Customary law then allows for predictability in the legal system and will tend to enforce only those laws that people expect to protect their private property interests.

Third, private law exacts little if any net costs upon society. Restitution that is taken from the offender is given to victim. Within the current criminal law system, each individual involved in the case must be paid for their service in arresting and convicting the defendant. The defendant then is placed in a prison cell where he is a drain upon society’s resources while contributing nothing to it.

Fourth, private law allows for specialization which allows it to better meet the specific needs of the consumer. Alternative dispute resolution allows for people with specialized knowledge and expertise in the subject matter to mediate or arbitrate.14 More creative solutions can be employed in dealing with the criminal offense rather than applying mandatory minimum sentence to a guilty verdict from a jury. Moreover, the specialized knowledge of an arbitrator would be more efficient than having to educate a jury on the technical details of a complicated criminal case. Law enforcement would also be more specialized in a private system and would be focused providing services focused on preventing crimes rather than on the number of arrests made or citations issued.

Fifth, a private law system would allow for competition between firms which would force suppliers of justice to produce the best product at the lowest cost. Furthermore, competition would have the effect of weeding out arbitrators and judges that were biased or corrupt. Those who acquire reputations for unfairness or inefficiency would have a much harder time staying in business. For all of these reasons, it is reasonable to conclude that a private criminal law system could provide a superior product to that of the state.

Concerning the Objections

Despite the benefits that a private criminal law system would provide, it is understandable that it would also present some challenges. Given that any legal system is made up of fallen human beings, we can expect that no system will be perfect and that there will be problems. However, the question is not whether a system is perfect, but rather whether or not the system takes into account human nature and economic law, providing incentives to conform to the norm while deterring violations of the standard code of conduct. Law, to be effective, must be appropriate to the cultural conditions and customs of those upon whom it is enforced. Thomas Aquinas put it this way:

Wherefore laws imposed on men should also be in keeping with their condition, for, as Isidore says (Etym. v, 21), law should be “possible both according to nature, and according to the customs of the country.” … Now human law is framed for a number of human beings, the majority of whom are not perfect in virtue. Wherefore human laws do not forbid all vices, from which the virtuous abstain, but only the more grievous vices, from which it is possible for the majority to abstain; and chiefly those that are to the hurt of others, without the prohibition of which human society could not be maintained: thus human law prohibits murder, theft and such like.15

The question then is whether or not a private law system would be appropriate and fitting for a people and whether it could stand up to objections.

The first objection one might raise concerns the protections criminal defendants are provided in the United States Constitution and the Bill of Rights. Would a private law system based on mediation and arbitration be unconstitutional because it does not guarantee constitutional rights such as the right to a jury trial, the right to confront witnesses, and the right against self-incrimination, etc.? The answer is no. The Bill of Rights, as it was originally intended by the framers, applied only to the federal government, not to state and local governments. However, even if one were to apply the legal fiction of incorporation and argue that the Bill of Rights are applicable to the state and local governments through the Fourteenth Amendment, they are still limited only to the government’s ability to prosecute and punish the individual. They would not apply to a private law system in which the victim brings a charge against a defendant. It may still be in the judge or arbitrator’s interest to consider the constitutional protections in evaluating the strength of the evidence in a particular case because his livelihood depends upon his reputation for fairness. However, the Bill of Rights would serve as a source of wisdom and prudence to the judge or arbitrator and would cease to be a tool for extending the authority of federal courts over state and local legal systems.

The second objection concerns issues of confidentiality. Would a mediation or arbitration system, in order to reach a settlement, compromise the defendant’s interests by encouraging him to expose information or admit guilt that could be used against him in a future trial? Not necessarily. Even in the current system, mediators and arbitrators are under a strict duty of confidentiality in regard to all information learned during negotiation process.16 They cannot be called as witnesses in a trial, nor can anything admitted by a party in an attempt to reach a settlement be used against that party in a court of law. These are the current rules in regard to civil cases. There is no reason the rules would change for criminal cases.

The third objection might be a concern for the lack of uniformity in the law that might result from a system based on negotiation rather than the application of a singular rule and punishment by the state. Two points might be made in response. First, there is a certain lack of uniformity in the current criminal justice system based on negotiation. However, this negotiation is between the prosecutor and the defendant and leaves the victim out of the process entirely. Plea bargaining results in differing punishments for people guilty of committing the same crime. The perverse nature of this negotiation process is that often those who are the easiest to convict (those charged with committing a non-violent drug offense, for example) are the ones who bear the full penalty of the law while the more sophisticated criminals that present harder cases to try, benefit from reduced sentences via plea bargaining.17 Scarcity rears its head in the form of rationing through the plea-bargaining process. Second, the historical record shows us that a private law system tends to be more uniform in the enforcement and application of law. The Law Merchant in England and the Hanseatic League are two historical examples of where uniform laws across national boundaries were developed in order to facilitate international trade. Because laws are based upon reciprocity and mutual expectations of all parties involved there is very little incentive to make arbitrary rules discordant with precedent.

A fourth objection may concern the ability of a poor victim to pursue justice and bring a claim against a powerful defendant without the power of the state prosecuting the case. Once again, we may look to the current civil law in which poor plaintiffs have no shortage of attorneys who are more than willing to file civil suits against powerful individuals and corporations. But in addition to this, a private criminal law system would also produce a market for the free transferability of the right to file charges and pursue a remedy against a criminal defendant. Victims would own a legal right to recover damages for the crimes committed against them by the offender. If the victim lacked a desire or means to personally pursue and prosecute the offender, the victim could sell that right at a discount to another who would be better able to extract the full penalty. The victim would give up the right to pursue the matter further upon sale, but would at least acquire some form of restitution. The buyer of the right would be able to recover the full amount of restitution from the criminal if he can prove the case against the one accused of the crime. The buyer of the right would also bear the risk of loss should he have to settle with the accused for less than the amount paid to the victim or should the accused be found innocent. This would cause buyers to be wary of accepting cases from alleged victims that are not credible.


There is no doubt that the use alternative dispute resolution procedures have been growing rapidly over the past several decades. The degree of flexibility, efficiency and cost saving that these methods provide have made them much preferable to taking civil suits to court. However, criminal law remains an area of law in which the state maintains a death grip on its monopoly power to exercise force. For this reason, the criminal justice system continues to deteriorate. Talk of reforming the system must go beyond narrow policy prescriptions or new government programs and task forces aimed at reducing crime. Instead, real criminal justice reform must focus at realigning the costs with benefits and restoring the rights of the victim. This can only happen by evaluating the current system and raising the age-old question, “Cui bono?” (Who benefits?). Returning the current Leviathan back to its common law roots will not necessarily be easy, but it will definitely be worthwhile.


  1. See Chris Coons and Thom Tillis, “America’s Criminal Justice System Is Broken,” CNN, Jnauary 09, 2017, accessed November 14, 2017, and “Criminal Justice & Policing Reform,” Charles Koch Institute, accessed November 14, 2017,
  2. Hans-Hermann Hoppe, The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy, 2nd ed. (Auburn, AL: Ludwig von Mises Institute, 2006) 8.
  3. , 27.
  4. Bruce Benson, The Enterprise of Law: Justice Without the State (Oakland: Independent Institute, 2013) 27.
  5. David Friedman, “Private Creation and Enforcement of Law: A historical Case,” The Journal of Legal Studies 8, no.2 (1979) 399-415.
  6. Benson, 24.
  7. , 46-47.
  8. , 53.
  9. Ibid, 63.
  10. Ibid, 62.
  11. Ibid, 64.
  12. Gary North, Victim’s Rights: The Biblical View of Civil Justice, (Tyler, TX: Institute for Christian Economics, 1990) 49.
  13. , 222.
  14. Benson, 237.
  15. Thomas Aquinas, Summa Theologica, Kindle Edition (Xist Classics, 2015), 472.
  16. Uniform Mediation Act, Section 8. Confidentiality. (National Conference of Commissioners of Uniform State Laws, 2001)
  17. Benson, 236.