You might be reading the title of this explanation and thinking "Wait, I thought anarchists were anti-capitalist! How can you be anarchist and capitalist at the same time!?" Well, you wouldn't be the only one asking that question. Anarcho-capitalism is one of the most controversial political ideologies, with many anarchists arguing that it doesn't belong to the family of anarchist ideologies at all. Well, let's dive right in and find out what anarcho-capitalism is all about.

Anarcho-Capitalism Anarcho-Capitalism

Create learning materials about Anarcho-Capitalism with our free learning app!

  • Instand access to millions of learning materials
  • Flashcards, notes, mock-exams and more
  • Everything you need to ace your exams
Create a free account
Table of contents

    Anarcho-Capitalism definition

    From Figure 1, you will see that anarcho-capitalism is related to anarchist thought through its rejection of the state. Travelling up the tree from the roots, we can see that anarcho-capitalism is related to the other individualist schools of anarchist thought which emphasise freedom from state control and coercion of the individual, rather than the collective.

    Anarcho-Capitalism Tree Illustration of forms of anarchism showing the relation between them StudySmarterFig. 1 How various schools of anarchist thought relate to each other

    Thus, anarcho-capitalism is influenced by liberal economic ideas, including the belief in the free market. In particular, anarcho-capitalists subscribes to the notion of market equilibrium, which frames the free market as a self-governing entity.

    Economic liberalism advocates for minimal state interference in the market, arguing that state management results in market inefficiencies. One form of economic liberalism, libertarianism, advocates that states power over various aspects of economic and social organisation should be rolled back as far as is feasibly possible. However, the liberal economic tradition has always stopped short of totally opposing state intervention. For example, liberal economists would most likely universally denounce the practice of slavery, and the majority would advocate for the state to intervene against it given its coercive power.

    Libertarianism: an economic and political philosophy that argues for individual liberty and opposes state intervention. Libertarians oppose taxation, regulation, and legislation on issues they regard as matters of personal choice, including gun-ownership, the use of narcotics, and medical care.

    Anarcho-capitalism goes even further, arguing that there can be no role for the state in a free society, and that all of the necessary functions of the state - policing, protection of property, and courts - should operate as private enterprises. Within this unrestricted free-market economy, anarcho-capitalists argue, there would be no space for monopolies to develop, due to the competitive nature of the market and a lack of regulation.

    Anarchism and anarcho-capitalism

    Anarchism, as we know, is a political ideology that rejects all forms of coercive authority and hierarchy, in favour of the organisation of society through voluntary participation. The rejection of the state lies at the centre of the anarchist tradition and all anarchists seek to abolish the state, which is seen as the principle form of coercive authority.

    Beyond this, anarchists disagree on what organising system should be implemented. The answer to this question depends largely on which aspect or consequence of state power is seen as harmful, and for whom, as well as how one understands human nature.

    Anarcho-capitalism Yellow and Black flag of anarcho-capitalism StudySmarterFig. 2 Yellow and black flag of anarcho-capitalism

    The collectivist anarchist objection to the state, for example, is its nurturing of the capitalist system, which results in workers having to sell their labour in order to survive. As a result, collectivist anarchists' vision of a stateless society is one where labour has the capacity to be a liberating endeavour. Solutions tend to be cooperative and inclusive, with every member of society contributing to - and benefiting from - economic activity.

    Individualist anarchists take quite a different view - their main objection to the state is that it restricts individual rights and liberties, including the right to private property and personal autonomy. Individualists view the free market as the ultimate expression of individuals working in concert, promoting the efficient exchange of goods, commodities and services. Individualists are not concerned with ensuring that all working members of society receive equal access to goods and services, believing instead that the free market offers all individuals the opportunity to access what they want or need.

    Anarcho-capitalism, therefore, is an individualists form of anarchism. By promoting market equilibrium as the best alternative to state coercion, it denies the efficacy of communism, syndicalism, or any other form of collectivised social organisation, believing that they simply add new barriers to the flourishing of individuals.

    Anarcho-capitalism ideology

    Murray Rothbard, an American economist, first coined the term anarcho-capitalism in the mid-20th century. For Rothbard, anarcho-capitalism is the logical conclusion of the Non-Aggression Principle (NAP). The NAP is a libertarian principle that argues that every human is granted natural and inalienable rights, including the right to life, liberty and property. Any form of "aggression" against an individual or their property rights is fundamentally unacceptable, and as a result, the coercive state can have no place in a free world.

    “Taxation is theft, purely and simply... It is a compulsory seizure of the property of the State’s inhabitants, or subjects.”1

    Rothbard argued that all functions of the state - including defence, law enforcement, and infrastructure - should be taken over by private companies operating within an unregulated free market. Competition between companies means that prices would be kept low, and the opportunity to earn profit would provide incentives for economic sectors to grow, as well as encourage technological innovation. Vulnerable groups, such as the elderly, would have their needs met by private charities rather than by state welfare systems.

    Rothbard's argument that an unregulated free market is capable of meeting all of society's needs is based on assumptions about human nature which are also present in individualist anarchist thought. Individualism is based on the idea that human beings are fundamentally autonomous and rational, which means that - when freed from the constraints of a state system - they are capable of making sensible decisions about the course of their own lives.

    Anarcho-capitalism Murray Rothbard signature StudySmarterFig. 3 Murray Rothbard vector and signature

    Rothbard elaborated on these ideas, arguing that the principle of autonomy could be understood as 'self-ownership'. Each individual 'owns' their own body, life and all its contents as one might own a house or piece of land. Rothbart also argued that self-interest is a natural part of the human condition, and came about through evolution as a way to ensure that human beings met their basic needs for food, shelter and warmth. It is this innate self-interest, Rothbard argues, that makes capitalism the most desirable form of social organisation.

    What would an anarcho-capitalist society look like?

    A society run according to anarcho-capitalist principles would be one based on the equilibrium of the free market. This equilibrium would emerge as individuals have an obvious self-interest in avoiding disaster or instability. Rothbard envisaged a society that would function according to a mutually-agreed legal code which would acknowledge private contracts between individuals, the right to private property and the principle of self-ownership in line with the Non-Aggression Principle.

    All interactions would be governed by contracts, replacing the need for any form of state authority. In an anarcho-capitalist society, voluntary agreement via contracts is fundamental to the exercise of liberty, and there is no coercion from any authority beyond the scope of contracts agreed by individuals.

    Complete de-regulation, therefore, would have a profound impact on society. Essential services would be provided by private companies with individuals purchasing their services from their own resources. Private property would be protected by insurance companies, who would act as the police and courts, enforcing property rights by force if necessary. Infrastructure would also be privatised, and subject to competition on the free market, with consumers offered a choice of which roads, trains or buses to use.

    Anarcho-capitalism criticism

    Anarcho-capitalism has been criticised by other anarchists, many of whom believe it isn't a form of anarchism at all. This criticism stems from anarcho-capitalism's acceptance of free-market capitalism, which most anarchists seek to overthrow, together with the state. As noted above, collectivist anarchists reject the idea that capitalism and anarchism are reconcilable ideologies. They argue that, within the anarcho-capitalist vision, the oppressive structures of the state are simply replicated.

    Many anarchists, then, would actually view anarcho-capitalism as a form of libertarianism. Most libertarians accept that some minimal form of state control needs to exist, however, to maintain order in society. This model of the state was developed by John Locke, who labelled the ideal as a 'Night Watchman', which only intervenes in order to protect its citizens theft, deprivation of property, or physical harm. For libertarian critics of anarcho-capitalism, the removal of the 'Night Watchman' paves the way for a whole range of horrific practices to become possible within the context of an unregulated free market.

    For instance, an individual could sell themselves or another person into slavery out of desperation or in a moment of mental incapacity. Provided both parties had signed a contract, the seller would be unable to reverse their decision, and the buyer would be able to enforce it. In this scenario, there is no impartial third party to represent the interests of the enslaved person, since the only law enforcement agencies are private enterprises paid to represent the interests of their client.

    Anarcho-Capitalism books

    Anarcho-capitalist theory has been influenced by many intellectuals and their most famous books, particularly throughout the 20th century.

    Murray Rothbard, Anatomy of the State

    In his book Anatomy of the State (1974), Rothbard launches a critique of the state in order to develop an argument for the establishment of a stateless free market system. For Rothbard, the state fundamentally undermines the ability of individuals to achieve sustained prosperity. Rothbard's ideas are comprised of an amalgamation of individual anarchist thought and free-market economics.

    David Friedman, The Machinery of Freedom

    Published in 1971, American economist David Friedman's book The Machinery of Freedom outlines his version of an anarcho-capitalist society. Friedman's vision of an anarcho-capitalist society is one in which all services would be provided through the free market system, and in this text he heavily critiques the US judicial system, as well as the welfare state.

    The way to achieve anarcho-capitalism, according to Friedman, is through an increase in the privatisation of sectors. Unlike the philosophical libertarian Rothbard, Friedman's promotion of an anarcho-capitalist society rests on a cost-benefit analysis of an anarcho-capitalist society as opposed to the assumption that it is the natural right of an individual to be without state coercion.

    Albert Jay Nock, Our Enemy, the State

    Taking formation as a collection of lectures delivered by Albert Nock, Our Enemy, the State was published in 1935. In it, Nock critiques the federal government of the US arguing that the government seeks to accumulate more power and wealth at the expense of individuals at every possible opportunity. Nock's criticism of state power is influenced heavily by the emergence of the New Deal which, according to Nock, was merely a way for the government to further tighten its grip on society and the economy. Whilst Nock is viewed as an influential libertarian thinker, his writings over time became increasingly anti-Semitic which has caused him to be looked on unfavourably by subsequent generations of critics and theorists.

    Anarcho-Capitalism - Key takeaways

    • Anarcho-capitalism advocates for social organisation through an unregulated free-market capitalist economy.

    • The first person to coin the term 'anarcho-capitalism' was the 20th-century American economist Murray Rothbard.

    • For Rothbard, anarchism is the logical endpoint of the non-aggression principle (NAP), which rejects any incursion by an external authority into the area of individual rights.

    • Rothbard shared his view of human nature with individualist anarchists but also believed that human self-interest was an evolutionary trait designed to protect humans from scarcity.

    • This same self-interest makes capitalism dynamic and capable of innovation.

    • In an anarcho-capitalist society, all functions of the state, including law enforcement and justice, would be managed by private companies.

    • Many anarchists dispute whether anarcho-capitalism should be described as anarchism at all, since, in their view, capitalism itself replicates the oppressive structures of the state.

    • Libertarians, who argue for minimal state intervention, would also disagree with anarcho-capitalism's privatisation of law enforcement.


    1. Rothbard, Murray, The Ethics of Liberty, (1998) pp. 162-163.
    2. Fig. 3 Rothbard Signature ( by Krapulat ( licensed by CC-BY-SA-4.0 ( on Wikimedia Commons
    Anarcho-Capitalism Anarcho-Capitalism
    Learn with 10 Anarcho-Capitalism flashcards in the free StudySmarter app

    We have 14,000 flashcards about Dynamic Landscapes.

    Sign up with Email

    Already have an account? Log in

    Frequently Asked Questions about Anarcho-Capitalism

    Is there a government in anarcho-capitalism?

     No there is no government or state in anarcho-capitalism. 

     What is anarcho-capitalism?

    Anarcho-capitalism is a political ideology that lies within individual anarchism that advocates for an unregulated free-market economy that operates under the principles of capitalism. 

    Is anarcho-capitalism true anarchism?

    Anarcho-capitalists would consider themselves anarchists but the ideology is often rejected as being a part of the anarchist ideological tradition due to its acceptance of capitalism and therefore critics argue it is not true anarchism.  

    Why is anarcho-capitalism not anarchism?

    Whilst many anarcho-capitalists consider themselves to be a part of the anarchism ideology other anarchists argue anarcho-capitalism is not anarchism due to its acceptance of capitalism. 

    What are the arguments against anarcho-capitalism?

    Whilst anarcho-capitalism maintains the rejection of the state its embrace of capitalism is criticised due to the belief that capitalism and the state are intrinsically linked. 

    Discover learning materials with the free StudySmarter app

    Sign up for free
    About StudySmarter

    StudySmarter is a globally recognized educational technology company, offering a holistic learning platform designed for students of all ages and educational levels. Our platform provides learning support for a wide range of subjects, including STEM, Social Sciences, and Languages and also helps students to successfully master various tests and exams worldwide, such as GCSE, A Level, SAT, ACT, Abitur, and more. We offer an extensive library of learning materials, including interactive flashcards, comprehensive textbook solutions, and detailed explanations. The cutting-edge technology and tools we provide help students create their own learning materials. StudySmarter’s content is not only expert-verified but also regularly updated to ensure accuracy and relevance.

    Learn more
    StudySmarter Editorial Team

    Team Anarcho-Capitalism Teachers

    • 11 minutes reading time
    • Checked by StudySmarter Editorial Team
    Save Explanation

    Study anywhere. Anytime.Across all devices.

    Sign-up for free

    Sign up to highlight and take notes. It’s 100% free.

    Join over 22 million students in learning with our StudySmarter App

    The first learning app that truly has everything you need to ace your exams in one place

    • Flashcards & Quizzes
    • AI Study Assistant
    • Study Planner
    • Mock-Exams
    • Smart Note-Taking
    Join over 22 million students in learning with our StudySmarter App